We haven't heard much from the Jana Partners LLC contingent following CBS Corp.'s May 15 announcement that it would buy CNet Networks Inc. for $1.8 billion.
Jana leads an investor group that wants to nominate directors and raise other matters at CNet's 2008 annual meeting. The firms have criticized the media company for failing to translate its strong brands into shareholder value.
Tech Confidential spoke with a person close to the proxy process who said that Jana and its investor group, which own roughly 21% of CNet, is still reviewing the transaction. At first glance, the deal supports Jana's reason for going after CNet, the person said.
CNet's Web sites include News.com, TV.com, Mp3.com, MySimon and GameSpot. And CBS expects to use CNet to tap into the internet advertising market. This deal raises the question of whether any CBS competitors will decide to get into the game of buying internet content companies.
Here are three possible targets:
TheStreet.com (NASDAQ: TSCM) - This provider of business, investment and ratings content has $65 million in sales and a market cap of $236 million.
TechTarget (NASDAQ: TTGT) - This provider of online content for buyers and sellers of corporate information technology (IT) products has $95 million in sales and a $531 million market cap.
WebMD Health Corp (NASDAQ: WBMD) - This provider health information services to consumers, physicians and other healthcare professionals, employers and health plans has $332 million in sales and it's market capitalization is $1.7 billion
I think traditional media companies buying Internet ones could become a trend. It would only take two more such deals to make it one.
Online media company CNet Networks Inc. (NASDAQ: CNET) said late Thursday it may appeal to a court ruling that allows a group of investors to nominate seven directors to its board.
The Delaware Court of Chancery ruled earlier Thursday that hedge fund Jana Partners LLC, which is leading a group trying to wrest control of CNet's board, could nominate directors without violating the company's corporate bylaws.
Jana is taking on CNet with investment funds Sandell Asset Management Corp. and Velocity Interactive Group, venture capital firm Spark Capital and technology entrepreneur Paul Gardi of Alex Interactive Media. CNet said in January that the group's efforts to nominate two directors to board seats and then expand the board by five members to 13 from 8 were improper under its bylaws.
With the proposed Microsoft (NASDAQ: MSFT) and Yahoo! (NASDAQ: YHOO) merger grabbing headlines, for investors looking at the next internet company that may be put in play, have a look at CNET Networks (NASDAQ: CNET). CNET shares a lot of similarities with Yahoo!, the most glaring being the continued under-performance of both the stock price and the company in general.
About two weeks ago, federal antitrust regulators cleared hedge fund Jana Partners LLC's increased stake in online media company. Jana Partners leads an investment group that said last week it now owns 10.6% of CNET's voting stock, up from 8.1%. Antitrust law requires companies and other investors to seek antitrust approval when they cross certain ownership thresholds.
The timing is interesting. If you are trying to profit from M&A in the internet space, take a look at CNET. It may be the next company to be acquired.
Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. DISCLOSURE: Writer has no positions in any stock mentioned as of 2/3/08.
If imitation is the best form of flattery, then denial may be the best way to deflect criticism. That appears to be the tactic used by CNet Networks Inc. (NASDAQ: CNET) as it faces a potential takeover from hedge fund Jana Partners LLC.
During a fireside chat at a Citigroup Inc. conference on Wednesday, CNet chief executive Neil Ashe described a company that had overcome a number of challenges, is looking into new market opportunities and had generally a bright future. He made little mention of Jana's growing stake in the company, which now stands at 10.6%, nor of the escalating war or words between CNet, which has accused the hedge fund of trying to gain control at an unfair price, and Jana, which says it is being misrepresented.
Activist hedge fund Jana Partners LLC on Wednesday said it has raised its voting stake in CNET Networks Inc. (NASDAQ: CNET) to 10.6% from 8.1%, and it criticized the technology media firm for purportedly misrepresenting its intentions.
In a press release, Jana denied that it is attempting to gain control of the company "without offering sufficient value to all stockholders," as CNET contended on Monday. Jana managing partner Barry Rosenstein said the group's goal is to add qualified board members who would focus on creating long-term value for shareholders, not acquire the company on the cheap.
Rosenstein also said it was CNET's "own underperformance that makes it more vulnerable to an opportunistic acquirer looking to acquire it cheaply."
DealBook is reporting that Jana Partners is leading a consortium which has taken major stake in CNet Networks (NASDAQ: CNET). The consortium is trying to replace CNet's directors and take control of the company's board.
Jana Partners is a $5 billion event-driven hedge fund founded by Wharton grad Barry Rosenstein in 2001. The consortium focused on CNet includes Sandell Asset Management and Spark Capital, a venture capital firm.
CNet has performed poorly over the last several years, and is currently in the red. Despite the impressive growth of online advertising, especially at tech-related sites, CNet has experienced falling ad revenues. One problem may be that it is simply too big. The 15 year old company has over 2,500 employees, and finds itself competing with similar sites that have only a few dozen people behind the scenes. No doubt that will be something the activists focus on as they seek control of the company.
The performance at LookSmart (NASDAQ: LOOK) hasn't been too smart over the years. Even though the company is in the red-hot online advertising sector, it still can't seem to get an edge against Google (NASDAQ: GOOG), Yahoo (NASDAQ: YHOO), and Microsoft (NASDAQ: MSFT).
For example, in yesterday's Q3 report, LookSmart posted a meager 4% increase in revenues, rising to $12.6 million. There was also a GAAP net loss of $4.3 million, or $0.19 per share.
So to get things on track, LookSmart is rationalizing things. The company announced it has sold its FindArticles.com division to CNET (NASDAQ: CNET) for $20.1 million in cash.
FindArticles.com is a niche asset, with an archive of 11 million articles from more than 3,000 sources. And, for the most part, it looks like a fit for CNET. Expect other content deals from the company.
However, as for LookSmart, it still has a lot of challenges. The company slashed 25% of its workforce and isn't providing any revenue guidance. In other words, things are going to remain cloudy for some time.
Finally, visit DealProfiles.com to check out other recent M&A activity.
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We haven't heard much from the Jana Partners LLC contingent following CBS Corp.'s May 15 announcement that it would buy CNet Networks Inc. for $1.8 billion.
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