A consortium of investors, led by Barry Rosenstein’s Jana Partners, is trying to seize control of the CNET Networks board.
Jana has joined Alex Interactive Media and the VC firm Spark Management in an effort to increase the size of the board from eight directors to 13. The group plans to nominate seven people at the next shareholders’ meeting.
The group has also filed suit in Delaware Chancery Court, to stop CNETfrom rejecting its proposals.
In a press release issued today after the New York Times published a story about the dispute, Rosenstein said, “This effort is about taking an underperforming company and increasing shareholder value by building on its top-notch editorial talent and premier internet assets.”
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CNET responded with its own press release, saying it had reviewed the Jana proposals and found that they violated company bylaws. “Furthermore,” the release said, “the Company believes that no person or group of persons should be able to gain a majority of the Board and control of the Company without offering sufficient value to all stockholders.”
Noting that it had been under new management since 2007, the company said it had made “significant strategic, financial, personnel and operational progress.”
Nevertheless, CNET, founded in 1992, has slipped precipitously since the early days of the web, when it held a prime position in online publishing. As Jana points out, CNET shares rose less than 1% in 2007, compared to gains of approximately 15% for the Interactive Week Internet Index, and 10% for the Nasdaq Index.
Four of Jana’s nominees - Paul Gardi, Santo Politi, Jon Miller and Giorgio Caputo - come from within the companies in the consortium.
The group is also proposing election of Jayne Studenmund, former COO of Overture and former president of Paymybills.com; Julius Genachowski, managing director of Rock Creek Ventures and a director of Motley Fool; and Brian Weinstein, senior executive at Creative Artists Agency.
Shelby Bonnie, former CNET chairman and CEO, stepped down in October 2006, after an internal review showed instances of backdating stock options. Neil Ashe succeeded Bonnie as chief exec.
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