CNET Networks Reports Fourth Quarter and Full Year 2004 Financial Resu

CNET Networks Reports Fourth Quarter and Full Year 2004 Financial Results

    Business Editors/High-Tech Editors

    SAN FRANCISCO--(BUSINESS WIRE)--Feb. 2, 2005--CNET Networks, Inc. (Nasdaq:CNET)

    - Company Posts Full-Year 2004 Revenues of $291.2 Million

    - Interactive Revenue up 30% in 2004

    - Monthly Unique Users up 55% and Average Daily Page Views up 94%

    CNET Networks, Inc. (Nasdaq:CNET) today reported results for the fourth quarter and fiscal year ended December 31, 2004.
    "We delivered on our growth objectives in 2004, culminating in 30 percent Interactive revenue growth and expanding profit margins," said Shelby Bonnie, chairman and CEO of CNET Networks. "During the year, in addition to this strong financial performance, we achieved significant growth in user and usage trends. Key contributors include our success in increasing the visibility of our brands, and in deepening our established Website offerings with more engaging and innovative features such as video content, personalization, and community."

--	Total revenues for the fourth quarter totaled $89.2 million, a 21 percent increase compared to revenues of $73.5 million for the same period of 2003.
--	Interactive revenue increased 29 percent to $80.1 million in the fourth quarter versus $61.9 million in the same period in 2003.
--	Operating income equaled $5.3 million, including the impact of an $8.9 million non-cash asset impairment charge associated with Computer Shopper magazine. The non-cash asset impairment charge was recognized as a result of an impairment evaluation of Computer Shopper which resulted in a reassessment of the carrying value of that business.
--	Operating income before depreciation, amortization, and asset impairment was $20.5 million, a 55 percent increase compared to $13.2 million during the fourth quarter of 2003.
--	The profit margin of operating income before depreciation, amortization and asset impairment increased to 23 percent, from 18 percent during the fourth quarter of 2003.
--	Net income for the fourth quarter of 2004 was $9.2 million, or $0.06 per diluted share. This compares with net income of $6.9 million, or $0.05 per diluted share, for the same period of 2003. Net income for the fourth quarter of 2004 includes a loss of $5.4 million, or $0.03 per diluted share, related to the $8.9 million non-cash asset impairment charge partially offset by a $3.5 million gain on the sale of investments. Excluding these items, net income for the fourth quarter was $14.6 million, or $0.09 per diluted share.

    Financial highlights for the year ended December 31, 2004 are as follows:

    -- Total revenues for the year ended December 31, 2004 increased
    18 percent to $291.2 million, versus revenues of $246.2
    million for the same period of 2003.

    -- Full year 2004 interactive revenue increased 30 percent to
    $256.2 million from $197.0 million for the same period last
    year.

    -- Operating income equaled $1.2 million, including the impact of
    an $8.9 million non-cash asset impairment charge associated
    with Computer Shopper magazine.

    -- Operating income before depreciation, amortization and asset
    impairment was $35.5 million for the year ended December 31,
    2004, versus $2.8 million for the same period last year.
    Results for full-year 2003 included $9.8 million of
    realignment costs.

    -- The profit margin of operating income before depreciation,
    amortization and asset impairment increased to 12 percent,
    from 1 percent during the full year 2003.

    -- Net income for the full year 2004 was $11.7 million, or $0.08
    per diluted share. This compares to a net loss of $26.3
    million, or loss of $0.19 per share, in 2003. Net income for
    the full year 2004 includes a loss of $5.4 million, or $0.03
    per diluted share, related to the unusual fourth quarter items
    described above.

    "The achievements and growth trends during 2004 position us for strong performance in the coming year. Through our ongoing focus on content innovation and expansion, we are providing our audiences an ever more compelling experience across our network. By successfully meeting the needs and interests of our users, we will expect to continue our positive growth trajectories in reach and traffic, monetization, and in broadening our advertiser relationships," added Bonnie.

