When I worked at IGN, I recall the hatred and disdain the brass there had for CNET. CNET owned Gamespot.com, IGN owned both GameSpy.com and of course, IGN.com. Not being a gamer, I did not get the rivalry.
That, was child’s play compared to the competition between Rupert Murdoch and Sumner Redstone. The former went on to buy IGN Entertainment for $650M in 2005, the latter’s CBS (where he is Chairman) today acquired CNET for $1.8B.
I think the war of the media moguls just escalated a tad today.
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WatchMojo NewsletterCBS - who last year made a splash by buying music-oriented social media site Last.fm for $280M today bought uber 1.0 web site CNET.
Earlier this week, a VC told me that “social network” has become a taboo word, even though just last year you saw a herd rushing towards more investments in the space.
Yesterday, eMarketer slashed social media advertising estimates, with Facebook’s downgrading in tandem.
This morning, an executive I know whom had left a quality programmer for a social media network all of a sudden pulled a 180-degree turn and got back into content.
Hmm.
Is it just me, or are you seeing a flight to quality programming and the validation of the “content is king” mantra rising?
Bear in mind, Sumner Redstone coined that term, and he just plunked $1.8B for CNET.
By virtue of being one of the oldest Web companies out there, CNET has a lot of really neat-sounding URLs on its balance sheet.
The problem, however, is that a good URL does not a business make.
While CNET has launched TV.com, it is not a must-see-destination.
It also owns Radio.com, but that too does not cause waves. Sorry for the pun.
In fact, historically generic names are not favored at all:
- Search.com (incidentally, owned by CNET, too) is no Google.
- News.com (incidentally, also owned by CNET) is no CNN.com
Even things like Cars.com, Travel.com, etc. have competing business such as Autobytel.com and Expedia, for example.
Ultimately, there can be a hundred ways to go about developing (if at all) Radio.com, News.com and TV.com. After all, CBS is:
- The #2 in Radio (after Clear Channel)
- The #1 in TV (ahead of ABC, NBC and FOX).
However, these URLs are double-edged swords: creating any business and brand around a generic name is a bad idea legally. It is very hard to trademark - and defend - something generic like Mojo, but WatchMojo.com? That is doable.
Ultimately, managing all of the assets within the CNET empire is going to an enormous challenge, but one that CBS CEO Les Moonves is sure to welcome. After all, CNET has its denigrators, particularly in Web 2.0 gaga San Francisco… but much like 2005’s shopping spree catapulted Rupert Murdoch into the webosphere, Quincy Smith has started to digitize CBS to some extent.
Armed with CBS’ billions, admittedly that is the easy part.
When News Corp. bought IGN Entertainment, the idea was that between IGN’s content businesses (IGN.com, RottenTomatoes.com, etc.) and technology (digital download business, in-game advertising), the sum of the parts would be moving the needle. But in the end, IGN has been a relative disappointment… and a flop next to News Corp.’s other big purchase: MySpace.
All to say, while CNET brings alot of good stuff to CBS, sometimes trying to shove too much in a bag creates a mess.
All in all, it will be interesting seeing how this plays out… As they say: talk is cheap, execution is all that matters (not sure who says that second part, but you know what I mean).
In 2005, News Corp. bought MySpace, a social networking site with a music affinity.
Then, it bought IGN Entertainment (where I was employed at the time at one of its many subsidiaries), a gaming-oriented site.
It also bought Scout Inc., a sports community.
What about CBS?
CBS starts off buying MaxPreps - similar to Scout.
Then it buys Last.fm - a music oriented social network.
As we called it in April, CBS just now bought CNET - essentially a bigger, slightly more diversified and older IGN Entertainment.
Is it just me: is that a coincidence of big media’s playbook.
Check out Center Networks’ live coverage here.
One by one, they pick up the baton and run with it.
News Corp. Chairman and Rupert Murdoch had mentioned how he had become enamored with the Web because with very little investment, he got abnormally positive returns. So off he went.
After remaining largely quiet for a decade, News Corp. got serious about the Web in 2005 and spent nearly $2B buying up Intermix (parent of MySpace), IGN Entertainment (that’s how they inherited me for a few months), Scout Inc., and then capped off 2007 with purchases of Strategic Data Corp., Photobucket, Flektor.
But, by 2007 the buying spree was over. His Chief Buying Officer Ross Levinsohn left for greener pastures, launching his own investment fund with former AOL Chief Jon Miller, merging with ComVentures.
Then last year, CBS picked up the mantle of Chief Acquisitor by buying Last.fm and Wallstrip. While relatively small, you could see there was more in store, especially with former Allen & Co. Quincy Smith being brought in as CEO of CBSI, reporting directly to CBS CEO Leslie Moonves, and Yahoo!’s former corporate development executive Michael Marquez rounding up the team.
We then commented: is CBS the new News Corp. in that regard?
Perhaps. Today they made it official: CBS spends $1.8B to buy CNET. There will be those who say this was a lot of money for an old Web company, but CNET is a proven business with $400M in annual revenues and over 100M global users, propelling CBS to become a Top 10 Media Property in the US.
Of course, we always liked this idea, even prompting CBS to do so just back on April 14th.
The point is: TV-based media companies need to buy and buy big time, otherwise the future looks awfully like print’s past: downwards and smaller.
Wow.
A couple of weeks ago I ran down a number of companies CBS should buy and concluded: CBS should buy CNET.
Quincy and Mike, you can send me my M&A consulting fee, made out Granicus Group. Jokes aside, this is a good move as it adds $400M in annual revenues to CBS Interactive at 4.5x revenue (pretty decent). With over 100M uniques, this gives CBS a lot more leverage.
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