Jan 16, 2024 - Business

Scoop: Red Ventures explores sale of CNET

Photo: Andrew Harrer/Bloomberg via Getty Images

Red Ventures, the digital media and marketing juggernaut based in Fort Mill, South Carolina, has approached strategic buyers about offloading tech news and reviews site CNET, five sources familiar with the effort told Axios.

Why it matters: Red Ventures acquired CNET, along with a few smaller websites, from ViacomCBS, now Paramount Global, in 2020 for $500 million. It's hoping to get at least half of that for CNET alone.

Data: Similarweb; Chart: Axios Visuals

Details: Red Ventures has been quietly approaching strategic buyers, mostly other large media holding firms, for several months to gauge their interest in CNET, but talks began to ramp up before the holidays, sources told Axios.

  • Red Ventures hired CNET's former president Mark Larkin to return to the site as president in November. Larkin left CNET in 2021, after having spent roughly two decades there, including 12 years under its previous owners at CBS.
  • The process, for now, is still informal, as the company looks to boost earnings before a possible sale. CNET is profitable, sources said.
  • Red Ventures declined to comment.

Catch up quick: Red Ventures acquired CNET six months into the pandemic when the digital media ecosystem was reeling from pullbacks in advertising and affiliate commerce revenue.

  • The private equity-backed firm took on debt to fund the deal. (Red Ventures has in the past used debt to facilitate major deals, such as its 2017 acquisition of Bankrate and its 2019 acquisition of HigherEducation.com.)
  • It hoped to grow CNET's business by integrating it into the revenue engine that it uses to fuel its other assets, including Bankrate, The Points Guy, and more. (As part of that effort, it redesigned CNET in 2022 and announced expansions to its editorial coverage and commerce opportunities.)
  • Red Ventures' brands mostly make money via programmatic (automated) online ad sales and affiliate marketing. CNET's business was more reliant on direct sales before the acquisition.
  • The company sold several of the smaller brands it acquired as part of the CNET deal to Fandom in 2022, including GameSpot, TV Guide and Metacritic. It shuttered one of the smaller sites, Chowhound, earlier in 2022, before it was revived by Static Media in 2023.

Yes, but: A slew of challenges, including a slower ad market, plunging traffic, raising interest rates and brand reputation issues, have plagued the deal.

  • Sources who have been pitched on the asset have cited concerns about CNET's reputation following a controversy last year over CNET's failure to disclose the use of AI in articles during a publishing experiment.
  • The company cut roughly 10% of staff shortly thereafter, but it said the two incidents weren't related. Both the AI saga and the layoffs drove CNET workers to form a union a few months later.

The big picture: Red Ventures has grown to become one of the largest privately held digital media companies in the country.

  • The firm was co-founded in 2000 by Ric Elias and Dan Feldstein, who currently serve as chief executive officer and chief marketing officer, respectively.
  • In addition to its consumer business and lifestyle sites, the firm also operates a joint venture called RVO Health with UnitedHealth Group's Optum Health. That partnership, formed in 2022, houses a slew of consumer-focused health news and services websites, including Healthline, Healthgrades.com and others.

The bottom line: The company has a strong reputation for being able to successfully integrate its acquisitions into its larger portfolio, helping to pay down debt. The CNET deal has proven to be an exception.

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