A quick post-announcement check-in with CBS digital boss Quincy Smith, and Neil Ashe, who will be reporting to him if CBS’ $1.8 billion bid for CNET goes through. The message: The deal makes sense because the two offer non-overlapping, complimentary assets that can grow faster when combined.
Cost-cutting? Sure, there will be some — during the conference call this morning CBS CEO Les Moonves and CFO Fred Reynolds talk about combining some of the companies’ ad teams/platforms. But folks (like the JANA consortium) who thought that CNET should have canned a third of its workforce years ago won’t be satisfied with current CNET CEO Ashe’s response: “This isn’t about cutting costs. It’s about building a large and profitable interactive business.” Adds Quincy: “It’s not like you spend 800 years on due dilligence [for a deal like this]…we certainly will look on the cost side, but frankly that’s on the integration piece.”
What about JANA? Have they floated this by the hedge fund and its partners? “It’s a great deal for all of our shareholders,” Ashe said. We asked him three separate times whether he’d had contact with the JANA group about the deal, and got the same response each time. But we have a sense that he’s right: Hard for the JANA team to argue with the return they’d get.
Why CNET as opposed, to say, Bebo, which CBS had looked at? Because CNET has real revenue and real profits (even if neither are growing as fast as they should). Quincy: “The other [option] is if we go out and buy a social network for $1 billion that generates a 76 cent cpm… We don’t understand that business. We do understand this business.”
Other deals? Les Moonves more or less said that he wouldn’t be making acquisitions of this size, and that other M&A work would be on a much smaller scale (Of course, as the NYT notes, back in 2006 Les talked about not spending $1.6 billion on YouTube, and now they’re spending more for CNET). And Quincy says that there’s nothing out there with similar size, opportunity etc. So what about WebMD, which a lot of folks are bringing up as a comp? That’s one vertical, while CNET is diversified, says Neil. Of course, Quincy is a deal guy, so he won’t say never: “I’ll never shut down an opportunity to look at an acquisition. But the decision is my made by my big boss.”
See Also: CBS Buying CNET For $1.8 Billion