ViacomCBS this week agreed to sell digital publisher CNET Media Group
Red Ventures for $500 million, a deal that can unlock considerable value for its new owner. By adding CNET to its publishing platform, Red Ventures can realize some cost savings and offer greater
scale to national advertisers.
Red Ventures is a closely held operator of digital-media businesses that has built a sprawling collection of more than 100 brands covering a
variety of industries. Backed by private-equity companies Silver Lake and General Atlantic, Red Ventures in 2017 bought personal finance site Bankrate for $1.24 billion and health and
wellness publisher Healthline Media last year without announcing the deal value.
CNET gives Red Ventures a stronger foothold in the consumer technology industry with titles
including CNET, GameSpot and ZDNet that have been around for years. With ViacomCBS more focused on developing video properties like its recently announced Paramount+ streaming
platform, CNET has been considered a non-core brand that deserves greater investment.
CNET's yearly revenue is more than $100 million, The Wall Street Journal reported
, citing people familiar with the
business. A deal price of $500 million suggests a price-to-sales ratio of about five times, which is rich for a publishing company. Without knowing CNET's enterprise value or earnings metrics, it's
hard to offer an opinion on a valuation.
However, Red Ventures can realize greater value for CNET by cutting operating costs and boosting revenue as the digital advertising market recovers from the
The technology industry has been a bright spot for the U.S. economy during the health crisis, with consumers spending heavily to set up home offices or to provide kids with
equipment for distance learning.
Online shopping also has surged among homebound consumers who are wary of visiting retail stores. With the growing upgrade cycle
to next-generation 5G mobile service, more consumers will be trading in their smartphones for newer models that are likely to be more expensive at first.
These trends bode well for a digital
property like CNET.