The market ate up CNET Networks'
I was able to catch up with CEO Neil Ashe yesterday afternoon. He took the helm at CNET three months ago, after former CEO Shelby Bonnie stepped down in the aftermath of the company's unfortunate stock options backdating scandal.
The diversified media empire -- and it really is so much more than the "online tech publisher" tag that so many journalists use to describe CNET -- is doing pretty well these days. It is drawing 136 million unique visitors a month, a 17% advance over the past year. The company is earning more on every page that it is serving up, except for its Webshots.com photo-sharing site, where it is losing traffic.
Cynics figured that the level playing field of tech bloggers or the launch of Yahoo!
Its Crave blog on CNET launched just three months ago, but drew 800,000 unique users last month. The site was drawing 350,000 daily page views during the Consumer Electronics Show, dovetailing nicely into the company's ZDNet stronghold. ZDNet has been blogging away since 2004, attracting two million technology decision-makers a month.
As for Yahoo! Tech, CNET Reviews has seen its traffic climb 30% over the past year, greater than CNET as a whole. "You can't serve passionate users part-time," Ashe notes.
CNET is currently the 12th-largest Internet network in the world. Now it's just looking for a little R-E-S-P-E-C-T.
The potential upside
To me, the beauty of CNET -- and the reason why I have recommended the stock twice to Rule Breakers subscribers over the past two years -- is that CNET looks good, yet we still haven't seen everything that it's got.
Its Search.com search engine and its MySimon.com comparison shopping site appear to be stuck in a time capsule, oblivious to the success of their larger peers. The domain-rich company has barely scratched the surface of some of its valuable virtual real estate. Chat.com will simply direct you to chat software available on the company's Download.com site. CNET also owns domains like Kids.com and Community.com, which are little more than landing pages loaded with paid-search links.
The company outsources the selling of those contextual links, whcih comes as a relief to me. Minutes before our interview, I clicked on "Childrens Toys" at Kids.com and was surprised to see an ad by adult novelty store Adam & Eve promoting a "Sex Toy Super Sale."
Ashe checks it on his end, and assures me that it will be gone within the hour. It is. Yet even then, Ashe uses that as a point to stress why the company's bias is to sell its own ads. CNET is pretty good at that. This past quarter found all but four of its 100 largest advertisers renewing their site campaigns. The company has a working relationship with Google
In to win
CNET has made recent divestitures -- in areas like print magazines, live event conferences, and overseas properties -- that haven't panned out. But that doesn't mean the company is going to quit on all of its struggling properties. Webshots has been dragging down overall page views, and sites like Download.com and MP3.com seem to rely on chunky bandwidth that isn't as cost-effective to monetize as its text-driven bulwarks -- but Ashe isn't giving up.
"We can't shrink our way to greatness," he says.
It doesn't seem as if CNET is looking to cash out as a whole, either. Ashe may have cut his teeth at Smith Barney's Mergers & Acquisitions group in the early 1990s, but his hire isn't an exit strategy. If anything, Ashe has been using his earlier experience to assemble and acquire the pieces that make up the growing CNET puzzle. He's been working on that since he joined the company in 2002.
CNET's expanding empire has taken it far from its tech-heavy roots. The company recently launched Filmspot, a site for movie buffs that incorporates the features of its TV.com and Metacritic properties in its own celluloid-specific platform.
Ashe sees games, television, music, and film as the four legs of the entertainment stool. He can now flip that stool over and grab a seat as the marketer-magnet youth audience redefines CNET's potential.
"A different kind of media company," is CNET's tagline. The editorial-driven nature of CNET sets it apart from content aggregators like Google, Microsoft
Other media giants, like News Corp.
In short, CNET's got community. It's got Community.com. Just wait until the community-building process bears fruit.
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Longtime Fool contributor Rick Munarriz is a fan of CNET and of Chow.com's Chowhound community. He does not own shares in any of the companies in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.