    Business Review

    -- CNET Networks' global network of Internet properties reached
    an average of 103 million unique users on a monthly basis
    during the fourth quarter of 2004(1), an increase of 55
    percent from the fourth quarter of 2003. Average daily page
    views increased to 85 million during the fourth quarter(1), up
    94 percent from the year-ago quarter. Growth in monthly unique
    users and average daily page views reflects strong organic
    growth as well as acquisitions, including the company's
    acquisition of Webshots, which closed in the third quarter of
    2004.

    -- CNET Networks continued to make strides during the quarter to
    grow and diversify its customer base, breaking into new
    advertiser segments. During the fourth quarter, CNET Networks
    attracted advertisers such as Bose, Mastercard, Gillette, New
    Line Cinema, Toyota, Johnson & Johnson, Kodak, and Marriott.
    While this success in attracting new advertiser segments began
    with its entertainment properties, CNET Networks has started
    to see increased traction on a broader set of properties,
    including CNET.com, CNET News.com, and Webshots. The company's
    focus on diversifying its customer base into new categories
    helped drive a 60 percent increase in the number of Ad Age Top
    100 US advertisers doing business with CNET Networks in 2004.
    By the end of 2004, CNET Networks' customer list included
    close to half of the Ad Age Top 100 US advertisers.

    -- CNET.com continues to leverage the growth in broadband
    adoption by expanding its video content coverage, providing a
    much more compelling user experience. Just last month, its
    editorial team added more than 200 video reviews of the
    hottest products introduced during the 2005 International
    Consumer Electronics Show, giving users an easy, unbiased, and
    informative way to evaluate the latest offerings. In addition
    to its ongoing coverage of established consumer electronics
    categories, CNET.com editors expanded their coverage to
    include categories such as automotive technology, as well as
    the latest in portable audio and video devices.

    -- A marked increase in visibility for several of CNET Networks'
    leading brands contributed to its overall user and usage
    growth. During the quarter, CNET.com and GameSpot proved
    continued momentum in securing content licensing partnerships
    with leading Websites. These relationships further expand CNET
    Networks' brand visibility and reach to new audiences, as well
    as validate its position as a leading provider of trusted,
    unbiased content. In addition, the company is gaining brand
    exposure as its respected editors are increasingly relied upon
    by other media as topic experts, providing commentary on new
    product releases, breaking news, and issues. Recent highlights
    include:

    -- CNET.com secured new content licensing agreements with
    Marketwatch from Dow Jones, Netscape.com, and CompuServe.
    Each of these sites will feature CNET's consumer
    technology content in co-branded areas, which are expected
    to launch in the first half of this year. CNET's current
    content licensing relationships include New York Times
    Digital, ABCNews.com, MSN, BusinessWeek, MobiTV, Windows
    Media, and Premier Retail Network (PRN).

    -- During the fourth quarter, GameSpot continued to add to
    its growing list of content partners. Yahoo! Games
    announced a partnership through which GameSpot's
    comprehensive PC and video game content will be provided
    to Yahoo! Games users, starting in the first quarter of
    2005. Other GameSpot partners include AOL, MSN,
    Electronics Boutique's EBGames.com, and Sony PlayStation.

    -- CNET.com and GameSpot received significant media coverage
    during the fourth quarter, with hundreds of appearances on
    network, regional, and cable television, radio, and
    national and regional print publications. CNET Networks'
    editors are gaining recognition for their expertise,
    providing commentary for television programs such as the
    CBS Early Show, CNN Headline News, as well as interviews
    with numerous local television programs, and print
    publications such as USA Today, The New York Times, USA
    Weekend, and Newsweek.

    -- During the quarter, the company continued to see strong growth
    trends across the Webshots platform. In just four months, the
    Webshots audience size, usage, photo uploads, and photo
    library have increased significantly as a result of leveraging
    the CNET Networks platform. For example, since reaching the
    key milestone of 100 million digital photographs in its shared
    and private libraries early in the fourth quarter, the library
    has increased in size by 40 percent, to more than 140 million
    photos. As the leading photography Website(2), Webshots
    continues its rapid growth, attracting a vibrant global
    community of photography fans.

