CNET sells Webshots for $45 million

CNET has sold photo-sharing site Webshots to American Greetings for $45 million — a website it spent $70 million on three years ago. And this in an age when MySpace bought Photobucket for hundreds of millions. An internal memo reads:

Today, Webshots was sold to American Greetings for approximately $45 million. This was a tough decision but the right business decision. Selling Webshots allows us to focus our efforts against long term strategic goals, and concentrate on the passion-based categories we believe offer the most promise for CNET Networks.

We are pleased that Webshots can become an important ingredient to American Greetings' business, and we are committed to making this a successful transition over the next several months.
The full internal email from CEO Neil Ashe is after the jump:
Hi Everybody,

The third quarter marks a turning point for us. After a year on the job, I am confident we are building a company that can succeed in 2008 and beyond. Today, during our Q3 Earnings Call, I will make several major announcements that underscore our progress.

Strategically, we are focused on providing people with brands that make a difference and that help marketers win. Financially, we evaluated our asset mix and are focused on those areas that best fit within our brand portfolio, represent the largest opportunity and where we can be leaders. Operationally, we have a winning team that knows what success is and is committed to achieving it.

Let me provide more detail for you on those announcements.

Sale of Webshots Today, Webshots was sold to American Greetings for approximately $45 million. This was a tough decision but the right business decision. Selling Webshots allows us to focus our efforts against long term strategic goals, and concentrate on the passion-based categories we believe offer the most promise for CNET Networks.

We are pleased that Webshots can become an important ingredient to American Greetings' business, and we are committed to making this a successful transition over the next several months.

New Head of the Combined Entertainment and Lifestyle Business Unit I am pleased to announce Stephen Colvin as EVP of our new Entertainment & Lifestyle business. A 20-year media veteran, Stephen joins us from Dennis Publishing, where he built Maxim, Blender, Stuff and The Week magazines. He has a track record as a dynamic leader and brand builder. Stephen will be based in our NYC office which allows us to expand our presence in a city that is the hub of the media world. Stephen will be spending a lot of time in San Francisco.

The merger of CHOW and Urban Baby into the Entertainment & Lifestyle business unit simplifies our business, and allows us to leverage infrastructure, tools and best practices across this larger group. Over the next few days and weeks there will be individual and team meetings within Entertainment and Lifestyle to discuss the transition process.

Stephen will be in San Francisco next week, and he is looking forward to meeting the team.

Partnership Marketing and Sales Jack Haire joined us several months ago to evaluate and evolve our sales structure and go-to-market strategy. As a result of his assessment, Jack will be taking on the newly formed role of Chief Client Officer. In his new position, Jack will oversee the Partnership Sales team, chair the revenue council and have responsibility and final decision making for sales best practices, infrastructure and policies.

This new sales construct provides the flexibility to tap our best people across the company and align them against our best opportunities for revenue growth. The team will include dedicated centralized resources as well as part time allocation of resources from each BU. More announcements regarding this new team structure will be made in the coming weeks.

Channel Moves into the CNET BU The joining of Channel and CNET brings together two category leaders. Together, they cover the spectrum of bringing information and services to manufacturers, distributors, retailers and consumers. The two businesses will benefit from a holistic view of tech consumption with the channel and to the consumer.

Steve Parrot will report to Joe Gillespie and continue to manage Channel as a stand alone business within the CNET BU.

Credit Facility Last week we announced that we secured a $250 million credit facility. A credit facility is a set of loans that allow us to borrow money in order to enhance our ability to grow. Together, with the proceeds from our sale of Webshots, we have the financial resources available to create value for our shareholders.

Q3 Earnings We reported that revenues for the third quarter were $99.5 million up 7% compared to the same period in 2006. Excluding all exited businesses, including Webshots, from both 2007 and 2006, total revenue increased 11% during the quarter. In addition, CNET networks' global Internet properties reached and average of 141 unique monthly users consuming over 91 million pages per day.

At the beginning of the year, I laid out three initiatives and key areas of focus as part of our long term growth strategy:

First, realize the potential and opportunity of existing brands. Second, identify new opportunities for growth. And third, continue to strive to do what we do better.

Today's announcements directly support our ability to achieve these initiatives and build a vibrant and valuable company that seizes the long term opportunity and creates value for users, employees, marketers and shareholders.

As we exit the third quarter, we have made real progress on our transformation to a new CNET Networks. A bold company that is entrepreneurial and aggressive. CNET Networks is not the site-of-the-day. CNET Networks is the media company of the future.

Best, NA

__________________________ Neil Ashe CNET Networks, Inc. 415-xxx-xxxx