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CBS Agrees to Buy CNET for $1.8 Bil.

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NEW YORK CBS has struck a deal to buy CNET Networks for $1.8 billion in cash.

The deal represents CBS' biggest move yet to become a major player in online advertising. It would add to the company one of the most highly trafficked collections of Web properties, including the tech-focused News.com and ZDNet, gaming site GameSpot, music destination mp3.com and a series of venues in entertainment and information.

CBS said it would combine those assets with its existing Internet properties, which would make the company one of the top 10 U.S. Web firms with 54 million monthly users.

CBS has been assiduously building its Web presence over the past 18 months, since bringing in Silicon Valley deal maker Quincy Smith to lead its strategy. In addition to CBS-branded Web properties, it has launched a content and ad network of 300 sites. CBS has also made several smaller acquisitions, such as finance video blog Wallstrip, high-school sports destination MaxPreps.com and music discovery site last.fm.

While social networks are the hot properties of the moment, CBS is doubling down on premium content, Smith said, anticipating a greater shift of brand ad dollars online.

"It's a business that's easy for CBS to understand," he said. "The bulk of the [online ad] revenue has been search. What else is there? CNET is making a good living off online content."

CNET was one of the largest remaining independent content properties. It reported revenue of $405 million in 2007, but it has seen traffic to some of its tech sites eclipsed by the rise of blogs. Former company executives also were ensnared in an options-backdating investigation in 2006. CNET CEO and founder Shelby Bonnie stepped down in late '06 on account of the probe.

Neil Ashe, CEO of CNET, said comparisons are "apples and oranges," particularly because CNET is a "multi-property large platform business that has proven adept to adopting to changes in Internet media."

He added, "CNET is a Web 1.0, 2.0 and Web 20 company," pointing to the rapid development of BNET.com, a small business site CNET launched in three years ago.

CNET's board unanimously approved the deal, which will pay the company $11.50 per share. CBS expects the transaction to close in the third quarter. The bid represents a 45 percent premium above CNET's closing share price of $7.95 on Wednesday.

Unique Visitors in Millions, 2008:

CNET Networks
Jan: 34.122
Feb: 32.284
Mar: 33.051
Apr: 31.394

CBS Corp.
Jan: 24.298
Feb: 27.017
Mar: 31.923
Apr: 26.526

(Source: Nielsen Online)