Activists unveil turnaround proposal for CNET

By Anupreeta Das

SAN FRANCISCO, April 1 (Reuters) - A group of activist investors led by Jana Partners unveiled a detailed plan on Tuesday to boost CNET Networks Inc's CNET.O earnings, and rejected the online media company's offer of one board seat to settle their dispute.

The group, which has been fighting to win control of CNET's board, said in a 38-page proposal that the investment banking backgrounds of CNET Chief Executive Neil Ashe and Chief Financial Officer Zander Lurie make them ill-suited to spearhead the company's turnaround.

CNET's management and board lack the urgency and expertise required to turn CNET from a "Web 1.0" company into one that can keep abreast of peers like Yahoo Inc (YHOO.O: Quote, Profile, Research, Stock Buzz), which are increasingly making money from online advertising and sophisticated search, the Jana group said.

"We believe CNET's board and senior management lack the industry-specific experience and expertise to stop this shareholder value destruction," the investors said. Jana owns about 10 percent of CNET's voting stock.

The group's proposal calls for a range of measures, including tying up with a popular online advertising platform like Google Inc's (GOOG.O: Quote, Profile, Research, Stock Buzz) Doubleclick, revamping search, and building social networking features for CNET's various Web sites.

The group said these measures will bring more visitors and help CNET sell targeted and contextual advertisements.

Based on an external review of CNET's business, the group said these and other measures could push its 2009 earnings before interest, tax, depreciation and amortization (EBIDTA) to $183 million, 60 percent higher than current Wall Street projections.

CNET, best known for its technology news Web site News.com, faces stiff competition from savvy tech blogs such as Michael Arrington's Techcrunch.com. Analysts have also questioned its ability to generate new cash, as its share price nosedived from a dotcom-era peak of nearly $80 to $7.10 as of Monday's close.