CBS (NYSE: CBS), in a bid to extend its online properties, announced today that it would purchase CNET Networks (NASDAQ: CNET) for $1.8 billion in cash, or $11.50 a share.
Through the acquisition of the popular Internet network, whose properties include ZDNet, news.com and TechRepublic, CBS is looking to build out its online presence and become one of the most heavily trafficked brands on the Web.
CBS, which largely sat out the cable channel buying boom in the early 1990s compared to its competition such as NBC, has been trying to leapfrog into the Web as a way to diversify its traditional broadcast revenues.
"There are very few opportunities to acquire a profitable, growing, well-managed Internet company like CNET Networks," CBS President and CEO Leslie Moonves said in a statement. "Together, CBS and CNET Networks will have significant additional exposure to the fastest-growing advertising sector and can accelerate our growth through a number of new content, promotion and advertising initiatives."
The deal comes as CNET has been struggling to stave off a group of activist investors led by the hedge fund Jana Partners., who have been seeking to take control of the company's board. Now, those directors have voted unanimously in favor of selling to CBS, with the transaction expected to close in the third quarter, pending shareholder approval.
Like many old-line broadcast companies, CBS has been trying to extend its Internet offerings as advertising dollars continue to migrate online. CBS has recently acquired smaller vertical Web properties such as the music site Last.fm and the celebrity site Dotspotter.com.
In March, CBS saw 28.6 million unique visitors to its Web properties, ranking it No. 24 in overall traffic according to online metrics firm comScore. At No. 16 on the same list, CNET sites had 34.6 million unique visitors.
CBS said that it expects the combined entity to bring in some 54 million unique monthly visitors, making it one of the 10 most heavily trafficked networks on the Web.
Just last month, CNET announced a partnership with Yahoo to syndicate its technology content and cross-sell advertising. The three-year partnership was widely viewed as a response to Jana Partners' agitating for the company to more aggressively court online ad dollars.
Moonves said that the acquisition will not change the terms of CNET's partnership with Yahoo, and signaled that he was optimistic about forming a closer relationship with the Web portal. CBS and Yahoo have struck deals together in the past, including a partnership to syndicate local news from CBS and share ad revenue.
CNET shares were up 44 percent to $11.43 in early trading.