    -- During the quarter, CNET Networks closed its acquisition of
    the assets of ZOL and Fengniao, which operate the zol.com.cn
    and fengniao.com Web sites, respectively, in cooperation with
    Chinese subsidiaries and affiliates. ZOL is one of the leading
    providers of online personal technology-related content and
    shopping services in Northern China. Fengniao is one of
    China's leading digital photography properties, with reviews
    on over 1,000 digital cameras, as well as a large image
    database, content, and forums related to the digital
    photography category. These acquisitions expand CNET Networks'
    online presence in China, securing a leadership position in
    the personal technology category ahead of the wave of expected
    Internet usage and online advertising growth.

    -- The award-winning CNET News.com Web site announced that it has
    become the first major media entity to integrate TrackBack
    link notification capability into its stories, providing
    readers valuable perspective on the response of the blog
    community to its reporting and analysis. As a result, readers
    can easily find the blogs that discuss a particular news
    story, gaining multi-faceted insight on the issues that
    interest them. In turn, when bloggers using TrackBack discuss
    a CNET News.com story, they gain visibility before the
    audience of one of the most popular news sources on the Web.
    The CNET News.com editorial team benefits from TrackBack by
    gaining valuable feedback to their stories, as well as insight
    on which topics are generating the most buzz, so they can
    expand their coverage of those topics.

    Business Outlook

    For the first quarter of 2005, management anticipates total revenues of $71.0 million to $74.0 million. Interactive revenues are expected to be in the range of $66.0 million to $68.0 million, and publishing revenues are expected to be between $5.0 million and $6.0 million. Management estimates an operating loss between $600,000 and $2.6 million during the first quarter, and operating income before depreciation and amortization of between $4.0 million and $6.0 million for the quarter.
    For the full-year 2005, management is estimating total revenues will be in the range of $340.0 million and $355.0 million. Management expects Interactive revenue to be in the range of $310.0 million to $320.0 million, and publishing revenues are expected to be between $30.0 million and $35.0 million. Operating income before depreciation and amortization is expected to be between $63.0 million and $69.0 million. Full-year 2005 guidance does not reflect any stock option related expenses.
    More detailed guidance, as well as a table that reconciles operating income (loss) before depreciation and amortization guidance to operating income (loss) guidance can be found on the "Guidance to the Investment Community" sheet that accompanies this press release.

    Sarbanes-Oxley Update

    The company is in the process of completing its analysis of internal controls as required by Section 404 of The Sarbanes-Oxley Act and expects to complete that evaluation prior to the issuance of its Form 10-K for the year ended December 31, 2004, which it expects to file on or before March 16, 2005.
    As described above, CNET Networks recorded a non-cash impairment charge associated with the goodwill of its Computer Shopper reporting unit as a result of the analysis of goodwill impairment under SFAS 142 undertaken by the company at the end of the fourth quarter. During the course of its audit of the 2004 financial statements, KPMG discovered an error in one step of the company's SFAS 142 impairment analysis that impacted the size of the company's initial calculation of the impairment charge. The error was corrected by the company prior to the finalization of the reported financial statements.
    As a result, there was no effect on the fourth-quarter or year-end results reported today or on previously reported financial results. The company is currently analyzing whether the error that occurred in the SFAS 142 impairment analysis reflects a "material weakness" in internal controls as defined in PCAOB Audit Standard No. 2 related to Section 404 of Sarbanes-Oxley. The outcome of that analysis will be included in the company's overall evaluation of internal controls to be included within its Form 10-K.

    Conference Call and Webcast

    CNET Networks will host a conference call to discuss its fourth quarter and full year 2004 financial results and business outlook beginning at 5:00 pm ET (2:00 pm PT), today, February 2, 2005. To listen to the discussion, please visit http://ir.cnetnetworks.com and click on the link provided for the webcast conference call or dial (800) 344-1035 (international dial-in: (706) 679-3076). A replay of the conference call will be available through February 16, 2005 via webcast at the URL listed above or by calling (800) 642-1687 (international dial-in: (706) 645-9291) and entering the conference ID number 3453534. The company's past financial news releases, related financial and operating information, and access to all Securities and Exchange Commission filings, can also be accessed at http://ir.cnetnetworks.com.

