JANA Partners Proposes New Board Members for CNET Networks
January 07 2008 - 9:15AM
Business Wire
JANA Partners LLC (�JANA�) announced today that an affiliate has
notified CNET Networks, Inc. (Nasdaq: CNET) that it will nominate
seven people for election to CNET�s Board of Directors at the next
annual shareholders meeting. JANA has collaborated with Paul Gardi
of Alex Interactive Media and with venture capital firm Spark
Capital to select a slate of directors it believes has the industry
expertise and proven talent needed to revitalize CNET, which JANA
believes has significantly lagged peers in value creation and
performance. JANA and its partners currently beneficially own
approximately 8% of CNET�s voting stock and JANA has an additional
approximately 8% non-voting economic interest in CNET. Sandell
Asset Management Corp., which has agreed to support JANA�s effort,
has a separate approximately 5% non-voting economic interest. JANA
Managing Partner Barry Rosenstein said, �This effort is about
taking an underperforming company and increasing shareholder value
by building on its top-notch editorial talent and premier internet
assets. Together with Paul Gardi and Spark Capital, we have
assembled a group of nominees we believe has the technical skills
and business experience to reverse CNET�s ongoing underperformance
and start delivering value for shareholders.� Tom Sandell, CEO of
Sandell Asset Management said, �We are pleased to support JANA in
this effort to improve the performance and ultimately the valuation
of CNET to the benefit of all shareholders. The depth and
experience of the team that JANA has assembled is impressive and
well matched for the challenge of turning around the poor
performance at CNET.� Despite owning leading web properties
including technology, food and gaming review franchises, CNET has
failed in recent years to create shareholder value. In 2007, CNET
shares rose less than 1% versus gains of approximately 15% for
CNET�s stated benchmark, the Interactive Week Internet Index, and
10% for the Nasdaq Index. For the three years through 2007, CNET
shares fell approximately 19% versus gains of approximately 32% for
the Interactive Week Internet Index and 22% for the Nasdaq Index.
JANA�s board nominees intend to create a stronger, more profitable
company through: Maximizing Core Strengths: Despite the
unparalleled quality of its editorial content and staff, JANA
believes CNET has not been able to leverage these assets to
increase shareholder value. JANA�s nominees if elected will use
their combined experience in seeking to substantially grow CNET�s
core business. Driving Traffic and Increasing Revenues: JANA�s
nominees if elected will seek to broaden the reach of CNET�s
properties by implementing intent-driven media strategies that
better connect consumers with relevant content, which in turn will
enhance revenue realization through optimized ad serving. Focusing
on ROI and Key Metrics: JANA�s nominees if elected will bring a
disciplined, return on investment-oriented approach to CNET�s Board
of Directors, which JANA believes has pursued growth through
expensive non-strategic acquisitions and investments but has not
delivered significant organic growth in CNET�s core business. The
following two individuals will be nominated to replace the two
directors who will stand for re-election at the 2008 annual meeting
of shareholders: Paul Gardi � Managing Member, Alex Interactive
Media. Former CEO of IAC Advertising Solutions; former EVP, GM for
Ask Jeeves, Inc.,�where he led�Operations and Strategic Planning;
former President and COO of Teoma Technologies, Inc. He has been
instrumental in evaluating CNET�s operations and developing
recommendations for improving performance and creating value should
JANA�s nominees be elected. Santo Politi � Founder and General
Partner of Spark Capital. Former Partner at Charles River Ventures;
former President of New Media for Blockbuster Entertainment Inc.;
co-founder of BT Venture Partners; various engineering and
management positions with Matsushita Electric Industrial, Panasonic
Broadcast and Television Systems Company, and Weston Instruments, a
subsidiary of Schlumberger Industries. In addition, JANA will
propose to stockholders that they expand the current CNET board
from eight to 13 directors and fill the resulting vacancies with
the following five JANA nominees: Jon Miller � Founding partner,
Velocity Interactive Group. Former Chairman and CEO of AOL; former
CEO and President of USA Information and Services (which became
IAC/InterActiveCorp and Expedia); former Managing Director of
Viacom�s Nickelodeon International. Jaynie Studenmund � Former COO
of Overture Services Inc./Yahoo! and former President and COO of
Paymybills.com. Current board member of Orbitz World Wide,
eHarmony, Western Asset and Countrywide Bank. Former board member
of aQuantive, Inc. Julius Genachowski � Managing Director of Rock
Creek Ventures and co-founder of LaunchBox Digital. Former Chief of
Business Operations and other senior executive positions at
IAC/InterActiveCorp. Current board member of Website Pros, The
Motley Fool and Marc Ecko Enterprises. Former board member of
Expedia, Hotels.com and Ticketmaster. Brian Weinstein � Senior
executive, Business Development Group at Creative Artists Agency
focusing on strategic acquisitions and digital strategy. Mr.
