Why CBS Bought CNET, And Not The Other Way Around
Michael Arrington
81 comments »
- 1999: CNET is a $12 billion company
- January 2000: CNET Aquires MySimon for $700 million
- October 2000: CNET Acquires Ziff Davis (ZDNet) for $1.6 billion (after the March 2000 stock crash)
- July 2004: CNET Acquires Webshots for $70 million
- October 2007: CNET Sells Webshots for $40 million
- May 2008: CBS Acquires CNET For $1.8 billion
CNET announced its sale to CBS, a $16.5 billion company, today for $1.8 billion. In late 1999, though, CNET was a $12 billion company. They subsequently acquired MySimon for $700 million and ZDNet for $1.6 billion, and it’s been all downhill for CNET’s market cap since then.
So why didn’t CNET continue to grow and ultimately take over a media dinosaur like CBS, instead of the other way around? Perhaps it was because they did deals like buying Webshots for $70 million and then a couple of years later selling Webshots for $40 million. Or perhaps it was because they failed to realize the importance of blogs until 2007. Whatever the cause, or causes, CNET failed to disrupt the old guard, and will find itself to be a footnote in Internet history rather than the headline it should have been.
Micheal, October 2007 is when CNET sold Webshots for 45million in cash.
your bullet itelm is off by a few years
After all, comparing 2008 to 1999?
Again, there you go with a less than credible ramble. To insinuate that CNET might be in a position to purchase CBS (today) had they recognized blogs earlier just tells me that you, sir, know little about this industry or about business. I’m no fan of CNET’s and will concede that they lost their edge a long time ago. This happens to companies after 10-12 years in business.
Add up all the blogs in the United States and give them to CNET (for free) and they still wouldn’t have the heft to buy CBS — CBS has a $16B market cap. Stick to writing about little start-ups. Your thin knowledge of the industry is remarkable. I, for one, don’t buy what you’re selling.
Strange that they wouldn’t recognize how important blogs are becoming till 2007 - baffles me.
Peter
do you follow me @ http://twitter.com/peterurban
is anyone covering the apple store opening in boston? its awesome
$12B was a “pre-bubble” valuation…CNET survived where most Web 1.0’s failed…to argue that CNET was a better media property then compared to what it is now is somewhat foolish. I’ll look elsewhere for objective commentary on this deal.
i remember that they’ve had an saas directory site called webware.com back in 2000, which was very early, maybe too early
http://web.archive.org/web/200.....bware.com/
Typo: Webshots sold in October *2007* , not later in the same year October 2004.
@2 I agree. How is 1999 relevant to the purchase that happened 9 years later. Even if they were a 12 billion company now, for the sake of argument, they would still be smaller.
I love CEO announcements that say “This is exciting” Wow, you sound excited man. Your carefully chosen words are catchy.
Pasan,
What is your Tech website please? Would like to read about your extensive knowledge
The mySimon acquisition was one of the harbingers for CNET. Although mySimon was bought at an outrageous price, it was the best thing in shopping at the time (2001), hands-down, and in a position to own the space. Had management been smarter and integrated mySimon the right way, it could have helped CNET become a real leader. However, they did not understand how to deal with it and so they botched the opportunity. Not knowing what to do with it, they cut staff by over 80%, and left it to wither on the vine (where it still sits, hanging on). CNET, with mySimon in its backpocket, could have done great things.
So your target just got bigger. Now you’ll have to try and take down CBS.
Terrible analysis.
Everyone was overvalued in 99 - making big acquisitions, therefore, was not a bad thing as long as it is bought with stock. Yahoo did the same thing.
as far as i konw, CNET china is doing pretty good… i enjoyed the original contents they published, and i hope CNET will continue to survive as a BRAND in the future instead of “being a footnote in Internet history”.
You missed the bullet point for when you asked CNET to buy TechCrunch for around $8 million. Wasn’t that back in 2006 some time? Funny how your “analysis” of CNET has changed since then.
What strategically could C|Net have done with blogs? Which part of the blogging revolution would have benefited them? Was it LiveJournal (personal online journals), Blogger (mainstream ‘blog’), or Twitter (microblog) that could have saved them? Should they have gotten into the distribution-end of the business and bought those companies?
Or are you inferring to the fact that regular folks acting as journalists covering tech news was what C|Net missed out on? If that was the case, what could they possibly have done? Give every Joe Schmo’ without credentials a domain name and let them have at it? Buy up every up and coming blogger?