    Safe Harbor

    This press release and its attachments include forward-looking information and statements that are subject to risks and uncertainties that could cause actual results to differ materially. These forward-looking statements include the statements under the section entitled "Business Outlook," which sets forth our estimated financial performance for the first quarter and full year of 2005, and statements regarding our growth prospects and expectations regarding the future success of our products and services. In addition, management expects to provide forward-looking information statements on the conference call to be held shortly following the issuance of this release, which are also subject to risks and uncertainties that could cause actual results to differ materially. The forward-looking statements in this release and on the conference call are identified by the words "expect," "estimate," "target," "believe," "goal," "anticipate," "intend" and similar expressions or are otherwise identified in the context in which they are made as being forward-looking. These statements are only effective as of the date of this release and we undertake no duty to publicly update these forward-looking statements, whether as a result of new information, future developments or otherwise. The risks and uncertainties that could cause actual results to differ materially from those projected include: a lack of growth or a decrease in marketing spending on the Internet due to failure of marketers to adopt the Internet as an advertising medium at the rate that we currently anticipate; a lack of growth or decrease in marketing spending on CNET Networks' properties in particular, which could be prompted by competition from other media outlets, both on and off the Internet, dissatisfaction with CNET Networks' services, or economic difficulties in our clients' businesses, as evidenced in previous periods by many of our enterprise technology customers; economic conditions such as weakness in corporate or consumer spending, which could prompt a reduction in overall advertising expenditures or expenditures specifically on our properties; the failure of existing advertisers to meet or renew their advertising commitments as we anticipate, which would cause us to not meet our financial projections; the failure to attract advertisers outside of our traditional technology and consumer electronics categories, which would cause us to not meet our financial projections; a continued decline in revenues from our print publications as advertising dollars shift to other media; the acquisition of businesses or the launch of new lines of business, which could decrease our cash position, increase operating expense, and dilute operating margins; an increase in intellectual property licensing fees, which could increase operating expense, including amortization; the risk of future impairment of our intangible assets, goodwill or investments based on a decline in our business or investees; and general risks associated with our business. For risks about CNET Networks' business, see its Annual Form 10-K for the year ended December 31, 2003 and subsequent Forms 10-Q and 8-K, including disclosures under the captions "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations," which are filed with the Securities and Exchange Commission and are available on the SEC's website at www.sec.gov.

    About CNET Networks, Inc.

    CNET Networks, Inc. (www.cnetnetworks.com) is a premier global interactive content company that informs, entertains, and connects large, engaged audiences around topics of high information need or personal passion. The company focuses on three categories--personal technology, games and entertainment, and business technology--and includes such leading brands as CNET, ZDNet, TechRepublic, MP3.com, GameSpot, CNET Download.com, CNET News.com, Webshots, Computer Shopper magazine, and CNET Channel. With a strong presence in the US, Asia and Europe, CNET Networks has operations in 12 countries.

    (1) CNET Networks September - December 2004 (internal log data)
    (2) December 2004 Nielsen//Net Ratings - Photography Subcategory including Excluding Internet Applications

Consolidated Statements of Operations Unaudited (in thousands, except share and per share data)

Three Months Ended Year Ended December 31, December 31, -------------------------- ------------------------- 2004 2003 2004 2003 ------------ ------------- ------------ ------------

Revenues Interactive $ 80,146 $ 61,948 $ 256,245 $ 196,990 Publishing 9,066 11,559 34,911 49,250 ------------ ------------- ------------ ------------ Total revenues 89,212 73,507 291,156 246,240

Operating expenses: Cost of revenues 39,145 34,817 144,312 138,305 Sales and marketing 19,188 17,554 73,268 68,827 General and administrative 10,373 7,887 38,105 36,272 Depreciation 4,491 4,045 19,432 17,348 Amortization of intangible assets 1,761 1,087 5,895 6,304 Asset impairment 8,931 - 8,931 - ------------ ------------- ------------ ------------ Total operating expenses 83,889 65,390 289,943 267,056

