CBS to Buy GameSpot Parent CNET for $1.8 Billion

According to Reuters and other news agencies, CBS announced today that it has reached a deal with CNET Networks to buy the web publisher for $1.8 billion (which is $11.50 per share and represents a 45 percent premium to the closing price on Wednesday). With the Internet stealing time from TV watching, networks need to find a way to

reach the web audience.

"When you can combine the entertainment assets, the news assets, the platforms that are available with technology, the cross advertising opportunities, it just gives us great scale," CBS Chief Executive Leslie Moonves said during a conference call.

In addition to gaining GameSpot, CBS will get ZDNet, TV.com, and UrbanBaby.com. The TV network hopes to use the deal to accelerate its web growth and complement its sites such as CBSSports.com and CBSNews.com. CNET Networks posted revenues of $406 million in 2007. CBS believes the acquisition will be accretive to earnings right away; the combined companies are expected to achieve sales of $1 billion by 2010 or 2011.

The deal is expected to close in the third quarter and represents the largest since CBS split from Viacom in late 2005. According to Moonves, the deal is going to be funded from excess cash on CBS' balance sheet and won't affect the company's dividend. When the transaction is complete, CBS's digital properties combined with CNET Networks will have a web audience of about 200 million users worldwide and 54 million unique monthly users in the U.S.

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