With CBS Corp.'s $1.8 billion purchase of Cnet Networks Inc., we're again reminded that strategics are back at the helm of dealmaking. The renewed power has created a heady atmosphere for corporate dealmakers willing to make bold moves, as evidenced not only by the CBS offer, but also by the Microsoft Corp. bid for Yahoo! Inc., the Blockbuster offer for Circuit City Stores Inc., the Cablevision Corp. purchase of Newsday, and Hewlett-Packard Co.'s deal for Electronic Data Systems Corp.
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These combinations -- some of which defy logic -- have observers often wondering why, and BloggingStocks wasted no time calling the CBS-Cnet deal "the weird deal of the year." Like the Cablevision-Newsday deal, it's possible to extract a rationale for CBS' purchase even when it eludes others.
In the case of CBS-Cnet, the so-called synergies lie in core demographics. By the very nature of Cnet's tech focus, its audience features the increasingly hard-to-reach 18-to-34-year-old men who prefer "Grand Theft Auto IV" and "Indiana Jones" to TV viewing -- unless there's a ball game on, of course.
Additionally, Cnet has a wealth of videos -- some of which are available via cable on-demand services. It's not hard to imagine CBS potentially parlaying that content into a new cable channel to prop up its anemic offerings of CSTV and Showtime (which is now facing new competition from Paramount Pictures Corp. and Lions Gate Entertainment Corp.). A tech-focused cable network would complement the equally male-oriented college sports channel CSTV.
Finally, Cnet offers CBS a stronger net presence, something it has sorely lacked since parting with Viacom Inc. As a matter of fact, some Cnet properties -- Gamespot and UrbanBaby come to mind -- will pit CBS against its sibling's online properties, such as Gametrailers and ParentsConnect.
Either way, it looks like CBS chief Les Moonves is slowly rebuilding CBS into a more complete media empire that not only offers broadcast but cable and Internet. Of course, if shareholders side with BloggingStocks, then Cnet could be Moonves' swan song (for more on that, see the next issue of The Deal newsweekly's Backstory media column). - Matthew Wurtzel
See story about CBS-Cnet from Dealscape
See story questioning CBS-Cnet rationale from BloggingStocks
See story about rationale for Cablevision-Newsday from Dealscape