C|Net is a new media business still playing in old media. Bloggers-cum-journalists are the end result of benefiting from tech innovation, these two things don’t correlate.
calling cbs a media dinosaur and thinking cnet ever had a chance to be an AOL? rofl good one.
Why in 2009 Fox Will Buy TechCrunch, And Not The Other Way Around
a) Fox has the larger “natural” audience, and therefore a higher valuation.
b) All these new companies in the Valley are one hit wonders — Arrington never managed to grow CrunchGear or Gillmor Gang to the level of TechCrunch, and — unlike ZDNet — wasn’t able to bring the international TechCrunch sites on a level comparable to the US original.
It’s all about scaling…
sure a lot of public companies peaked in 1999. But the winners recovered. Here’s why Amazon is not now a subsidiary of CBS, or whoever.
http://finance.google.com/fina.....AMZN&
Michael,
A little bitter, aren’t we? Could this have anything to do with the fact that CNET decided not to buy Techcrunch awhile back?
Alaska,
All terrific questions. There will, of course, not be quality answers forthcoming. You need to visit AlleyInsider.com for competent analysis of this industry. You won’t get that from TC — this site is great for start-ups and rumors. Oh, you’ll also gets lots of inane conjecture (like the post above) but it rarely has anything solid behind it.
Long live AlleyInsider.com!
@22
Been reading TechCrunch since day 1, this site’s has its ups and downs. AI is shaping up to be a pretty good analytical source recently. Much better than Mashable, aka cut’n'paste PR flubs.
Standard Oil could have bought them both for nothing! Stupid Rockefeller.
Mike, come on man.
This is just so lame. You are grabbing for straws because a company that you LOVE to bash on (CNET) actually made an AMAZING move. You are a hard headed punk who can never admit when he is at fault or when something good happens to someone he may not like.
Its a bit pathetic, considering how you have been blowing up your new content partnership with WSJ.
This is a GREAT opportunity for all parties involved and its time that you change to and objective reporting style from your now “aw, MOMMMM he stole my icecream cone….wahhhhh” style.
Interesting and slightly off-topic thought:
CBS will now own the domain “news.com”. If I were CBS, I would use that domain for CBS News, not C|Net’s tech news focused site.
Anyone else agree or disagree?
Mike made what appears to be a serious statement above: ” the good ones (companies) recovered since 1999″. I’d like for Mike to prove this is true. Which public companies, from back around 1999, have recovered their stock prices since the top of the bubble? Of course to do this properly one would have to look at any acquistions and back them out. The fact is that I don’t think the facts back up Michael’s statement but I’d love to have him prove me wrong. One has to parse everything he says these days.
Now and again, the bitterness that is Arrington is exposed for all to see. Mike, you are not ever going to be in these guys’ league.
Scott K,
Totally agree with that. It’s a great domain and CNET owns lots more like that one.
@90’s.
I could not agree more.
Mike, big suggestion for you, i promise it will change you LIFE.
Read Dale Carnegie’s “How to win friends and influence people”
#26 Agree
@26 disagree.
It will become an integrated news/tech news property, think financial times for technology and all that is influenced by it, which is everything. It will be very powerful.
I think CNET is a cool guy. Eh tech news first and doesn’t afraid of anything.
Mike’s right about CNET. They were such an undervalued company. They lost control of their armada a long time ago. The bubble had nothing to do with it. Amazon is a great example. They’ve been able to create profitable subsidiaries and products. CNET has a treasure trove of generic domain names, a portfolio alone that is worth $300M easily. Instead of taking advantage they didn’t innovate. Didn’t create good products (or properly market them..IE: AllYouCanUpload.com) and this is the result.
It’s a shame to think that nothing will change now that CBS has their hands on it. CNET R.I.P.
The once high flying company with such promise has waved the white flag.
Mike you should have a “Dead Pool” for flameouts.
here’s a real analysis, couresty of readwriteweb. read it, mikey. maybe you’ll learn something.
btw, jealous green is not becoming on you. LOL
CBS bought CNET for Gamespot.com period. Look at the insane sales of GTA 4 on its first week release. They are finally catching on that gaming rules now and for the future.
Just as an example. CreditCards.com has been able to take essentially the best generic domain (for that vertical) and through SEO, arbitrage and really no innovation (a basic website) they’ve created a hugely profitable business that was well on it’s way to a breakout IPO.
What they did, CNET should have done. Search.com - Kids.com - Computers.com - Radio.com
The list goes on and on. CBS share holders should put pressure on CBS to develop now.
