CNET Networks, JANA Partners continue to spar over reorganization, director nominations

By Lisa Kerner

Charlotte, N.C., March 27 - JANA Partners LLC reacted to CNET Networks, Inc.'s news that a task force will evaluate the company's operating issues by recommending new members to CNET's board of directors.

"It is astounding that it has taken years of shareholder value destruction for CNET to even start examining the basics of reversing its ongoing underperformance," JANA managing partner Barry Rosenstein said in a JANA news release.

Rosenstein said fundamental issues raised by JANA should have been addressed "years ago."

JANA, along with Sandell Asset Management Corp., Paul Gardi of Alex Interactive Media, Spark Capital and Velocity Interactive Group, are seeking the election of two individuals to replace the board members who are up for re-election at CNET's 2008 stockholders meeting.

The investors, with a collective stake of 14.9% in the company, also want to expand CNET's board by five members and nominate individuals to fill those vacancies, the news release stated.

CNET was not surprised by JANA's attempt to take credit for CNET's initiatives and for attacking the company's "active and engaged board," according to a statement released on Thursday.

The company said it has made "significant" strategic, financial, personnel and operational progress with a focus on core brands. CNET also cited its addition of two independent members to the board, a realigned workforce and the company's resolved legal issues.

According to CNET, seven of its eight board members are independent.

The San Francisco-based interactive media company had been locked in a legal battle with JANA over director nominations.

As previously reported, the Delaware Court of Chancery upheld the rights of a JANA affiliate to nominate seven directors and propose other business at CNET's 2008 annual meeting of stockholders.

CNET said it would appeal the court's decision, believing a costly and disruptive proxy contest initiated by JANA is not in its stockholders' best interests.

JANA would need a super majority vote of 66.67% in order to put up more than two directors, according to a previous CNET news release.

According to JANA, CNET has gone to great lengths to create the impression that JANA is attempting a hostile takeover, when in fact only one of its seven nominees is a JANA employee.

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