With CNET, CBS eyes big Web audience
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KAI RYSSDAL: Its little slice of the Web isn’t going to come cheap for CBS. The sticker price on CNET is $1.8 billion — that’s a hefty 45 percent more than the company’s stock was worth at the opening bell this morning. It’s not hard to see why the sale makes sense for CNET. It’s a pre-dot-com bubble icon that’s run into some trouble of late. We asked Stacey Vanek-Smith to find out what’s in the deal for CBS.
STACEY VANEK-SMITH: CNET just reported a $6 million loss and it’s been battling dissident shareholders, so why would CBS pay such a premium for the tech-news giant? Porter Bibb is with Media Tech Capital Partners:
Porter Bibb: This was a kind of Murdochian offer you can’t refuse — the way he came at Dow Jones with his $5.2 billion offer.
The deal will make CBS the 10th largest Internet network on the Web. CNET owns dozens of sites, like ZDnet and Gamespot and pulls in more than 105 million visitors a day. It also owns the Boardwalk and Park Place of online real estate — URL’s like News.com, Download.com, and TV.com. Bibb says CNET will dramatically expand CBS’s reach.
BIBB: They also are extremely well-positioned in Europe and in Asia — particularly in China. They’ve been in China for nearly 10 years.
Bibb says if CBS had offered less, the deal might have gotten drawn out Yahoo-Microsoft style, with other companies making bids. Still, CBS bought itself a pretty expensive insurance policy says industry analyst Rob Enderle.
ROB ENDERLE: This offer from CBS seems to be a very, very generous offer, given CNET’s performance of late.
Enderle says other tech-news sites are doing a better job of covering the industry for a lot less money. But for CBS, buying an Internet audience is easier than building one.
Jeff Jarvis teaches journalism at City University of New York.
Jeff Jarvis: So this is a long tradition of big companies trying to buy their future. And I’m not sure it works.
Jarvis says this could be a mini-AOL Time Warner disaster in the making.
I’m Stacey Vanek-Smith for Marketplace.
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