Flush with cash and hoping to expand its Internet advertising reach in a single stroke, CBS announced it would pay US$11.50 per share in an all-cash tender offer for CNET. That is a 45 percent premium over Wednesday's closing price and turns CBS into a white knight for CNET, which is embroiled in a proxy fight against a dissident shareholder group.

"There are very few opportunities to acquire a profitable, growing, well-managed Internet company like CNET Networks," said CBS Chief Executive Leslie Moonves on Thursday, adding that the move "pushes the clock forward" on the company's goal of becoming a bigger Web player.

CNET, of San Francisco, owns the technology-oriented news sites CNET and ZDNet, the online gaming site GameSpot.com, and TV.com, UrbanBaby, CHOW, and TechRepublic. The company reported cash flow of US$79 million in 2007 on revenue of US$406 million and is projecting cash flow of US$92 million and revenue of US$450 million this year.

The deal, expected to be completed in the third quarter, would vault CBS into the top 10 Internet U.S. companies, with a combined 54 million visitors monthly and about 200 million visitors worldwide.

Moonves said that CNET would "add a tremendous platform to extend our complementary entertainment, news, sports, music and information content to a whole new global audience."

CBS has aggressively expanded on the Internet by buying such outlets as lastfm.com, an Internet radio firm. It broke barriers by making online streams of its NCAA basketball coverage available immediately, sacrificing advertising revenue to its television networks in a bid for Internet traffic.

"This shows that CBS is serious about expanding their business to become a true digital company," said consultant Larry Kramer, who once led CBS's Internet operations. Noting the lack of overlap between the companies' assets, he said: "It's going to be somewhat of a management challenge for them. CBS can make itself into a big Internet player, but it is going to take a lot of work."

Thursday's joint announcement by CBS and CNET capped weeks of secret negotiations conducted while CNET was trying to fend off a challenge led by Jana Partners LLC, a New York hedge fund that is CNET's biggest shareholder with about a 20 percent stake.

Jana, which is seeking to install its own slate of directors, has said that CNET has failed to keep up with the changes roiling the online world and that its board and management appear unequipped to get it moving in the right direction. The company's stock has languished under US$10 a share for the last two years.

"All we're saying today is that we're reviewing the transaction," said Charles Penner, a spokesman for Jana, on Thursday.

CNET shares leaped on news of the CBS offer and closed the day's trading at US$11.41, up US$3.46. CBS stock, meanwhile, slipped 59 cents, to US$24.23.

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