Old Media Buys Newer Media:CBS $1.8bn deal for CNET
This is an interesting deal: CBS paying a nice premium for CNET Networks. Here is the story by Steve Gelsi at Marketwatch:
Upon closing, CNet Networks' sites will be combined with CBS's existing Internet unit, which oversees CBS.com, CBSSports.com, MaxPreps.com, CBSNews.com, last.fm, Wallstrip and MobLogic.
Analysts cautioned while CBS stands to benefit from the move, the premium it's offering may be questionable.
Chart of CNET
"It's a very efficient way for CBS to expand its advertising reach, by offering CNet advertisers the chance to bundle ad buys across more of its properties," said Sarah Rotman Epps, an analyst at Forrester Research.
However, CBS could be overpaying for CNet's aggregate monthly audience of more than 140 million users, Epps said.
Underscoring the risks of the deal, Jason Bazinet of Citigroup pointed that the overall advertising climate has been "sluggish" due to a weakened U.S. economy.
The key challenge for CBS, said Bazinet, will be how to sustain the premium rates CNet's sites have been able to charge advertisers. He estimated that CNet has commanded about $12 per thousand page views, "well above" rates earned by rival Web sites.
Marketwatch used be called CBS Marketwatch - a joint venture between Financial Times publisher Pearson and Viacom, the owner of CBS. It was sold to Dow Jones in January 2005 for $500m. Is this CBS taking another shot at becoming a strong online publisher? Will it be more successful this time? It's often difficult to change the culture of a company and at CBS the culture is strongly based in what used to make a lot of money for the company: TV.