Operating income (loss) 5,323 8,117 1,213 (20,816)

Non-operating income (expense): Realized gains on investments, net of impairments 3,514 - 14,852 - Interest income 496 393 1,872 2,205 Interest expense (731) (1,658) (6,149) (6,932) Other 220 401 (136) (87) ------------ ------------- ------------ ------------ Total non- operating income (expense) 3,499 (864) 10,439 (4,814) ------------ ------------- ------------ ------------ Income (loss) before income taxes 8,822 7,253 11,652 (25,630)

Income tax expense (benefit) (405) 304 (33) 660 ------------ ------------- ------------ ------------

Net income (loss) $ 9,227 $ 6,949 11,685 $ (26,290) ============ ============= ============ ============

Basic net income (loss) per share $ 0.06 $ 0.05 0.08 $ (0.19) ============ ============= ============ ============

Diluted net income (loss) per share $ 0.06 $ 0.05 0.08 $ (0.19) ============ ============= ============ ============

Shares used in calculating basic net income (loss) per share 143,973,980 141,711,185 143,289,458 140,234,438

Shares used in calculating diluted net income (loss) per share 159,090,390 148,234,382 150,313,734 140,234,438

Note: Diluted earnings per share for 2004 reflects the early adoption of EITF 04-8.

Consolidated Balance Sheets Unaudited (in thousands, except share data)

Dec. 31, Dec. 31, 2004 2003 ----------- ----------- ASSETS Current Assets: Cash and cash equivalents $ 29,560 65,913 Investments in marketable debt securities 22,193 12,556 Accounts receivable, net 66,712 54,387 Other current assets 15,155 8,823 ----------- ----------- Total current assets 133,620 141,679

Restricted cash 19,774 19,159 Investments in marketable debt securities 22,199 38,711 Property and equipment, net 48,989 56,384 Other assets 21,722 23,092 Intangible assets, net 34,756 11,263 Goodwill 126,287 61,555 ----------- ----------- Total assets $ 407,347 351,843 =========== ===========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities: Accounts payable $ 6,903 8,767 Line of credit 5,000 - Accrued liabilities 61,992 53,151 Current portion of long-term debt 4,007 99 ----------- ----------- Total current liabilities 77,902 62,017

Non-current liabilities: Long-term debt 125,614 118,029 Other liabilities 10,252 1,835 ----------- ----------- Total liabilities 213,768 181,881

Stockholders' equity: Common stock; $0.0001 par value; 400,000,000 shares authorized; 144,455,283 outstanding at December 31, 2004 and 142,100,372 outstanding at December 31, 2003 14 14 Notes receivable from stockholders - (137) Additional paid-in-capital 2,719,576 2,709,178 Accumulated other comprehensive income (12,652) (14,074) Treasury stock, at cost (30,453) (30,428) Accumulated deficit (2,482,906) (2,494,591) ----------- ----------- Total stockholders' equity 193,579 169,962 ----------- ----------- Total liabilities and stockholders' equity $ 407,347 351,843 =========== ===========

Statements of Cash Flows Unaudited (in thousands) Year Ended December 31, ------------------------ 2004 2003 --------- --------- Cash flows from operating activities: Net Income (Loss) $11,685 $(26,290) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 25,327 23,652 Asset impairment and loss on disposal 9,364 (247) Noncash interest 1,683 831 Noncash stock compensation - 53 Allowance for doubtful accounts 3,513 2,579 (Gain) loss on sale of marketable securities and privately held investments (14,852) (10) Changes in operating assets and liabilities, net of acquisitions Accounts receivable (14,463) (902) Other assets 5,890 3,360 Accounts payable (1,875) 2,195 Accrued liabilities (5,373) (11,166) Other long-term liabilities (9,765) (983) --------- --------- Net cash provided by (used in) operating activities 11,134 (6,928) --------- ---------

