CBS to acquire CNET Networks for $1.8 billion

In what was a surprise even to its own staff writers, it appears, CNET Networks said Thursday that it had entered into an agreement with CBS Corporation to be acquired in an $11.50 per share deal.

Both companies urged shareholders to approve the deal, which they expect to close in the third quarter.

"CNET Networks and CBS Interactive represent near perfect category symmetry in premium online content," CBS Interactive president Quincy Smith said. "Together we will have a terrific opportunity to not only grow our established businesses, but to build new attractive verticals of content as well."

With the technology news conglomerate in tow, CBS would likely become one of the top ten Internet companies in the US. It would reach some 200 million users worldwide, and serve 54 million unique visitors per month.

It could also signal the end of a protracted fight for control of the company by hedge fund group Jana Partners. The investor had accused CNET of doing little to fix the company's ongoing stock price woes.

Shares of the company have lost one-fourth of their value over the three years ending March 2008, which is a far cry from the 39% average growth realized by its peers over the same time period.

According to a position paper published April 1 (PDF available here), Jana's plans called for a massive management shakeup, including nominating new board members that have experience in digital media and operations at large companies. Part of the problem, Jana argued, is that CNET's current management is inexperienced and overwhelmed.

It also said that the company's advertising platform and user experience both needed work to maximize impact and cater to each individual user's needs. Social networking functionality and other Web 2.0 features should play a bigger part in today's CNET.

CNET Networks maintains a vast array of technology Web sites, including CNET, ZDNet, GameSpot, TV.com, MP3.com, CNET News.com, UrbanBaby, CHOW, Search.com, BNET, MySimon, and TechRepublic.

CBS owns its own fair share of Internet properties, which include CBSSports.com and CBSNews.com, as well as last.fm and Wallstrip.

Off the bat, one can see that there are some obvious overlaps -- last.fm with MP3.com, and so forth. Also, with CBS Interactive likely building its own ad platform, its likely that CNET would convert to CBS's own to streamline ad sales there.

CNET also owns some premier domains, and not just for their content but for the value of their names alone: search.com, mp3.com, and TV.com. It wouldn't be all that inconceivable that CBS may find that domain more suited for its own news site, rather than the front for a technology-centric one, or use any of the other domains it now would own in ways it may see as a better fit. Imagine if a future incarnation of News.com were to link to Katie Couric instead of Dan Farber.

What may result is that, in the process of merging with CNET, the face of many of these Web sites may change. For those working with the company, that is probably not welcome news, as it could mean further job cuts and uncertainty.

The news is only the latest in what has become a period of fast-paced change for the CNET. In April, it announced a deal with Yahoo which put its content on the search engine's news portal. The deal enabled CNET to sell ads on Yahoo pages with its stories included, with Yahoo gaining the ability to sell ads on CNET properties.

The revolving door at CNET was already turned up to "frappe," it seemed, with appointments such as the hiring of former Maxim magazine publisher Stephen Colvin as executive vice president for entertainment, and the exit last February of editor-in-chief Jai Singh for ZDNet blog chief Dan Farber.