Andy what do you think they could do (besides a re-direct) with VideoGames.com (another CNET domain)?
Mike you used to work in the domain industry. What do you think about all of this? Do you agree that CBS is just going to sit on these domains?
Anyone remember http://www.refer-it.com? Another cnet property that has been dead for years. I wonder what CBS would do with that?
Congrats to Alan Meckler on the sale.
Readwriteweb’s article was excellent, trustworthy and on the money. I actually believe everything in their article to be true.
Yeah they were way late on blogs but what blog company is worth $12 billion. In your rundown you somehow forgot to mention that a $12 billion valuation in 1999 was ludicrous.
what i find interesting is that facebook is said to be worth about the same as cbs.
the valley is the land of make-believe.
… What exactly is your role at techcrunch, Michael? Seeing as you bring no value to the site.
i’ve been waiting for crap like this from mike since i heard the news this morning and i think i love reading these articles a lot more than the pathetic post. but that’s not saying much.
mike, get over it. if you play nice then the big boys might let you join in one day. but nobody wants to have a crybaby around.
oh some advice, try selling your little blog to fox news. you two both seem so FAIR AND BALANCED! =)
People keep beating that Facebook valuation to death. It’s not worth what Microsoft paid. That wasn’t a VC investment.
It was payoff money. We provide your ads, you keep Google out we’ll take a very small piece at a huge valuation and Mark can now finally get a Bugatti.
Although when you look at what some people are willing to pay for Bebo…….
CNET also owns radio.com, tv.com, and a few other great domains. Halsey Minor also nabbed coffee.com, but I think traded it to peet’s for a lifetime supply of coffee or something silly.
ever since they started reviewing CARS, something didn’t seem right… what are computer geeks doing reviewing cars??? lol
CNET would never have the money to buy something like CBS.
Some recent comps:
Bebo (to be crushed by FB)
TimeWarner
$850M
3/13/08
18M uniques WW/mo.
2M US uniques/mo.
$47 paid for WW unique, $425 US unique
Plaxo (spam engine)
Comcast
$160M (approx)
5/15/08
1.2M WW uniques/mo
600k US/mo.
$133 paid for WW unique, $267 US unique
CNET (profitable, but uninteresting)
CBS
$1,8B
5/15/08
200M WW uniques/mo.
54M US uniques/mo.
Paid $9 WW unique, $33 US unique
Your post is very revealing on how naively you see things.
CBS should have given that 1.8 billion dollars to Bruckheimer. A way better ROI. CNET was a web 1.0 dinosaur about to be extincted.
hmmm . . . seems like the question is not “how did they blow their $12 billion market cap” . . . it is more like “how the heck did a news site ever get a valuation easily 10x its worth?”
kinda funny that techcrunch is taking the bubble 1.0 valuation seriously . . .
Mogilny — haha nice. Extincted. Obviously all you haters are of the same breed.
I think Martin’s analysis of Plaxo VS. BEBO VS. CNET acquisition prices is a very good indicator of how skewed the market is. CNET could have been a launching platform for a number of web services. As far as the valuation going from $12B pre-bubble to $2B post bubble. Companies weren’t valued at logical levels. CNET network isn’t just a news site. It’s a true web based media company. They have the ability to promote their own properties heavily within their own network. CNET CPM actually sells for far more than say a dejour web 2.0 social site. Facebook/Myspace. But they still could target and promote their own new verticals instead of running lower priced ads that are performing(selling) poorly.
Look at kids.com. It’s a parked page that gets more than 50,000 uniques (type in traffic) a month. (According to compete.com - my guess is that this number is low) You may think that doesn’t represent a large audience, but in terms of scaling quickly and not having to spend a fortune to enter the market place and it’s huge. Chat.com is another example. They receive more than 60,000 uniques of type in traffic a month. It’s a re-direct. CreditCards.com because the market leader in credit card application/ customer acquisition in large part due to the domain and aggressive marketing.
When you take a category killing domain (IE: creditcards.com) and put SEO, SEM and affiliate marketing behind it, it’s a receipe for success. CreditCards.com financials: “For the first nine months of 2007, CreditCards.com reported net income of $2.3 million on revenue of $44.6 million, compared with net income of $15.2 million on sales of $29.9 million for the year-ago period.”
The problem is that CNET didn’t execute well. And it’s a damn shame. But I suppose it’s easier to just park a site, or have it redirect to your main property.
