CNET Should Sell News.com to "Dream Team" Bloggers

Apr. 7.08 | About: ChinaNet Online (CNET)

The wily Michael Arrington caused quite the fuss a few days ago by criticizing blog networks that take venture capital and suggesting that TechCrunch and other leading technology blogs instead band together to create a “dream team” blog network that would, in Arrington’s words, “kill CNET (NASDAQ:CNET).” Henry Blodget, founder of the Silicon Valley Insider blog seemed to agree with Arrington that banding together might not be such a bad idea.

I think rolling up a mega technology blog network makes a lot of sense. Creating a focused group of top-tier tech blogs would give the network enough reach and inventory to go grab big, lucrative advertising deals. You see all those start-ups advertising in the upper right corner of TechCrunch? Imagine if Microsoft or HP took over that slot and imagine how much more they would pay to be there.

But will a dream team tech blog network in the mold of TechCrunch really kill off CNET? No - because most people don’t understand what CNET’s really about and what makes the company the most money. When bloggers talk about taking on CNET, they’re really talking about taking on News.com, one of CNET’s premier properties. An influential blog network could certainly steal users from News.com, but this wouldn’t be the worst thing to happen to CNET. News.com, while an undeniably great brand and service, is also amazingly heavy on the overhead. All those pesky reporters and editors cost money.

In fact, the best thing CNET could do would be to sell off News.com to this yet-to-be-formed blog network. The network could use the News.com name as its central brand (doesn’t get any better than that domain!), and spin off all of News.com’s great reporters into their own blogs (many of whom are active bloggers already).

Jettisoning News.com would impact CNET’s short-term revenues, but it would undeniably boost the company’s sagging profit margins. What drives CNET’s profits is its technology product reviews and the Shopper.com product search engine. This is an area that CNET still dominates and it would be largely unaffected by competition from a tech news blog network. In recent years CNET’s reviews have been behind the curve in evaluating new technology products, mainly because the company has been spread thin going into a variety of areas, many of which have had significantly lower margins than its review/shopping core. CNET’s biggest blog competition is not from TechCrunch, but from Engadget and Gizmodo - these are the blogs breaking the tech product news that CNET should be breaking.

Selling off News.com would free up CNET to re-focus on its core competency which, as it turns out, also makes them the most money. So c’mon Michael - get this super mega tech blog network going. You wouldn’t be killing CNET, you’d actually be helping it.

Disclosure: I used to work at CNET and I currently own CNET stock.