Thursday, May 15, 2008

The New Portfolio: CBS Quietly Amasses Must-See Content for the Web

The CBS Corporation Web site features photos of their television news staff, most of whom are well into their sixties, or well further in some instances, interspersed with shots of the young stars of some of their entertainment shows. Both motifs show some of the demographic challenges that CBS faces in developing audiences. Having missed largely the shift into cable television news and entertainment and faced with a rapidly aging audience for its news products, CBS has been leapfrogging its marketing strategy into online content development. The latest of these is a fairly "big fish" - CNET Networks, which according to was puchased for USD 1.8 billion, a 44 percent premium above its current share price.

This number may be a little eye-popping for some in the media industry, but this is no mistaken enthusiasm. CNET is one of the oldest commercial Web sites offering news on the technology industry and consumer goods, with a solid top-200 audience and some of the best journalism and analysis on the Web. CNET has always stood for best practices in publishing and site design on the Web, with a solid team of largely Bay Area journalists, analysts and bloggers, a great library of videos on tech and gadget topics, product reviews, well-tracked blogs, strong comments and a great channel strategy. There's not too much not to like. I think the factor that impresses me more, though, is that as a bazillion blogs have sprouted up to talk about topics in CNET's domain it's held on to its audience very nicely through a diverse array of content assets. While its U.S.-centric focus limits some of its appeal for growth in other markets, it's likely to be a good revenue generator for years to come.

More to the point, it begins to round out a portfolio of solid and up-and-coming destination content holdings that CBS has assembled. As CNET's own news blog notes it will make CBS one of the 10 most popular Internet companies in the United States, with a combined 54 million monthly unique visitors and about 200 million users worldwide. While much of the media business focuses on familiar moguls and the battles of print titles to condense into some sort of stable business CBS has become quietly a superstar of destination content the old fashioned way - by building up a portfolio of superstar publishing properties. It makes one wonder what investment bankers were thinking as they continued to spin out questionable multiples on continually sinking print-based news properties.

There are still profitable print titles left to play with, but CBS is reaching for and developing the online brands that will help it to bridge into the next generation of content consumers very aggressively - while milking what it can out of old media channels. Kudos to CBS for a well-timed and solid purchase and for focusing on the properties that will help their shareholders have a brighter future as the next generation bypasses cable television for new forms of news and entertainment.
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