It makes more sense to create a very well executed photo-sharing tool like
allyoucanupload.com but not call it upload.com or uploads.com when you own both domains.
hope this will not affact some of the open source projects from cnet
In 1999, CNET paid $20 million to buy Nordby aka PrivateWire. The same unit was sold to FinancialContent for $1 million in 2003.
I used to be part of a community called TvTome, it had an actual “neighborhood” feel. Than, three years ago, CNet bought it and it’s new site, tv.com, was and still is ugly and depressing. Now CNet has gotten it’s just desserts
Crybaby… pathetic… among the proper words used to describe your attempt at putting down a good move from Cnet.
Posts like this make blogging a lesser job than real journalism.
I’m no longer reading this “publication”, end of story
you guys don’t get the big game, just hang around in sub $3m revenue land scratching out breakeven on $1 cpms at best. big media wins always and little ‘web 2.0′ land is just noise and r&d - the reality is that TechCrunch is meaningless to marketers and always will be. comparing to CNET.com is laughable in every measure, traffic, revenue, cpms, reach, brand… blah blah..
Mike, this is really about your exit strategy being sold. Rumor has it just a few days before your rant about rolling up the blogosphere and killing CNET you were at headquarters trying to sell TechCrunch to them for $20 million to $30 million or so. Now you’re obviously pissed because your most likely buyer is now owned by CBS. You are the parsley on the steak of irony, dude.
Michael, thanks for pointing out CNet’s plain ol’ fashioned value destruction. However, value destruction in the valley is no big deal. No one is accountable for their strategic misteps here. Funny, in a town that likes to use words like “strategy” and “innovation” it’s interesting to see how little of it there really is.
Scott K, I think CBS having news.com is the biggest irony of them all considering what has happened with CBS’ news organization over the last decade! “News.com! Starrying Your Favorite Blogger — Katie Couric! We’re so Internety!”
No innovation or foresight here.
Arrington’s ability (range) to process information and put it in context is staggering (post after post after post). That said, I do not totally agree with his basic premise on the inefficacy of CNET (a major TechCrunch competitor). Certainly, market cap is a powerful and proper metric, and as the expression says, “the numbers don’t lie”. But you have to look at the landscape. Yes, Amazon is an exception, but most cap darlings of 1999 in our overall (Internet etc.) space don’t exist. That’s why they call it the dot.com BUST. Within that context, being alive at all, and being purchased by a major media player like CBS (let’s not debate how major they are, that’s a tangential discussion) is a win. Not a loss. Not a staggering win, but a win nonetheless. The more interesting issue, for me (arises in my mind) is what TechCrunch may do in response. I wouldn’t be surprised at all to see TechCrunch announce a significant round of financing, start roll up purchases, etc.
wWoWw I thought it would end up being the other way around. Matters how you see it i guess. Maybe C|Net wasn’t able to keep up.
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@35 and @40: Thank you for referring ReadWriteWeb’s article:
CBS Pays $1.8 Billion for CNet: CNet Shows How It’s Done
http://www.readwriteweb.com/ar.....s_cnet.php
CBS got some Priceless, strategic domain names that are ready to bust out mainstream style. Time for cbs to put the newscorp style spin on there new network of common sense keyphrase self propelled web properties. Not the best portfolio but definitely in the top 5 all time greatest. This portfolio does have some meat and potatoes on it. It only takes one premium domain channel to blow up and wella CBS is now on the mainstream map. Rupert did it with one keyphrase personalized domain name. Cbs now has a arsenal of premium domain channels that are very easy to embed in the minds of the masses. At least they wont be peddling a domain name like hulu. Strategic keyphrase domain names are the most valuable properties on the planet. question: Where would myspace.com be if it was called bebo.com or hulu.com. I remember how much i was forced to swallow the name yahoo when it came out. The properties acquired are on the tip of the tongues and minds and just need to be commercialized. Extreme Potential. The conceptualist Sahar shared some thoughts on the subject.
http://www.conceptualist.com/2.....potential/
Cbs now has a beachfront footprint in the sands of our digital universe.
Kids.com, Help.com, Computers.com, Download.com, Online.com, TV.com, Upload.com, News.com, Search.com, Com.com, Builder.com, Gaming.com, Shopper.com, Marketplace.com, Updates.com, Store.com, Buying.com, Chat.com, Welcome.com, Browser.com, Shareware.com, Freeware.com, Auctions.com, Labs.com, Community.com, Silicon.com, Radio.com, mp3.com, Future.com, Events.com, Tunes.com.