JANA PARTNERS CALLS ON CNET NETWORKS TO PUT ASIDE
TECHNICALITIES AND FOCUS ON SHAREHOLDER VALUE
NEW YORK, March 17, 2008 - In response to comments by CEO Neil Ashe of CNET
Networks, Inc. (Nasdaq: CNET) last Friday, including that CNET is considering
appealing the Delaware Court of Chancery's rejection of CNET's attempt to
prevent an affiliate of JANA Partners LLC ("JANA") from proposing director
nominees at CNET's 2008 Annual Meeting, JANA Managing Partner Barry Rosenstein
sent the following letter to CNET.
The text of the March 17, 2008 letter from JANA to CNET follows:
March 17, 2008
Mr. Neil Ashe
Chief Executive Officer
CNET Networks, Inc.
235 Second Street
San Francisco, California 94105
TRANSMITTED VIA FAX AND OVERNIGHT DELIVERY
Dear Neil:
We took note of your statements on Friday indicating that CNET Networks,
Inc.'s ("CNET" or the "Company") Board of Directors (the "Board") is considering
appeal of the Delaware Court of Chancery's rejection of CNET's attempt to
prevent an affiliate of JANA Partners LLC ("JANA", "we" or "us") from proposing
new directors at CNET's 2008 Annual Meeting. We believe that most shareholders
would agree that Company assets, which belong to the shareholders, should be
used to create value for them rather than for further attempts to entrench the
current Board. We therefore take exception with a number of these comments, both
as proponents of change at CNET and as part of a group which is your largest
shareholder.
First, your comment that "we may see more decisions on this front in the
next month or so" is misleading. The court plainly and unambiguously rejected
CNET's attempt to prevent us from offering a choice of new directors at the
Annual Meeting, and the only possibility of more decisions on this matter will
come if CNET appeals this ruling. We strongly encourage the Board to consider
whether such an appeal, which would come on top of the already considerable
expense of the futile initial attempt to block our proposals as well as the
adoption of a poison pill and golden parachutes, which one commentator referred
to as a "self-serving, scorched-earth tactic,"(1) in any way benefits
shareholders. We have offered shareholders a choice of new directors who we
believe will help create maximum shareholder value, a choice they are free to
embrace or reject, and we believe it is wrong to burn further company assets in
seeking to deny them this choice.
Second, CNET has gone to great lengths to create the misleading impression
that we are attempting a hostile takeover and that if the seven nominees we have
put forth are elected CNET
- --------------------
"Is CNET's Poison Pill Shareholder-Friendly?", Rick Aristotle Munarriz,
TheMotleyFool.com, January 16, 2008.
would be run for our sole benefit, thus dictating that we should "pay a premium"
to shareholders. However, only one of these nominees is a JANA employee, all
seven nominees are independent of each other, and each will be under no
obligation if elected in carrying out their duties other than the same duty
every director owes all shareholders. If as we believe these nominees have the
experience and expertise to reverse CNET's ongoing underperformance and make it
a stronger and more profitable company, this will create value for ALL CNET
shareholders, not deprive them of it, and the notion that we should pay a
premium for offering this choice to shareholders is absurd.
Third, you have sought in your comments to create the impression that we
will be unable to garner the support of the requisite number of shares to bring
change to CNET. Given that you and the other current members of the Board own
only approximately 1% of the outstanding shares and that just in the last two
years CNET's shares have fallen over 45%, vastly underperforming its peers and
the market, this confidence seems misplaced. In addition, CNET's vigorous
efforts to erect legal and technical barriers to merely offering shareholders a
choice at the Annual Meeting belie these expressions of confidence in the
outcome.
Most importantly, such words and deeds represent a profound
misunderstanding of shareholder democracy and the relative place of the Board
and shareholders in this system. Board members serve at the shareholders'
pleasure, and if these shareholders wish to elect new Board members after years
of underperformance they should be free to do so without the incumbents putting
up legal roadblocks paid for with the shareholders' own money. This is not a
"game of chess" as you put it, to be played out amongst bankers, lawyers and PR
firms. It is, or should be, a referendum on which director candidates can best
guide the strategic direction of the Company and ensure that management
successfully executes on this strategy.
