Another big M&A play is going down in the world of media. Publishing group Red Ventures today announced that it is buying CNET Media Group from ViacomCBS for $500 million. The deal will include the eponymous CNET tech site, as well as ZDNet, Gamespot, TVGuide, Metacritic and Chowhound.
The news puts paid to speculation that had been circulating for months that ViacomCBS was looking for a buyer for CNET, which is now 25 years old, and the wider media group, after ViacomCBS's CEO Bob Bakish floated the idea of offloading non-core assets post the Viacom/CBS merger. And even earlier than that, insiders tell us there were rumors that CBS had wanted to offload CNET and its tech stable "for literally years."
A memo we were leaked, meanwhile, from the CEO of CNET, Marc DeBevoise, said that the company had been fielding interest in the portfolio from acquirers "for many years." That full memo is below.
Bakish had been looking for cost savings of $500 million, a neat coincidence since that is the price Red Ventures is paying.
Red Ventures has been around since 2000 -- a veteran and beneficiary, you could argue, of the late-nineties dot-com crash. It already owns 100 digital brands in categories like health, finance, travel, entertainment, home services and education. Its titles include Healthline.com, Greatist.com, Medical News Today, Bankrate.com, The Points Guy and CreditCards.com. It has also collaborated with Time on a personal finance site, NextAdvisor.
The focus across many of these is reviews that the company subsequently monetizes. Given that this is a huge emphasis for CNET and other sites in its media group, you can see where the synergies might lie for Red Ventures.
“Red Ventures believes in the power of premium content from trusted brands that help people make better life decisions,” said Ric Elias, Red Ventures CEO and co-founder, in a statement. “Over the last 25 years CNET Media Group has built a dynamic portfolio of brands with well-earned authority on such topics as consumer tech and gaming that play an increasingly important role in people's lives. Red Ventures is eager to invest in CNET Media Group’s growth with more personalized consumer experiences that will reinvigorate CNET Media Group's brands and unlock unprecedented opportunity for all.”
CBS, prior to being combined with Viacom, originally acquired CNET and related sites in 2008 for $1.8 billion. CNET was at the time a veritable leviathan in online tech journalism and the ambition was to create much more reach into online media. That deal did not include GameSpot, TV Guide, Metacritic or Chowhound.
The significantly discounted price being paid today for a larger group of assets underscores the changing -- and often declining -- value of more traditional media and publishing brands -- even those "born" and solely existing in digital form -- as well as the difficulties of the current market.
It's not clear how big the audience is today for CNET, nor for the portfolio as a whole, but DeBevoise noted in his memo that CNET this year saw record audience numbers. However, these days, even record numbers for a digital publication doesn't necessarily mean big money.
But it's not all bad news. Red Ventures' message seems to be that even if older, ad-based, mass-market models are under strain for some -- in particular in a world where publishers like Facebook and Google continue to take the lion's share of online advertising revenues -- there are ways to run media businesses well, if you shift the models and re-set your expectations on how that business scales. (There are alternatives, of course, to diversify in other ways, such as building out paywalls around premium content, building out events businesses and more.)
Mark Larkin, who is the the EVP and GM of CNET Media Group, will continue to lead the business at Red Ventures.
“I am incredibly excited about CNET Media Group’s future. I believe that the combination of Red Ventures customer experience platform and CNET Media Group’s rich content and deep editorial expertise greatly benefits both our audiences and our partners,” he said in a statement. “Red Ventures shares our vision and is committed to realizing the full potential of our portfolio of world-class brands.”
The companies said that the deal is expected to close in Q4.
Memo from Marc DeBevoise:
Today we announced that Red Ventures has signed an agreement to acquire CNET Media Group. For many years we’ve received interest from others looking to acquire the CMG portfolio, as it is one of the few long-term success stories in a very crowded and competitive digital media landscape. That interest and this deal is a testament to what Mark Larkin and this team has built, especially in tandem with the overall growth and success of CBS Interactive and now the combined Viacom CBS Digital. At our All Hands in August, I shared with you that CNET has continued to see record traffic numbers (even as it turned 25 this year!) and has built an incredible new commerce business across numerous properties. They’ve done all of this in one of the most challenging environments. I’m so proud of everything we have accomplished together.
As Bob has said previously, Viacom CBS’s strategic priorities are focused on our networks business, studio production and, of course, our acceleration in streaming. With these key areas of focus in mind, it was the right time to consider the interest of a partner who is committed to realizing the next chapter of growth for CMG. We believe we’ve found that right partner in Red Ventures. Today is the announcement of the purchase agreement and really just the beginning of the sale process. The CMG team will continue to be a part of Viacom CBS Digital until the deal closes, and we will continue to provide many central services to CMG for the coming months post-close as well. That said, I know it’s hard to think about saying goodbye to team members we’ve worked with for so long. I want to thank the CMG team for the hard and smart work they’ve done to build and grow an incredible brand portfolio all the while taking risks, holding themselves to the highest journalism standards and contributing to our overall division and company goals for many years. We wish them all the best on their next journey ahead and look forward to continuing to follow all their exploits and coverage in the future.