CNET subject to hostile takeover?

The Wall Street Journal is reporting that hedge fund Jana Partners LLC, which holds an 8.1 per cent stake in CNET, plans to nominate seven people to the online media company's board.

According to the Journal article, Jana has teamed up with Paul Gardi of Alex Interactive Media and venture capital firm Spark Capital in its bid for board seats.

Asset management firm Sandell Asset Management, which has a separate 5 per cent nonvoting stake in CNET, said that it will support Jana's efforts. Jana's nominees for CNET's board include Mr. Gardi, Spark Capital founder Santo Politi and Jon Miller, a former AOL chief executive and founding partner of Velocity Interactive Group.

In a filing with the SEC, Jana said its nominees will increase shareholder value at CNET by leveraging the company's editorial content and staff, broadening the company's properties and by focusing on return on investment.

CNET said that it has determined Jana's proposal for board seats is improper under its bylaws, and 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."

Shares in the company rose more than 9 per cent in pre-market trading Monday following a New York Times report that a consortium of investment funds had amassed a 21 per cent stake in CNET and was seeking to oust the company's directors.

By the end of trading, however, CNET shares closed at USD 8.44, down 13 cents from Friday's closing price.

CNET runs GameSpot, following its acquisition of ZDNet in 2000.