Content Matters

The morning's buzz was all about two acquisitions - CBS (NYSE:CBS) acquiring the downtrodden CNET (NASD:CNET) and Comcast (NASD:CMCSA) acquiring Plaxo.

Looking at the CNET deal, I guess my initial reaction is that if I had $1.8 billion to spend, it certainly wouldn't be at the top of my list. While traffic stats are unreliable, it was fairly well documented last year that CNET had lost about 50% of its traffic, as compared to 2006. The stock, which peaked around $70 during the dot-com boom has been stuck in the $8-14 band for the past five years. Revenue last quarter was $91 million, up a paltry 3% from the same quarter in the prior  year.

About a week ago, I wrote a post suggesting there should be more M&A in the blog space. I think an acquirer would be much better served acquiring a series of blogs to get into this space. The obvious start would be TechCrunch, followed by gadget blog Boing Boing, and I'm sure that Nick Denton would part with Gizmodo for the right price. Heck, you could buy all of Gawker for about a tenth of the price of CNET, according to Doug McIntyre's estimates.

While none of these blogs have the current traffic of CNET, they all have two features that make them much more attractive (IMO) than CNET: growth and a low cost structure.

It makes sense that during down markets, companies fish around for acquisitions at discount prices. What doesn't make sense to me though is bottom-fishing in this space. Rather than buying underperforming assets for bargain basement prices, why not leverage the bad market to buy growth businesses at a (albeit lower) discount?

This is just another case of an old media company buying another dying media business. Hey, CBS - why not go acquire a few newspapers while you're at it?

The Comcast/Plaxo deal is a little harder for me to get my arms around. The deal is rumored to be for $170 million. The two companies have partnered for the past year, with Plaxo serving as the address book for Comcast's data subscribers.
Plaxo is a great utility for keeping address books current. That was its initial purpose and I've always thought that it would be a great add-on for Gmail, Hotmail or Yahoo. Recently, it's tried to leverage its user base to form a social network, Plaxo Pulse. I've joined and have gotten a bunch of invites, but have yet to find any value in it as a YASS ("yet another social network"). PaidContent, via the Washington Post, notes that the companies see the future as leveraging Plaxo Pulse's social networking capabilities via the Comcast set top box. Sounds OK in theory, but I don't see any real value there in practice.