CBS buys CNet

Bits: CNet’s Allure for CBS: Both Are Laggards
981B1E8B-CFCF-4268-8DA4-3CCBE8D7655B.jpgSo CNet is finally being bought.

In January, I wrote a post called “The Problem With CNet: No One Wants to Buy It.” Every Internet and media company has looked closely at CNet. They are intrigued because it is a leader in its category of tech news and reviews, with some good technology and brands. But it is growing slowly, and its cost base is so high that its profit margins are meager. And the asking price, which hovered between $1 billion and $2 billion, scared off all the potential buyers.

So what is different for CBS, which announced today that it will pay $1.8 billion for CNet?

For one, CBS is also a company with well-known brands and sluggish growth. So CNet adds some luster to CBS, even if it would drag down other theoretical buyers like Yahoo.

Interestingly, on a conference call with investors this morning, CBS said that its own Internet properties — like Sportsline and the Web site for the Grammy Awards — are actually growing faster than CNet is.

CBS, of course, gave the normal synergy talk: The network’s relations with auto, financial services and drug companies will bring new advertisers to CNet, and CNet’s tech advertisers will add customers to CBS properties. CBS can obviously cut some of CNet’s overhead costs. (If the deal goes through, it also cures a big headache for CNet’s management: the agitation for reform from Jana Partners, a hedge fund.)

CNet has been diversifying away from technology into some other areas that may be of use for CBS. It is building its BNet service for small businesses. Intriguingly for CBS, CNet also owns TV.com, which it has been trying to use to create an entertainment and television fan portal. Owning CNet’s News.com domain name might even lead to a revival strategy for the once great CBS News.

Read full Article HERE!

(Via NYT > Technology.)

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