Rafael Sosa’s Weblog

For the past several months, I have been watching and considering an investment in CNET Networks, precisely because of its attractiveness of individual assets, which if spun off could suggest a much higher total worth than the current $1.3 billion. However, upon closer inspection of the individual parts, I am still not convinced that the sum of its parts, under current conditions, is worth more than its 1.3 billion. CNET is currently carrying too much fat and producing mediocre returns on their prime jewels. Take for instance News.com, which as suggested by the NY Times produced in October a mere 6 million page views, compared to 8 million page views produced by a small group of bloggers with minimal costs over at TechCrunch.

The key of course, is finding buyers for CNET’s crown jewels, which are:

• TV.com – This is currently a site which alone could be worth more than CNET’s current market cap, but the focus of the site is its main problem. TV.com is aimed at providing a TV guide resource – big mistake!

Instead, TV.com could become the place to go for TV watching, think YouTube or Hulu. Capitalize on the millions of confused visitors coming in from the highly marketed .TV extension. Strike deals with media companies to stream television through TV.com. Stream everything under the sun! Sell the idea to Mark Cuban, sell it to Murdoch. Try to get a link from future generation television sets that are integrated with wireless internet, so that TV.com is the link to online television. How many people are looking to buy a TV and just type TV.com? Have a section in the site for TV purchases, cable subscription services.

The current site is probably 10 to 15% of the traffic and revenues it could achieve.

My current price – $100 to 500 million. Future worth with minimal refocus – $1 to 5 billion.

 

• News.com – When you type News.com, the first thing you see is technology news. Get over it. If I want technology news, I will type TechnologyNews.com, Technology.News.com, or TechCrunch.com. I don’t even want to know how many of CNET’s 2,600 employees it takes to run this charitable venture costing investors $16.65 million last quarter. Again, as TV.com, News.com is being used for less than 15% of its capacity.

When I type in News.com, it should be news about everything. I want to see videos of what’s happening around the world. I want to get international perspectives for what is happening in the war in Iraq. People should find ALL possible resources on news information and be able to interact and contribute. Oh so many possibilities!

My current price – $50 to 300 million. Future worth – $0.5 to 1 billion.

 

• Download.com is fairly well developed and should fetch a good price. I don’t have specifics on how much it costs them to offer what they claim to be a, “a rigorous testing process to ensure it is safe and spyware free”. Unless this rigorous testing process is subsidizing a considerable number of employees, an automated system should not represent a considerable cost. Advertising money here should be flowing comfortably in the black.

My current price $50 to 150 million.

 

• Search.com – Wow, these people really knew how to pick their names. However, as Google becomes a household synonym for “search” I am less confident in this domain than what I would have been five years ago. I would assume that this is a rapidly depreciating asset and should have been shopped around much earlier. Sell it to Sahar Sarid for his search venture Assista. I am sure he’d appreciate the value it can bring to own the direct synonym to Google in his quest to take a bite of that space.

My current price $10 to 20 million (perhaps more depending on current traffic and revenue numbers)

 

• Chat.com – Give me a break! This baby redirects to cnet.com? Yes, it should be a crime punishable to death. Chat.com has no home of its own. I’ve personally shopped around to buy chat ccTLDs and have already developed one into a chat site. These sites are great, because they are cheap to build and to maintain, and user loyalty is huge. Chat.com is a dream domain with immense potential. I want it.

Suggestions for this site are obvious – build chat channels and capitalize on the type-in traffic, which will serve as the commencement of an avalanche of visitors. These people spend 20, 40, 60 minutes straight in a page. Even at $2 CPMs, this is one site that could produce millions. Instead, old grandpa CNET reasons – if they type in chat.com it must be they want to read technology product reviews! Shame on you CNET.

My price $300k cash, right now! OK, seriously – $5 to 10 million – and the 10 is pushing it, because there’s no community. This is just a domain name purchase.

Future worth – $10 to 50 million easy.

Mp3.com – $5 million

GameSpot.com – $4 million

ZDNet.com – 3 million

TechRepublic.com – $2 million

mySimon.com – $1 million

UrbanBaby.com – $500k

Chow.com – $300k

As you can see from current conditions, a $1.3 billion market cap is reasonably priced. Yes, many of us see potential in a much higher worth, given the properties they own, but right now there is no bargain investment in CNET unless you have the power to enforce radical changes to current management or have faith in Jana’s capacity to push for that change.