CBS Corp. said Thursday it agreed to pay a pricey $1.8 billion in cash for CNET Networks and its technology news and product-review Web sites, buying access to 54 million unique online visitors per month.
The price of $1.8 billion, or $11.50 per share, represents a 45% premium above CNET's Wednesday's closing price of $7.95 per share. CNET's share price stormed up by $3.45, or 43%, to $11.40, while CBS slid 72 cents, or 3%, to $24.10 early Thursday.
CBS wants news.com, ZDNet, GameSpot.com, TV.com and mp3.com to enhance an online stable that now includes CBS.com, CBSSports.com, CBSNews.com, last.fm, Wallstrip and MobLogic.
A survivor of the dot-com implosion, CNET has faced pressure recently. Hedge fund Jana Partners in the past year garnered a 10% voting stake and was pushing for operational improvements or a sale. CNET also faced growing pressure from upstart tech news sites and blogs such as TechCrunch and Gizmodo.
Analysts' initial take was that CBS paid a high price for CNET and its roughly 140 million aggregate monthly users. “We suspect CBS is trying to build a more formidable presence on the Web,” Citigroup analyst Jason Bazinet wrote in a research note. “But the key CBS challenge will be sustaining premium CPMs. We estimate CNET generated about $12 per thousand page views (RPM) in 2007, well above rivals.”
Forrester Research analyst Sarah Rotman Epps said CBS “definitely paid too much. Add up the audiences across all the CNET properties and all the other assets, including production staff and content, and you still don't get near $1.8 billion.”