Can CNET Change The Dismal Narrative For CBS?

When Sumner Redstone broke Viacom apart in January 2006, CBS (CBS) was saddled with the dying, aging, old-media businesses: Broadcast TV, local TV stations, radio, the No. 2 movie channel (Showtime), publishing, and a big billboard operation. Nevertheless, for the first year-and-a-half, it was CBS that grew at a steady clip, while Viacom, with its stable of young cable networks like MTV, Spike and Nickelodeon, languished.

For CBS, those were the good times. But those times are long over. It's been nearly a year since the company hit its 52-week high: $35.75 on July 20, 2007. Since then, CBS shares have taken a long, precipitous swoon, setting a new 52-week low last week and narrowly missing setting a new one at yesterday's close of $19.49. (CBS isn't alone in this regard: News Corp. and Sony are also at or near 52-week lows.)

Yet: CBS's businesses certainly aren't any worse off than they were a year ago. Network TV's upfront advertising sales were surprisingly strong in spite of a general advertising downturn. The company keeps buying back stock. Its stations and radio operation are no weaker today than a year ago. What's slamming CBS shares? The fact that 70% of its revenue is tied to so-called old media.

What can be done? Not much. But CBS is trying with the acquisition of CNET to, if not change the business equation, at least change the narrative. What opportunities does CNET present?

• CBS-CNET becomes the 8th-largest Web company, per comScore, with 54 million unique visitors a month.
• CBS has the opportunity to remake its news division, an also-ran on the Web, with the News.com brand, which isn't strongly tied to to the tech news that's there now.
  
• It can try creating a video portal, a la Hulu, with TV.com, which, by the way, already has a very favorable distribution deal with Hulu, including NBC, Fox and Warner Bros. content.
• CBS can take a flyer on building businesses around CNET's cache of Internet domains, such as Download.com, Chat.com, Com.com, Shopper.com, Radio.com, etc, or else sell them to the highest bidder.

Is any of this game-changing for CBS in any real sense? No. Could it shed some of its image as a no-growth bastion of old media? Possibly. And as the chart below shows, anything is worth a try.

See Also:
Quincy Smith Named CEO Of CBS Interactive, CNET
How Will Sumner Redstone Fix Viacom's Stalled Stock: Buyout Or Shakeup?
CNET, CBS: We're Not Cost-Cutting, We're Growing
CBS Buying CNET For $1.8 Billion