Cash flows from investing activities: Purchase of marketable debt securities (40,108) (51,875) Proceeds from sale of marketable debt securities 47,522 81,389 Proceeds from sale of investments in privately held companies 16,754 - Investments in privately held companies (1,332) - Proceeds from asset sales - 247 Net cash paid for acquisitions (75,635) (2,938) Capital expenditures (14,214) (11,694) --------- --------- Net cash provided by (used in) investing activities (67,013) 15,129 --------- ---------

Cash flows from financing activities: Payments received on stockholders' notes 137 260 Net borrowing on credit facility 5,000 - Net proceeds from issuance of convertible notes 120,800 - Net proceeds from employee stock purchase plan 1,032 652 Net proceeds from exercise of options 8,874 9,496 Principal payments on borrowings (114,043) (536) --------- --------- Net cash provided by financing activities 21,800 9,872 --------- ---------

Net increase in cash and cash equivalents (34,079) 18,073 Effect of exchange rate changes on cash and cash equivalents (2,274) 641 Cash and cash equivalents at the beginning of the period 65,913 47,199 --------- --------- Cash and cash equivalents at the end of the period $29,560 $65,913 ========= =========

Business Segments Unaudited (in thousands)

CNET Network's primary areas of measurement and decision-making include two principal business segments - U.S. Media and International Media. U.S. Media consists of an online network focused on three content categories: personal technology, games and entertainment and business technology, as well as its Channel Services database licensing business and U.S. print operations. International Media includes the delivery of online technology information and several technology print publications in non U.S. markets. Management believes that segment operating income (loss) before depreciation, amortization, asset impairment and realignment expenses is an appropriate measure of evaluating the operating performance of the company's segments. However, segment operating income (loss) before depreciation, amortization, asset impairment and realignment expenses should not be considered a substitute for operating income, cash flows or other measures of financial performance prepared in accordance with generally accepted accounting principles.

Three months ended December 31, 2004 --------------------------------------------- U.S. International Media Media Other(1) Total --------- ------------- --------- --------- Revenues $70,553 $18,659 $- $89,212 Operating expenses 52,471 16,235 15,183 83,889 --------- ------------- --------- ---------

Operating income (loss) $18,082 $2,424 $(15,183) $5,323 ========= ============= ========= =========

Three months ended December 31, 2003 --------------------------------------------- U.S. International Media Media Other(1) Total --------- ------------- --------- --------- Revenues $61,174 $12,333 $- $73,507 Operating expenses 48,682 11,576 5,132 65,390 --------- ------------- --------- ---------

Operating income (loss) $12,492 $757 $(5,132) $8,117 ========= ============= ========= =========

Year ended December 31, 2004 --------------------------------------------- U.S. International Media Media Other(2) Total --------- ------------- --------- --------- Revenues $234,959 $56,197 $- $291,156 Operating expenses 198,027 57,658 34,258 289,943 --------- ------------- --------- ---------

Operating income (loss) $36,932 $(1,461) $(34,258) $1,213 ========= ============= ========= =========

Year ended December 31, 2003 --------------------------------------------- U.S. International Media Media Other(2) Total --------- ------------- --------- --------- Revenues $208,809 $37,431 $- $246,240 Operating expenses 191,812 41,827 33,417 267,056 --------- ------------- --------- ---------

Operating income (loss) $16,997 $(4,396) $(33,417) $(20,816) ========= ============= ========= =========

(1) For the three months ended December 31, 2004, other represents operating expenses related to depreciation of $4,491, amortization of $1,761 and asset impairment of $8,931. For the three months ended December 31, 2003, other represents depreciation of $4,045 and amortization of $1,087.

(2) For the year ended December 31, 2004, other represents operating expenses related to depreciation of $19,432, amortization of $5,895 and asset impairment of $8,931. For the year ended December 31, 2003, other represents operating expenses related to realignment of $9,765, depreciation of $17,348 and amortization of $6,304.

