"Tech Talk"-CBS Spins A New Cable/ Tech Web
Thursday, May 15, 2008SUSIE GHARIB: Shares of CNET Networks jumped almost 44 percent today after CBS agreed to buy it for $1.8 billion. The price tag, $11.50 a share, is a 45 percent premium over CNET's closing price on Wednesday. CNET was an early pioneer on the Internet and is now known for its technology reviews, news and advice. CBS says the deal makes it one of the 10 most popular Internet companies in the U.S. with about 200 million users worldwide. And Jeff, CBS also says that the combined company could generate annual revenues of $1 billion within the next two years.
SUSIE GHARIB: Why CBS wants CNET. Why Icahn wants Yahoo! And why Steven Spielberg wants to play with blox and wants you to play with them too. Our tech guru Scott Gurvey has all that and more in tonight's tech talk.
SCOTT GURVEY, NIGHTLY BUSINESS REPORT CORRESPONDENT: What do you get when old media combines with new? You might get a success story. At least that's what CBS hopes. As we reported earlier, the broadcast pioneer is buying Internet pioneer CNET for $1.8 billion. CNET has been around since 1993 when the worldwide web was young. It is the go-to destination for people looking for technical advice and product reviews. CNET owns two of the most valuable Internet addresses, news.com and shopper.com and most important to CBS, it delivers the young audience advertisers love. Analyst Leland Westerfield of BMO Capital Markets says CBS can make good use of CNET's eyeballs.
LELAND WESTERFIELD, MEDIA ANALYST, BMO CAPITAL MARKETS: CBS is a company with an underleveraged balance sheet, that is to say a lot of cash available to put to work. And with businesses that throw off a terrific amount of free cash flow and so I would suspect that this may not be the last time we hear about CBS making acquisitions in the Internet marketplace.
GURVEY: Meanwhile, investor Carl Icahn has his eyeballs on Yahoo! or does he? Icahn has been buying Yahoo! stock and he sent a letter today to Yahoo! threatening a proxy fight if the Internet company doesn't restart buyout talks with Microsoft. Since Yahoo! rejected Microsoft's bid, Microsoft has been saying it will grow its search advertising business itself. But industry insiders say Icahn would not be getting involved if he hadn't had some encouragement from Microsoft CEO Steve Ballmer. Analyst Jim Friedland of Cowan says Yahoo! shares are a trading buy.
JAMES FRIEDLAND, INTERNET ANALYST, COWEN & CO.: There is certainly some risk that the deal may not get done, but we do think there's near term upside here because we do think a deal's going to happen.
GURVEY: Movie mogul and director Steven Spielberg has teamed up with Electronic Arts to produce a video game for Nintendo's WII, the popular gaming system with the unique motion sensitive controller. It is called boom blox. I'll have to get an eight year old to really explain this game to me. But it seems you have to destroy things with the help of crazy characters like Marion McCluck, the bomb blox-laying chicken and Boots Beaverton, who likes to make the bomb blox explode. Spielberg says he created the game because he wanted something he could enjoy with his kids. Boom blox sells for $50.
You may recall in my last tech talk, I noted that Verizon had canceled two appointments to install its new fiber optic fios (ph) TV phone and Internet service at my New Jersey home. That triggered a call from Verizon executives and I am happy to report the installation has been made and everything is working well. It pays to have a big mouth. Scott Gurvey, NIGHTLY BUSINESS REPORT, New York.
