During a Q&A with analyst Imran Khan at the JPM Technology Conference, CNET CFO Zander Lurie had one major topic to discuss: the company’s recently announced planned $1.8 billion sale to CBS.
– What lead to the deal?: Lurie: Can’t say… back story will come out with the proxy in the next coming weeks (we’ll be curious to read that). But clearly: “We didn’t run a public auction.”
– Advantages: Cross promotion (radio, TV) and cross-selling. “Our pitch in the marketplace has always been premium demographics, premium content… where we have yet to crack the code is with non-endemics in many of our entertainment properties.” Scale matters when competing with sites like MSN or MySpace. This sounds very familiar. “This deal for CBS (NYSE: CBS) was not about synergies or cost cuts.”
– TV.com: Basically, there’s no plan yet on what to do with this valuable domain (just a pure guess: this domain will continue to go under-utilized, like so many other ultra-premium domains). “What CBS brings is some of the world’s premier content.” Interesting possibilities, said Lurie, include working with Hulu. The site will, obviously, have more access to broadcast and webisode content than it does now. More after the jump…
– Why the low breakup fee?: At 2 percent it’s low enough for another bidder to come in, which is consistent with the company’s fiduciary duty to extract the highest bid. (For more on the breakup provision see this recent discussion from at the Deal Professor)
– Competition from blogs: TechCrunch, SAI, GigaOM, et al? “What people don’t often comment about in the press… we do a lot of the things that the aforementioned bloggers don’t do.” Audience share in tech may have come down, but CNET (NSDQ: CNET) continues to dominate marketing spend. Nobody can cover it all.
– CPMs: Varies wildly. “By and large, we’ve seen CPM integrity hold its head up across the network… We haven’t seen what you saw in 2002, where everyone pulled the rip-chord.” No new economic trends since the last quarterly call.
– Reporting: “You have to have (the) in-house editorial staff… on the Microsoft-Yahoo (NSDQ: YHOO), Ina (Fried has) been key for breaking news.” It’s important to have a paid, top-notch reporting staff, but there are opportunities to partner with bloggers or other experts that aren’t necessarily compensated on a full-time basis.
Pic: Lurie speaking outside CNET’s HQ in SF, after the CBS-CNET deal got announced.