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CBS Interactive Opening Menlo Park Office; Big Acquisition Needed?

This story was written by Rafat Ali.

CBS Interactive (NYSE: CBS), the digital media arm of CBS, is finally opening up a fully staffed office in Menlo Park, CA, in an apparent attempt stir innovation and content development...this comes about 18 months after Quincy Smith took over at the interactive head, promising to find the next YouTube "only a year earlier, when they were 1/32nd of their size." Translated, it meant that the company wanted to merge big media (read NYC) with early stage startups in Silicon Valley.

It took a while coming, and none to soon, as the parent company is under a mini-siege of sorts about its performance, Leslie Mooves' salary, Katie Couric's disastrous tenure at the company, layoffs (even on the digital side, as others are ramping up) and other issues. This NY Times story lays out the troubles and challenges the company is facing now.

The parent company doesn't break out interactive revenues, but analysts estimate it at several hundred million dollars. Moonves said at a conference earlier this year that its "online revenues are north of $200 million, growing 30 to 40 percent". Jessica Reif Cohen of Merrill Lynch is more critical: while the network had taken "baby steps" in the digital business, "it's not enough to move the needle and probably won't be for a while," she said in the NYT story. She maintains that CBS's need for an acquisition is becoming apparent. Who and when would it be?

Meanwhile, what's CBS's future? Diane Mermigas has a pertinent point here: "Before the year's end, industry analysts may question how long or whether CBS should remain independent--even in this era of deconsolidation among media giants. The combination of declining old business lines exacerbated by hard economic times, not being able to ramp up revenues from new digital business lines fast enough, and having no cable television back stop could collectively prove to be CBS' undoing."

By Rafat Ali

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