CNET for sale, says the NY Post; but will it sell?

The New York Post reports this morning that "sources said CNET (ticker: CNET) has been informally shopping itself to a host of media companies". Details and comments:

Key points from The New York Post article (free registration required):

• CNET has been in discussions with Viacom (ticker: VIA) and Interactive Corp. (ticker: IAC);
• AOL (owned by Time Warner, ticker: TWX) and Yahoo (ticker: YHOO) are "rumored to be considering making a bid";
• No deal is imminent;
• CNET refused to comment;
• Sell-side analysts are negative on the stock; Scott Kessler of S&P has a strong sell rating on the stock and Needham recently downgraded the stock to "underperform";
• Recent deals: Dow Jones acquired MarketWatch, NY Times acquired About.com, Viacom acquired Neopets;
• Other Internet companies for sale: IGN Entertainment and TheStreet.com.

Comments:

Why would CNET sell itself now? Because it's over-exposed to technology, its competitive position is deteriorating, it's losing people, it may miss analyst estimates, and analysts think the stock is overvalued; but the market is excited about online advertising so the company may get a good price. Specifically:

• CNET is concentrated in technology publishing, and is therefore overexposed to the tech spending cycle;
• Yahoo is launching a technology channel and has hired key people from CNET to launch it;
• Technology blogs like
  Engadget, Gizmodo, Phone Scoop, Mobile Tracker and Mobile Burn pose a growing threat to CNET; they have lower cost structures and faster-growing readership. A CNET sales exec and technology director was recently poached John Battelle's blog advertising company FM Publishing.
• CNET's comparison shopping business (originally My Simon) has been overtaken by competitors, and faces growing competition from Google (Froogle), Yahoo (Yahoo Shopping), eBay (Shopping.com), EW Scripps (Shopzilla), ValueClick (PriceRunner), IAC (Gifts.com) and private companies PriceGrabber and Nextag and startup Become.com.
• Analyst estimates are back-end loaded for the year, with risk that the company will miss them;
• A number of analysts think the stock is overvalued. Avalon Research has a $6 price target on CNET.

CNET is up almost 10% in early trading on the news. Will it sell at that price or greater? Interesting question. TheStreet.com has been on the block since January, but so far there have been no takers. On the other hand, CNET has a better business than TheStreet.com, whose core revenue stream - paid subscriptions - is stagnant, and doesn't offer potential acquirers sufficient exposure to Internet advertising.

Full disclosure: at the time of writing I"m short both CNET and TSCM.

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