Jana said Cnet has failed to create shareholder value due in part to a focus on the development and acquisition of noncore assets such as its business site BNET.com, photo sharing site WebShots.com and comparison shopping site MySimon.com, while higher-traffic core assets such such as CNET.com, News.com, TV.com and Gamespot.com founder from a revenue standpoint. Jana's suggestions to lift traffic to these sites while keeping costs down includes everything from outsourcing ad serving, navigation and page optimization to focusing on search engine optimization.
Jana has partnered with investment funds Sandell Asset Management Corp. and Velocity Interactive Group, venture capital firm Spark Capital Management Partners LLC and technology entrepreneur Paul Gardi of Alex Interactive Media to take on Cnet. In a bid to take control of Cnet's board, Jana has nominated a slate of seven including its own representative, executives from Velocity, Spark Capital, Gardi, Yahoo! Inc.'s Overture Services Inc., Creative Artists Agency and LaunchBox Digital. Cnet said March 13 that it may appeal a court ruling that allows the activist investors to nominate seven directors to its board without violating the company's bylaws.
Jana's longer-term focus on revenue growth rather than more immediate value-creating moves such as a sale, spinoff or large share buyback is somewhat new to the activist -- or any activist for that matter. Is Jana taking a venture capitalist approach with a public company? Maybe that is why it decided to team up with a venture capital fund.
Cnet looks to have taken a gander at Jana's white paper and responded "to the extent there are any new strategies that would create stockholder value, they will be implemented." Cnet added that "while it welcomes the views of its stockholders, after a preliminary review, the white paper contains numerous misstatements and is misleading in many respects," noting that it will respond in due course. - Michael Rudnick
See the white paper from Jana [pdf]
See earlier story from Tech Confidential
See earlier story about appeal from Tech Confidential
See additional stories about Cnet from The Deal Blogs Network
Activist hedge fund Jana Partners LLC, which is embroiled in a proxy fight with Cnet Networks Inc., in a move to fuel its fire, devoted 38 pages in a white paper published on Tuesday on what the San Francisco online media company is doing wrong and what the fix may be.
