CNET-CBS: Making The Case To The CNET Troops

This story was written by Joseph Weisenthal.
Yesterday CNET (NSDQ: CNET) CFO Zander Lurie pitched the company's sale to investors, but really, how hard is it to justify a deal that delivered a 45 percent premium? Today is the day that the case is being made to employees, though we've heard and read elsewhere that CNET employees are by and large into the deal. This afternoon CBS (NYSE: CBS) CEO Leslie Moonves will be getting a tour of the SF headquarters, and there will be a company-wide phone-in address (we'll let you know what we hear). In advance of that, CNET has filed what's basically an employee FAQ with the SEC covering various topics on things like health benefits and strategy. Some of the questions have been addressed already. Here are some highlights:

-- Are there duplications between our organization/roles and their organization/roles? Can we expect layoffs as a result of the acquisition?: CNET Networks' employees were a major factor in CBS's decision to acquire us. As we work through the integration process, we will look at where roles and responsibilities may overlap and determine how to best utilize our employees' skills and expertise in the combined organization. Through this process, we will also determine if we need to make changes to the organization.

-- Does this announcement impact the recent Yahoo (NSDQ: YHOO) announcement? If so, how?: We are committed to launching our Yahoo partnership on July 1st. We view this news as an opportunity to potentially expand the Y! relationship across CBS Interactive brands.

-- Does CBS have plans to merge, close or sell any brands?: As part of the integration process, we will work closely with our partners to determine how to take advantage of our assets across both organizations.

-- Will we keep the CNET Networks name?: At this time we don't know. 

-- If we own stock options, what happens now?: In the merger, each in-the-money option (i.e., an option with an exercise price less than $11.50), whether vested or unvested, will be cancelled in exchange for a cash payment equal to the number of options multiplied by the "spread" between $11.50 and the exercise price (minus any applicable withholding tax). In other words, each in-the-money option, vested or unvested, will be "cashed out" at the closing of the merger. Under the merger agreement, each out-of-the-money options (i.e., option with an exercise price equal to or greater than $11.50) will be exchanged for an option for CBS shares of equal value with substantially the same terms as the original CNET Networks option (including vesting provisions). 

By Joseph Weisenthal