CNET didn’t formally respond to our friendly offer two weeks ago, and now another group has launched a hostile play for the company. And, boy, is it hostile. This morning, JANA released details of its plan. (*NEW: CNET’s wimpy response)
JANA Partners will nominate 7 directors at the next shareholders meeting–2 to replace the 2 up for election and then 5 more after JANA succeeds in amending the company’s bylaws to increase the number of directors to 13. Note that JANA isn’t offering to buy the company. It is trying to invade the boardroom and take it over. If it is successful–and given the hammering CNET shareholders have taken over the past decade, success seems a reasonable possibility–the new board’s first order of business will likely be to fire CNET CEO Neil Ashe and other members of his senior team.
JANA and its partners currently own 8% of CNET’s voting stock and JANA has an additional approximately 8% non-voting economic interest in CNET. Sandell Asset Management Corp., which has agreed to support JANA’s effort, has a separate approximately 5% non-voting economic interest. (Thus the “21%” the NYT noted this morning)
JANA’s CNET restructuring plan is similar to the one we proposed last week:
— Maximizing Core Strengths [e.g., focus the company on what it does (or at least did) well: technology coverage.]
— Driving Traffic and Increasing Revenues: JANA’s nominees if
elected will seek to broaden the reach of CNET’s properties by
implementing intent-driven media strategies that better
connect consumers with relevant content, which in turn will
enhance revenue realisation through optimised ad serving.
— Focusing on ROI and Key Metrics: JANA’s nominees if elected
will bring a disciplined, return on investment-oriented
approach to CNET’s Board of Directors, which JANA believes has
pursued growth through expensive non-strategic acquisitions
and investments but has not delivered significant organic
growth in CNET’s core business.
The following two individuals will be nominated to replace the two
directors who will stand for re-election at the 2008 annual meeting of
— Paul Gardi – Managing Member, Alex Interactive Media. Former
CEO of IAC Advertising Solutions; former EVP, GM for Ask
Jeeves, Inc., where he led Operations and Strategic Planning;
former President and COO of Teoma Technologies, Inc. He has
been instrumental in evaluating CNET’s operations and
developing recommendations for improving performance and
creating value should JANA’s nominees be elected.
— Santo Politi – Founder and General Partner of Spark Capital.
Former Partner at Charles River Ventures; former President of
New Media for Blockbuster Entertainment Inc.; co-founder of BT
Venture Partners; various engineering and management positions
with Matsushita Electric Industrial, Panasonic Broadcast and
Television Systems Company, and Weston Instruments, a
subsidiary of Schlumberger Industries.
In addition, JANA will propose to stockholders that they expand
the current CNET board from eight to 13 directors and fill the
resulting vacancies with the following five JANA nominees:
— Jon Miller – Founding partner, Velocity Interactive Group.
Former Chairman and CEO of AOL; former CEO and President of
USA Information and Services (which became IAC/InterActiveCorp
and Expedia); former Managing Director of Viacom’s Nickelodeon
— Jaynie Studenmund – Former COO of Overture Services
Inc./Yahoo! and former President and COO of Paymybills.com.
Current board member of Orbitz World Wide, eHarmony, Western
Asset and Countrywide Bank. Former board member of aQuantive,
— Julius Genachowski – Managing Director of Rock Creek Ventures
and co-founder of LaunchBox Digital. Former Chief of Business
Operations and other senior executive positions at
IAC/InterActiveCorp. Current board member of Website Pros, The
Motley Fool and Marc Ecko Enterprises. Former board member of
Expedia, Hotels.com and Ticketmaster.
— Brian Weinstein – Senior executive, Business Development Group
at Creative Artists Agency focusing on strategic acquisitions
and digital strategy. Mr. Weinstein has helped oversee the
incubation of multiple venture-financed Internet companies.
Mr. Weinstein helps lead Creative Artists Agency’s new media
advisory practice assisting corporate clients on traditional
media and content strategies. Founder and Chairman, The
— Giorgio Caputo – Managing Director, JANA Partners, focusing on
small cap and technology investments. Former Mergers &
Acquisitions Associate with Credit Suisse First Boston and
Equity Derivatives Quantitative Analyst for Lehman Brothers.
Separately, an affiliate of JANA today filed a complaint for
declaratory and injunctive relief in the Delaware Court of Chancery.
The complaint requests, among other things, that the court enjoin CNET
from rejecting JANA’s director nominations and proposals on the basis
of certain provisions of CNET’s bylaws which, according to CNET,
require stockholders to have held CNET stock for one year in order to
propose business or nominate directors. JANA and its Delaware counsel
believe such provisions, if interpreted in this manner, would be
impermissibly discriminatory and invalid under Delaware law.
JANA Partners LLC is a multi-billion dollar investment management
firm founded in 2001 by Barry Rosenstein.
Alex Interactive Media, LLC (“AIM”) is a private company focused
on leveraging its domain expertise in digital media and related
industries. AIM Managing Member Paul Gardi has committed to personally
investing $1 million in CNET equity.
Spark Capital is a venture capital fund focused on building
businesses that transform the distribution, management and
monetization of media and content, with experience in identifying and
actively building market-leading companies in sectors including
infrastructure (Qtera, RiverDelta, Aether Systems, Broadbus and
BigBand), networks (College Sports Television, TVONE and XCOM) and
services (Akamai and the Platform). Spark Capital has over $600
million under management, and is based in Boston, Massachusetts. Spark
has committed to investing $20 million in CNET equity.
Velocity Interactive Group, LLC is an investment firm that focuses
on digital media and communications. Velocity Interactive Group has
offices in Palo Alto, Los Angeles and New York. Velocity has an option
to invest $10 million in CNET equity.
Sandell Asset Management Corp. is a multi-billion dollar global
investment management firm, founded by Thomas E. Sandell, that focuses
on global corporate events and restructurings throughout North
America, Continental Europe, the United Kingdom, Latin America and the
Asia-Pacific theatres. Sandell frequently will take an “active involvement” in facilitating financial or organisation improvements accruing to the benefit of investors.
Business Insider Emails & Alerts
Site highlights each day to your inbox.