Quarterly Statistical Highlights Unaudited Q404 Q3-04 Q2-04 Q1-04 Q4-03 ------- ------- ------- ------- -------

Total Quarterly Revenue($mm) $89.2 $70.5 $68.1 $63.4 $73.5

Revenue Distribution (%)(a) Marketing Services 79% 75% 77% 76% 74% Licensing, Fees & User 11% 12% 10% 12% 10% Publishing 10% 13% 13% 12% 16%

Advertiser Metrics CNET Networks Top 100 US Advertisers' Renewal Rate (Q-to-Q) 96% 95% 98% 89% 96% CNET Networks Top 100 US Advertisers' % of Network Revenue 54% 57% 56% 58% 60%

Select Business Metrics(b) Network Unique Users (mm) 103.0 88.7 74.2 76.5 66.3 Network Average Daily Page Views (mm) 85.0 61.8 41.8 44.2 43.9 Total Paid Leads (mm) 51.5 45.5 44.8 46.1 49.0

Balance Sheet Highlights($mm) Cash $29.5 $29.1 $62.6 $77.9 $65.9 Marketable Debt Securities 44.4 44.7 71.1 51.6 51.2 Restricted Cash 19.8 19.8 19.8 19.7 19.2 ------- ------- ------- ------- ------- Total Cash & Equivalents $93.7 $93.6 $153.5 $149.2 $136.3

Total Debt $134.6 $129.3 $129.4 $118.1 $118.1

Days Sales Outstanding (DSO) 67 65 65 66 67

(a) Revenue distribution definitions are as follows: Marketing Services - sales of advertisements on our Internet network through impression-based and activity-based advertising. Licensing, Fees & User - licensing our product database, online content, subscriptions to online services, and other paid services. Publishing - sales of advertisements in our print publications, subscriptions and newsstand sales of publications, and custom publishing services.

(b) Total Paid Leads include leads from shopping services, downloads, search, and white papers.

Note: Beginning in the Q1 2005, CNET Networks will no longer report total paid leads.

Guidance to the Investment Community

Q4-04 Q1-05 estimate FY 2005 estimate $ in millions, Actual Low - High Low - High except per share ------ ----------------------- ----------------

Interactive Revenues $80.1 $66.0 - $68.0 $310.0 - $320.0 Publishing Revenues $9.1 $5.0 - $6.0 $30.0 - $35.0

Total Revenues $89.2 $71.0 - $74.0 $340.0 - $355.0

Operating income before $20.5 $4.0 - $6.0 $63.0 - $69.0 depreciation, amortization and asset impairment

Depreciation expense ($4.5) ($4.2) ($19.5)

Amortization expense ($1.8) ($2.4) ($10.5)

Asset impairment ($8.9) - -

Operating income (loss) $5.3 ($2.6)- ($0.6) $33.0 - $39.0

Interest expense, net ($0.2) ($0.4) ($1.7)

Other income (expense) $3.7 ($0.1) ($0.5)

Tax benefit (expense) $0.4 ($0.2) ($1.8)

Earnings per share $0.06 ($0.02) - ($0.01) $0.18 - $0.22

FY 2005 guidance excludes any stock option related expenses resulting from the impact of the adoption of Financial Accounting Standards Board Statement 123R, "Share-Based Payments" which is effective for periods beginning after June 15, 2005.

FY 2005 earnings per share guidance is based on a share count of approximately 160 million shares, of which 8.3 million shares are attributable to the impact of EITF 04- 8.

