CNET fishing for the CBS acquisition will define hidden risk

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Veteran broadcaster CBS will be substantial cash gifts and "after 90" CNET achievements Bonenkai Shinnenkai marriage, however bad the industry background and the difference between the "generation gap" so that the couple were questioned more than received a warm blessing.

USA CBS (the CBS) announced that it would spend 1.8 billion U.S. dollars acquisition of U.S. veteran IT portal - CNET site (cnet.com). Under the agreement, CBS will pay CNET shareholders of the purchase price of 11.50 U.S. dollars per share, the price of a CNET in the May 14 closing price of 7.95 U.S. dollars premium of 45 percent. CNET also higher than the price the highest price over the past two years. CNET's board has accepted this quote.

CBS basis for the planning, after the completion of the transaction, CNET's Web site will be incorporated into the CBS news and sports sites, CBS radio and CBS television digital media platform, and the CBS network's audience distribution networks. This, CBS president and CEO Leslie Muwei Si (Leslie Moonves) said, CBS combined with CNET, will be in the fast-growing advertising market occupied an important position, but also by a large amount of new content, promotion and advertising program to accelerate Their own development. He expects the acquisition will be completed in the third quarter of this year.

Affected by this news, CNET shares on May 15 in pre-open trading in the Nasdaq rose 42 percent, rose to 11.30 U.S. dollars, while the other protagonists of this incident CBS has not been subject to benefit, and its shares in New York Stock Exchange before trading was dropped to 24.10 U.S. dollars, or three percent.

Major foreign media and analyst on CBS's The acquisition is not good. The storm-stricken Master of radio and television sector, for the acquisition of the incident is not really "stupid old to" »

Weak advertising market

Acquisition Shengbufengshi

China Internet analyst Lvbo hope that the transition coincides with the television media, the Internet video growing number of viewers, advertising revenue is also turning increasingly to the Internet and TV media are bound to self-built networks or through the acquisition of the Internet to accelerate.

Has been advertising revenue as the main support of the CBS spend lots of money to buy CNET's wishful thinking is based on this, the online advertising market quickly opened the road to the Nuggets. However, Ganzao than Ganqiao. The rapid growth of Internet advertising market before the economic recession in the United States lost the potential for development. As the economic recession, the overall U.S. ad spending growth is slowing down.

According to Bernstein research firm statistics, the 2007 fourth quarter, the overall cost of advertising the past five years the growth rate hit a new low, and this trend will continue. Internet advertising market weakness in the overall environment of weak growth also. IDC noted that in 2007 the annual growth rate of online advertising to 27 percent, the GDP reached 25.5 billion U.S. dollars, but the U.S. ad spending accounted for only 7%.

Tracking online advertising price index PubMatic company claimed that in 2008 the March to April, the advertising network of online advertising sales price dropped by 23 percent, of which large sites of the largest advertising prices fell, reaching 52 percent. The acquisition of CBS and the move is also hoped that through the development of higher prices to show ads to get the revenue increase. Analysis of the industry, this is not the ideal acquisition opportunity in the short term is likely to CBS.

Citigroup Inc. (Citigroup) analyst (Jason Bazinet) issued to investors of information that, "CBS is clearly trying to buy an ad rates' far higher than competitors' Internet content providers, The company will fight the networking giant, the company faced the first challenge is to maintain such high ad rates. "He wrote:" The weak advertising market and the acquisition risk Chibi Let us wait and see. "

In addition to the market, CNET's own advertising business can not be convinced of the investors. Investment Company ThinkEquity analyst William Morrison (William Morrison) said that in the past few quarters, the online technology advertising market has maintained a 30-40 percent growth rate, and CNET's core technology advertising business in 2007 , Fell 3-4 percent.

In addition, there are views expressed concern that, CBS acquisition of CNET's bid is too high, and pay a high price later, CBS has been the real problem - excessive dependence on advertising revenue sources of the status quo can not be effectively resolved.

CNET to the May 14 closing price of the benchmark, CBS included a share, nearly 45 percent premium to the bid, an analyst at Cowen and Company, Gekeluzi (Doug Creutz) directly to the acquisition known as the "impairment . " Cruz described by CBS do not agree with the "synergy" and reiterated the stock of CBS "weaker than market" rating.