CBS Buys CNET for $1.8B
May 15th, 2008 by Fred Davis
I think CBS made a smart move by buying CNET. Yes, if you look at earnings, the price seems too high, at about 18 times earnings. But as CBS Chief Executive Leslie Moonves said, “…there are very few opportunities to acquire a profitable, growing, well-managed internet company like CNET.”
A lot of money gets shelled out for acquisitions that are highly speculative. With CNET, CBS is getting an established brand with one of the longest successful track records on the web. Sure, every company talks about the synergy factor when they make an acquisition, but in the pairing of CBS and CNET there may actually be some.
Where could the synergy come from? Well, CNET’s TV.com has the potential to be a killer property. However, CNET has never really been able to get much going with TV.com, and it has kind of languished as a lightweight TV version of IMDB. But with CBS driving it, TV.com could become a major online television portal.
Then there’s NEWS.COM. CNET has done a good job of making this a major tech news site… CBS could bolster that effort, or perhaps even broaden its franchise. CBS needs help in the news dept., and maybe the cross-pollination between the companies will help CBS learn more about how to do web news right.
With Grand Theft Auto IV raking in a breath-taking $500 million in its first week, there is no doubt that video games are a major pillar of the entertainment industry. CBS doesn’t have much to offer on that front, but CNET can offer up Gamespot.com, one of the top gaming sites.
In addition, CNET has several other properties that have a lot of potential and may be able to benefit from CBS synergy. For example, there’s BNET.com, the business network, the CHOW.com food site, the way underachieving MP3.com, the MySimon shopping engine, and the UrbanBaby.com site for the lucrative “urban parent” market… I can almost feel the tie-ins with the Early Show coming.
And then there is the wealth of internet experience that CNET brings to the table. Many of my old cohorts from the glory days of Ziff-Davis are over at CNET, and they have done a great job on both the editorial and advertising sides of CNET. CBS gets a whole boatload of internet insiders and expertise. I sure hope they value those people and that incoming CBS honcho Quincy Smith don’t make the mistake of thinking he
knows more about the web than they do.
CNET has been sort of floundering around without a real leader ever since Shelby Bonnie was pushed out over the stock option backdating mess. For a long time Halsey Minor and Shelby Bonnie were CNET, and without either of them there to drive the company things just weren’t the same. If Quincy Smith can fill the leadership vacuum, he may be able to re-energize CNET and put them back on a track to higher growth and industry leadership.
There’s also a bit of poetic justice in CBS buying CNET. I was one of the very first people to work for CNET. I met CNET’s founders, Halsey Minor and Shelby Bonnie, back in the early 1990’s, and their idea was to create a 24-hour TV network devoted to computers and technology. When I joined CNET the company consisted of Halsey, Shelby and their admin. I guess that would make me employee number 4, except back then there were no actual employees.
Some of the early CNET business meetings were held in the dining room of my old place in the Berkeley hills. When CNET did finally get real office space the place most meetings were held was in an old railroad car that was bolted onto the front of the warehouse space which we dreamed would someday house a TV studio. That old railroad car office was really cool, and the TV studio got built.
I was part of CNET’s pilot TV shows, along with my pals Adam Curry and John Dvorak, who are still collaborating on things like the cool No Agenda podcast. I think the first pilots we shot cost well over a million dollars. We had really great Hollywood-class sets, designed by a brilliant award-winning art director, Fred Sotherland, and we had top-rate TV talent like Adam Curry, Kate Kelly, Richard Hart, Gina Smith, and some unknown named Ryan Seacrest, who hosted a CNET show called The New Edge, which gave Ryan his start as a TV Host. He’s definitely not an
unknown anymore, huh?
I was proud to be on CNET’s first show, CNET Central, and helped CNET raise money, rework the company strategy, and maybe most importantly over the long run, got them tapped into hiring people from my old company, Ziff-Davis. ZD wound up being the source of much of CNET’s top talent, both before and after CNET’s purchase of ZD Net.
Although CNET wound up shifting from TV to the web, their TV shows were probably the best tech TV ever done. Halsey Minor made a great hire and brought in Kevin Wendle, an amazing Hollywood wunderkind who created iconic TV shows such as Fresh Prince of Bel Air, and was President of Quincy Jones Entertainment. Kevin was an amazing talent and I felt privileged to be able to have worked with him and learn what real TV production was all about.
CNET got their shows distributed on USA Network and SciFi Channel, but the economics of TV are brutal. CNET had to pay to get the shows carried, and then give up part of their ad revenue as well. By the time you deducted the cost of producing the shows and other overhead, it was almost a wash. Around the same time, Bill Ziff decided to sell Ziff-Davis. That’s when I bailed from ZD.
When we were trying to figure out what to do instead of TV, we came up with the not very original, but very successful idea of just doing what Ziff was doing, but do it on the web instead of in print. This was the early 90’s and Web 1.0 was barely going. I used to explain the idea by saying that we could print just print one copy of the magazine on our server, and everybody would come over to our place to read it. Goodbye printing, shipping, mailing, newsstand, subscriptions… in other words, a lot of the basic expenses of print publishing.
After Ziff sold ZD, it got sold a few more times, and the instability made it easy to hire a bunch of my cronies from Ziff to come and work at CNET. The first ZD transplants were great people like Chris Barr, Lon Otremba, Paul Klein, Ellen Atkinson, and a host of others. Ultimately, the post-Ziff ZD got in over its head financially, and was drowning in debt. The company was forced to sell its online business, ZD Net, and more than just ironically, it wound up getting sold to CNET. That’s when a whole new batch of great talent came over to CNET, including my old buddy, Dan Farber. What a wild ride that was.
So, CNET, I hope your new marriage to CBS turns out to be a good one, and that you get showered with new resources and possibilities. And, hey, CBS… you just bought one of the Tiffany web sites… I hope you show them the respect they deserve and figure out how to learn from them… when it comes to the web, they are the experts, not you.
the original… even the box looks like the iPhone box.
selling the “hiPhone,” a crappy Chinese knock-off, and trying to pass them off to unsuspecting suckers as real iPhones. I quickly flagged his posting, and flagged it again after it quickly reappeared.
Sprint acquired Nextel for roughly $35 billion back in December 2004, so the $29.7 billion write-off means that Nextel lost 85% of its value in just 3 years. Some analysts are predicting that Sprint will wind up writing off the remaining $5 billion, making the Nextel deal a total wipeout.
running for President. But hey, Microsoft has to spend all that money they’ve been stockpiling on something!
But rules are made to be broken, right? So, I’m going to reverse the reverse direction of the blog flow.































