Weinstein has helped oversee the incubation of multiple
venture-financed Internet companies. Mr. Weinstein helps lead
Creative Artists Agency�s new media advisory practice assisting
corporate clients on traditional media and content strategies.
Founder and Chairman, The Opportunity Network. Giorgio Caputo �
Managing Director, JANA Partners, focusing on small cap and
technology investments. Former Mergers & Acquisitions Associate
with Credit Suisse First Boston and Equity Derivatives Quantitative
Analyst for Lehman Brothers. Separately, an affiliate of JANA today
filed a complaint for declaratory and injunctive relief in the
Delaware Court of Chancery. The complaint requests, among other
things, that the court enjoin CNET from rejecting JANA�s director
nominations and proposals on the basis of certain provisions of
CNET�s bylaws which, according to CNET, require stockholders to
have held CNET stock for one year in order to propose business or
nominate directors. JANA and its Delaware counsel believe such
provisions, if interpreted in this manner, would be impermissibly
discriminatory and invalid under Delaware law. Background JANA
Partners LLC is a multi-billion dollar investment management firm
founded in 2001 by Barry Rosenstein. Alex Interactive Media, LLC
(�AIM�) is a private company focused on leveraging its domain
expertise in digital media and related industries. AIM Managing
Member Paul Gardi has committed to personally investing $1 million
in CNET equity. Spark Capital is a venture capital fund focused on
building businesses that transform the distribution, management and
monetization of media and content, with experience in identifying
and actively building market-leading companies in sectors including
infrastructure (Qtera, RiverDelta, Aether Systems, Broadbus and
BigBand), networks (College Sports Television, TVONE and XCOM) and
services (Akamai and the Platform). Spark Capital has over $600
million under management, and is based in Boston, Massachusetts.
Spark has committed to investing $20 million in CNET equity.
Velocity Interactive Group, LLC is an investment firm that focuses
on digital media and communications. Velocity Interactive Group has
offices in Palo Alto, Los Angeles and New York. Velocity has an
option to invest $10 million in CNET equity. Sandell Asset
Management Corp.�is a�multi-billion�dollar global investment
management firm, founded by Thomas E. Sandell,�that focuses on
global corporate events and�restructurings�throughout North
America,�Continental�Europe, the United Kingdom, Latin America and
the Asia-Pacific theatres. Sandell frequently will take an
"active�involvement" in�facilitating�financial or organization
improvements accruing to the benefit of investors. ALL STOCKHOLDERS
OF CNET ARE ADVISED TO READ THE DEFINITIVE PROXY STATEMENT AND
OTHER DOCUMENTS RELATED TO THE SOLICITATION OF PROXIES BY THE
INVESTORS AND NOMINEES NAMED ABOVE (THE �POTENTIAL PARTICIPANTS�)
FROM THE STOCKHOLDERS OF CNET FOR USE AT THE 2008 ANNUAL MEETING OF
STOCKHOLDERS OF CNET WHEN AND IF THEY BECOME AVAILABLE BECAUSE THEY
WILL CONTAIN IMPORTANT INFORMATION. WHEN AND IF COMPLETED, THE
DEFINITIVE PROXY STATEMENT AND FORM OF PROXY WILL BE MAILED TO
STOCKHOLDERS OF CNET AND WILL, ALONG WITH OTHER RELEVANT DOCUMENTS,
BE AVAILABLE AT NO CHARGE ON THE SEC'S WEB SITE AT
HTTP://WWW.SEC.GOV. IN ADDITION, THE POTENTIAL PARTICIPANTS IN THE
PROXY SOLICITATION WILL PROVIDE COPIES OF THE DEFINITIVE PROXY
STATEMENT WITHOUT CHARGE UPON REQUEST. INFORMATION RELATING TO THE
POTENTIAL PARTICIPANTS IS CONTAINED IN EXHIBIT 2 TO THE SCHEDULE
14A FILED BY THE POTENTIAL PARTICIPANTS WITH THE SEC ON JANUARY 7,
2008.
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