We believe it is time for fundamental strategic and operational change at
CNET, and that the nominees we have proposed together with Sandell Asset
Management, Alex Interactive Media, Spark Capital and Velocity Interactive
Management have the collective experience and expertise to successfully
implement this change. We encourage every member of the Board to honestly
consider whether a company that has so significantly underperformed
operationally and in creating shareholder value would not benefit from the
addition of these nominees. We believe it is clear that it would. If the Board
disagrees, however, it should make its case for the status quo based on its
record, and put away the legal, technical and oratorical "chess pieces" and let
shareholders simply decide who is best qualified to maximize shareholder value
at CNET.
Sincerely,
/s/ Barry Rosenstein
Barry Rosenstein
JANA Partners LLC
Managing Partner
BACKGROUND
JANA PARTNERS LLC is a multi-billion dollar investment management firm founded
in 2001 by Barry Rosenstein. JANA has on numerous occasions, alone or with other
shareholders, challenged management to focus on creating shareholder value,
including with respect to Kerr-
McGee Corporation, Time Warner, Titan International, TD Ameritrade and The
Houston Exploration Company.
ALEX INTERACTIVE MEDIA, LLC ("AIM") is a private company focused on leveraging
its domain expertise in digital media and related industries.
SPARK CAPITAL is a venture capital fund focused on building businesses that
transform the distribution, management and monetization of media and content,
with experience in identifying and actively building market-leading companies in
sectors including infrastructure (Qtera, RiverDelta, Aether Systems, Broadbus
and BigBand), networks (College Sports Television, TVONE and XCOM) and services
(Akamai and the Platform). Spark Capital has over $600 million under management,
and is based in Boston, Massachusetts.
VELOCITY INTERACTIVE GROUP, LLC is an investment firm that focuses on digital
media and communications. Velocity Interactive Group has offices in Palo Alto,
Los Angeles and New York.
SANDELL ASSET MANAGEMENT CORP., is a multi-billion dollar global investment
management firm, founded by Thomas E. Sandell, that focuses on global corporate
events and restructurings throughout North America, Continental Europe, the
United Kingdom, Latin America and the Asia-Pacific theatres. Sandell frequently
will take an "active involvement" in facilitating financial or organization
improvements accruing to the benefit of investors.
ALL STOCKHOLDERS OF CNET ARE ADVISED TO READ THE DEFINITIVE PROXY STATEMENT AND
OTHER DOCUMENTS RELATED TO THE SOLICITATION OF PROXIES BY THE INVESTORS AND
NOMINEES NAMED ABOVE (THE "PARTICIPANTS") FROM THE STOCKHOLDERS OF CNET FOR USE
AT THE 2008 ANNUAL MEETING OF STOCKHOLDERS OF CNET WHEN THEY BECOME AVAILABLE
BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. WHEN COMPLETED, THE DEFINITIVE
PROXY STATEMENT AND FORM OF PROXY WILL BE MAILED TO STOCKHOLDERS OF CNET AND
WILL, ALONG WITH OTHER RELEVANT DOCUMENTS, BE AVAILABLE AT NO CHARGE ON THE
SEC'S WEB SITE AT HTTP://WWW.SEC.GOV. IN ADDITION, THE PARTICIPANTS IN THE PROXY
SOLICITATION WILL PROVIDE COPIES OF THE DEFINITIVE PROXY STATEMENT WITHOUT
CHARGE UPON REQUEST. INFORMATION RELATING TO THE PARTICIPANTS IS CONTAINED IN
EXHIBIT 2 TO THE SCHEDULE 14A FILED BY THE PARTICIPANTS WITH THE SEC ON MARCH
13, 2008.
CONTACTS:
Sard Verbinnen & Co
George Sard 212-687-8080
or
Paul Kranhold or Andrew Cole, 415-618-8750
or
JANA Partners LLC
Charles Penner, 212-692-7696
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