Judge Rejects CNET’s Objections to Investor Lawsuit

The showdown between CNET (CNET) and its largest shareholder, Jana Partners, may be entering a new phase. Following a tense meeting last week with Jana representatives, there is now a good chance CNET’s hard stance against giving Jana any board seats (despite the consortium owning a 21 percent share in the company) is about to vaporize. According to a source close to the situation, CNET was trying to block a lawsuit Jana has filed to fill the board with its proposed slate of directors. Jana wants to increase the number of board members from 8 to 15, and have the right to name 7 of them.

CNET was trying to block the suit on a technicality—apparently there was some question as to whether it had been filed properly. CNET was advised that it had a pretty strong case. So strong, in fact, that CEO Neil Ashe earlier this week offered Jana only one board seat because he was so confident the lawsuit would be blocked. But the judge didn’t agree.

So now his hand has been weakened considerably.