Media conglomerate CBS Corporation agreed to buy CNET Networks Inc., the owner of technology news and information Web sites, for about $1.8 billion to more than double its online visitors in the US. CBS said it would combine those assets with its existing Internet properties, which would make the company one of the top 10 US Web firms with 54 million monthly users.
CNET's board unanimously approved the merger and recommended shareholders accept the offer. CBS expects the transaction to close in the third quarter.
The deal represents CBS' biggest move yet to become a major player in online advertising. It would add to the company one of the most highly trafficked collection of Web properties, including the tech-focused News.com and ZDNet, gaming site GameSpot, music destination mp3.com and a collection of venues in entertainment and information such as TV.com, Search.com and UrbanBaby.
CNET investors will receive $11.50 a share, or 45 per cent more than yesterday's closing price of $7.95, the companies said in a statement today. With this deal, CBS CEO Leslie Moonves gets a profitable business that increased sales 10 per cent last year to $405.9 million as he seeks acquisitions to make up for a drop in television and advertising sales. The purchase price values CNET at more than 100 times estimated earnings for fiscal 2008.
''There are very few opportunities to acquire a profitable, growing, well-managed Internet company like CNET Networks,'' said Moonves. ''CBS stands for premium content and unparalleled reach, and CNET Networks will add a tremendous platform to extend our complementary entertainment, news, sports, music and information content to a whole new global audience.''
CBS has been assiduously building its Web presence over the past 18 months, since bringing in Silicon Valley dealmaker Quincy Smith to lead its strategy. In addition to CBS-branded Web sites, it has launched a content and ad network of 300 sites. CBS has also made several smaller acquisitions, such as finance video blog Wallstrip, high-school sports destination MaxPreps.com and music discovery site last.fm.
"Together we will have a terrific opportunity to not only grow our established businesses, but to build new attractive verticals of content as well," Smith said in a statement. "This is the beginning of an era for both CBS and CNET Networks."
CNET agreed to a takeover as it tries to fend off a looming proxy fight with Jana Partners LLC, its largest shareholder. The hedge fund called for a change in strategy as the stock lost about half its value over a two-year period.
CBS Chairman Sumner Redstone is pushing an expansion on the Web with shows and other advertising-supported content. Viacom Inc., the other company he controls, has built up the Web sites for its MTV and Comedy Central to become some of the most visited sites on the Web.
While CBS had revenue of about $14.07 billion in 2007, CNET reported corresponding figures of $406 million last year.