CBS to Buy Internet Tech Heavyweight CNET
CBS said it is buying media firm CNET for $11.50 a share, a move that will make the broadcaster one of the top 10 Internet companies in the United States.
The deal would equate to $1.8 billion and its per share price is a more than 40 percent premium over CNET's Wednesday closing price of $7.95.
The deal could also put to rest a brewing fight between CNET and an activist investor group led by hedge fund Jana Partners, which wants to shake up the Web company.
Once the purchase is completed, expected in the third quarter, CBS's digital properties will be home to 54 million unique monthly users in the United States and about 200 million users worldwide, the companies said.
"When you can combine the entertainment assets, the news assets, the platforms that are available with technology, the cross advertising opportunities, it just gives us great scale," CBS Chief Executive Leslie Moonves said on a conference call.
The deal values CNET at $11.50 per share and represents a 45 percent premium to its closing price on Wednesday.
CBS said it has not spoken with CNET's activist investor group, which introduced last month a plan to boost earnings by reaching a partnership with Web search leader Google revamping its own search and adding social networking features to its sites.
A representative from Jana Partners was not immediately available to comment on the CBS deal.
CBS said the purchase would help boost its earnings from the start and expects CNET and its CBS Interactive unit combined to reach $1 billion in revenue by 2010 or 2011.
Moonves said the deal would be funded from excess cash on CBS's balance sheet and would not affect the company's dividend.
CNET's network of Internet sites including ZDNet, GameSpot.com, TV.com, and UrbanBaby.com. The company posted $406 million in revenue in 2007.
CBS said the combination would help it accelerate growth within its own portfolio of sites, such as CBSSports.com and CBSNews.com, as well as give it the ability to create new Internet destinations.
Miller Tabak analyst David Joyce said investors may well be surprised that CBS made such an acquisition, its largest since it split from Viacom at the close of 2005.
But he said the potential benefits from integrating the two companies' Web news and advertising operations could help CBS shares down the road.