Since CBS's most recent spinoff, from Viacom, Les Moonves hasn't distinguished himself in providing superior total returns to shareholders. Granted, he's been at it just over two years. But the trend since the stock's peak in mid-2007, as the nearby Yahoo-sourced price chart for the network and the S&P500 Index, has been discouraging.
According to the Journal,
"CBS's $1.8 billion cash acquisition of Web site operator CNET Networks Inc. is reminiscent of the tech-stock bubble. The CBS offer values CNET at a whopping 22 times Ebitda, according to Capital IQ data. CBS trades at about seven times. What's more, CBS is paying this fat premium when the advertising market is slowing.
Why is CBS overpaying for an asset with a questionable outlook? Look no further than CBS's share price. CBS shares have fallen nearly 30% from their peak last summer. (Fortunately for Mr. Moonves, who took home $36.8 million last year, his compensation has only been recently linked to CBS's share-price performance.)"
The article pulls no punches, does it? Comparing this acquisition to a tech-bubble, all-cash deal is no blessing. Further, if you look at the nearby Yahoo-sourced price chart for CBS, CNET and the S&P500 Index for the past five years, it's clear that, as mediocre as Moonves has performed with CBS, CNET has done even worse in the past 2+ years. Its peak was clearly over two years ago.
Beyond the high price for CNET, it's difficult to see any real synergies between CNET and CBS's existing portfolio of Web properties. CNET is based in San Francisco and CBS's Web operations are concentrated in New York. So there's not much room to save on overhead. It's difficult to see why CBS, which is at its core a broadcaster, will have better luck in monetizing CNET's Web properties than CNET did."