CNET responded to Jana’s hostile takeover play by branding the move “improper” under the company’s bylaws. What it didn’t say, intelligently, was why the play was improper. According to the New York Times, the answer may be a silly technicality–that Jana and its allies haven’t owned 1,000 shares of stock for a year.
Instead, CNET’s management tried to scare non-JANA shareholders by suggesting that Jana’s efforts would benefit Jana, but not CNET’s other shareholders:
CNET Networks’ governance processes and by-laws are intended to enable all stockholders…to submit proposals, and to prevent short-term stockholders without standing from using the Company’s established governance procedures in order to further their individual agenda. Furthermore, the Company believes that no person or group of persons should be able to gain a majority of the Board and control of the Company without offering sufficient value to all stockholders.
Jana would no doubt be quick to point out that–if it and its partners benefit–other shareholders are going to benefit, too. Jana & Co. also immediately want to change CNET’s by-laws (presumably seconds before they fire CNET’s CEO), so the argument that the play is improper under the current by-laws is irrelevant.
Ultimately, like many takeover battles, this one will likely come down to public perception, and through their statements this morning, both sides are now appealing directly to other shareholders. After branding Jana’s play improper, for example, CNET’s current management defended its own performance and strategy, the latter of which is similar in some parts to that of Jana & Co’s (and ours):
Under new management, since 2007, CNET Networks has made significant strategic, financial, personnel and operational progress. The Company has sharpened its focus on core brands, disposed of underperforming assets, recruited industry leaders to replace almost half of its executive management team, made strategic acquisitions solidifying the Company’s leadership in key categories and geographies, and added two independent members to its Board.
CNET Networks continues to execute on its strategy to drive long-term growth by realising the full potential of its brands and pursuing new growth opportunities. CNET Networks’ board and management team have been and remain intensely focused on acting in the best interests of the Company and creating value for all stockholders. CNET Network’s board of directors is comprised of eight directors, seven of whom are independent. The management team is fully supported by the Board of Directors in these efforts.
To that last sentence, we would add two words: “for now.” Ultimately, this fight is about one thing: whether CNET’s current management team will be able to keep their jobs.
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