UPDATE 3-CNET may appeal court ruling on board nominee case

(Rewrites first paragraph to reflect CNET news; adds closing share price, background)

By Anupreeta Das

SAN FRANCISCO, March 13 (Reuters) - Online media company CNET Networks Inc (CNET.O: Quote, Profile, Research) said on Thursday it may appeal a court ruling issued earlier in the day that allows a group of investors to nominate seven directors to its board.

The Delaware Court of Chancery ruled earlier Thursday that hedge fund Jana Partners LLC, which is leading a group of investors trying to take control of CNET's board, could nominate directors without violating the company's corporate bylaws.

CNET said in January that Jana's efforts to nominate two directors to existing board seats and expand the board by five members were "improper" under its bylaws.

Jana took the matter to court through an affiliate, challenging CNET's interpretation of its bylaws.

In response to the ruling, Jana Managing Partner Barry Rosenstein said he hoped the company "will now put aside their efforts to thwart this debate with technicalities and instead engage stockholders in a dialogue about the company's future."

CNET said it is defending the litigation because "it is not in the best interest of our stockholders to undertake a costly and disruptive proxy contest initiated by Jana Partners that does not comply with the company's by-laws."

It also said Jana will need to get the votes of two-thirds of CNET shareholders to secure the election of more than two directors.