May 15, 2008 3:16PM

A Wild Future for the World Wide Web?

By Alexis Glick

Is the fascination and investment in digital media a repeat of the dot-com bubble?

I’m certainly no expert, but the dollars being allocated toward digital platforms are big and getting bigger! This morning, CBS announced it is acquiring CNET for a 45% premium to its stock price pre-opening — or for $1.8 billion. The combined entity will have 54 million unique users in the US and 200 million worldwide a month. CNET owns properties like ZDNET, GameStop.com, TV.com, mp3.com, UrbanBaby.com, Search.com and others. CNET’s revenue last year $406 million vs. CBS’s revenue of $14.07 billion.

CBS shareholders apparently aren’t thrilled with the 45% premium, but can you blame CBS for doing the deal? If you were CBS, you’d be thinking about about two things.

First, its digital distribution and competition — which, oh by the way, continues to make huge investments in the digital community. Just look at News Corp (the parent company of the FOX Business Network), NBC Universal, IAC, Google, Microsoft’s interest in Yahoo. What about the persisent buyout rumors for LinkedIn… among other social networking sites like Facebook. There’s a lot going on!
Second, CBS is beginnging to look like the dinosaur of television or the Microsoft of the technology world. It’s a great brand and speaks to an older audience, but it needs to refocus it’s energy on a younger, more technologically astute audience. How do you do that if you’re CBS? You buy it! If you try to build it, it could take years. By that time, all of these companies will be on to the next thing. So if you’rem CBS do you have a choice? You’ve got to be in it, to win it!

The only glaring question at this point is valuations. Look at CNET… It was trading close to $80 dollars in the end of 1999 — an all-time high — and look at it today. Look at IAC and what Barry Diller is trying to do to bring value back to all of his standalone internet businesses. He’s trying to split them up and spin them off in the hopes that the pieces will be worth more than the sum of the parts.

So call me crazy….but will these investments be worth it two or five years from now? Should Blockbuster buy Circuit City? Should an $800 million dollar company buy a $600 million dollar company? Do bricks and mortar matter? Would you want to be one of these executives in the media world trying to find the next big thing? This is an insane and exciting time for the internet, media and the mutiple digital platforms, but your guess is as good as mine as to where it is headed! Next thing you know… Google is buying NBC Universal! It’s the WILD WEST!!!!!!