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CNET sold to CBS for $1.8 billion.

CBS Corp. (New York) has entered into an agreement to acquire CNET Networks, Inc. (San Francisco, CA). Under terms of the deal, CBS will make a cash tender offer for all issued and outstanding shares of CNET for $11.50 per share, representing an equity value of approximately $1.8 billion and a premium of 44.6% over CNET's per share stock price of $7.95 at the close on May 14, the day before the CBS offer was made.

CNET Networks owns and operates a wide range of Internet information, entertainment and news sites, including CNET, ZDNet, GameSpot.com, TV.com, mp3.com, CNETnews.com, UrbanBaby, CHOW, Search.com, BNET, MySimon and TechRepublic. CNET said it has a "large international footprint, particularly in China."

With the purchase, CBS automatically becomes one of the 10 most popular Internet companies in the U.S., with a combined 54 million unique users each month, and approximately 200 million users worldwide. While The Business Publisher believes CNET is a well-described "troubled company" that, if a majority of bloggers ate to be believed, may be past its prime in relation to its own content and services. Whether or not CNET will provide the appropriate online platform for CBS remains to be seen, however.

CBS predicted that CNET will have $1 billion in revenue by fiscal 2010-11 year. CBS said the deal gives it increased online exposure and called it "a very affordable deal" that will have no impact on dividends. CNET will become a part of a new CBS Interactive/CNET division.

CNET first quarter 2008 revenue was $91.4 million, an increase of 2.6% over the $89.1 million reported in the first quarter of 2007. The company lost $18 million in the 2008 period compared to a loss of $7.7 million in the 2007 period. For 2007, CNET reported revenue of $405.9 million (+9.9%) with net income of $176.8 million (net income for the year was positively affected by a $184.2 million income tax benefit) compared to revenue of $369.3 million and net income of $6.8 million in 2006. CNET had revenue of $338 million and net income of $19.6 million in 2005.

Thus, the purchase price is 4.43 times CNET's trailing annual revenue, 10.18 times 2007 net income (positively affected) and 91.8 times 2006 net income of $19.6 million.
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Publication:Business Publisher
Date:May 17, 2008
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