Safe Harbor Statement

This press release and its attachments includes forward-looking information and statements that are subject to risks and uncertainties that could cause actual results to differ materially. These forward-looking statements include the statements under the section entitled "Business Outlook," which sets forth our estimated financial performance for the first quarter and full year of 2005, and statements regarding our growth prospects and expectations regarding the future success of our products and services. In addition, management expects to provide forward-looking information statements on the conference call to be held shortly following the issuance of this release, which are also subject to risks and uncertainties that could cause actual results to differ materially. The forward-looking statements in this release and on the conference call are identified by the words "expect," "estimate," "target," "believe," "goal," "anticipate," "intend" and similar expressions or are otherwise identified in the context in which they are made as being forward-looking. These statements are only effective as of the date of this release and we undertake no duty to publicly update these forward-looking statements, whether as a result of new information, future developments or otherwise. The risks and uncertainties that could cause actual results to differ materially from those projected include: a lack of growth or a decrease in marketing spending on the Internet due to failure of marketers to adopt the Internet as an advertising medium at the rate that we currently anticipate; a lack of growth or decrease in marketing spending on CNET Networks' properties in particular, which could be prompted by competition from other media outlets, both on an off the Internet, dissatisfaction with CNET Networks' services, or economic difficulties in our clients' businesses, as evidenced in previous periods by many of our enterprise technology customers; economic conditions such as weakness in corporate or consumer spending, which could prompt a reduction in overall advertising expenditures or expenditures specifically on our properties; the failure of existing advertisers to meet or renew their advertising commitments as we anticipate, which would cause us to not meet our financial projections; the failure to attract advertisers outside of our traditional technology and consumer electronics categories, which would cause us to not meet our financial projections; a continued decline in revenues from our print publications as advertising dollars shift to other media; the acquisition of businesses or the launch of new lines of business, which could decrease our cash position, increase operating expense, and dilute operating margins; an increase in intellectual property licensing fees, which could increase operating expense, including amortization; the risk of future impairment of our intangible assets, goodwill or investments based on a decline in our business or investees; and general risks associated with our business. For risks about CNET Networks' business, see its Annual Form 10-K for the year ended December 31, 2003 and subsequent Forms 10-Q and 8-K, including disclosures under the captions "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations," which are filed with the Securities and Exchange Commission and are available on the SEC's website at www.sec.gov.

Operating Income (Loss) Reconciliation (in thousands)

Three Months Year Ended Ended December 31, December 31, ----------------- ------------------ 2004 2003 2004 2003 -------- -------- -------- ---------

Operating income (loss) $5,323 $8,117 $1,213 $(20,816) Depreciation 4,491 4,045 19,432 17,348 Amortization of intangible assets 1,761 1,087 5,895 6,304 Asset impairment 8,931 - 8,931 - -------- -------- -------- --------- Operating income (loss) before depreciation, amortization and asset impairment $20,506 $13,249 $35,471 $2,836 ======== ======== ======== =========

The company believes that "operating income (loss) before depreciation, amortization and asset impairment" is useful to management and investors in evaluating the current operating performance of the company, since depreciation, amortization and asset impairment include the impact of past transactions and costs that are not necessarily directly related to the current underlying capital requirements or performance of the business operations. Management refers to "operating income before depreciation, amortization and asset impairment" to compare historical operating results, in making operating decisions and for planning and compensation purposes. A limitation associated with this measure is that it does not reflect the costs of certain capitalized tangible and intangible assets used in generating revenue. Management evaluates the costs of these assets through other financial measures such as capital expenditures. "Operating income before depreciation, amortization and asset impairment" should be considered in addition to, and not as a substitute for, other measures of financial performance prepared in accordance with US GAAP.

Reconciliation of the Earnings Per Share Effect of Fourth Quarter 2004 Unusual Items (in thousands, except share and per share data)

Three Months Ended December 31, 2004 -----------------

Net income $9,227 Unusual Items: Gain on investments, net (1) (3,514) Asset impairment (2) 8,931 ---------------- Effect on earnings from unusual items 5,417 ----------------

Net income excluding unusual items $14,644 ================ Effect of unusual items on diluted net income per share $0.03 ================ Shares used in calculating diluted net income per share 159,090,390

(1) The company recognized $3.5 million of gains on the sale of investments during the fourth quarter of 2004.

(2) In the fourth quarter of 2004, an asset impairment charge of $8.9 million was recorded associated with the write-down of goodwill of our Computer Shopper reporting unit.

The company believes that this information facilitates comparisons to its guidance for the fourth quarter and full year 2004 provided on October 14, 2004, which did not include the effect of these unusual and unforeseen items.

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CONTACT: CNET Networks, Inc. Cammeron McLaughlin, 415-344-2844 (Investor Relations) cammeron.mclaughlin@cnet.com Martha Papalia, 617-225-3340 (Media) martha.papalia@cnet.com

KEYWORD: CALIFORNIA INDUSTRY KEYWORD: HARDWARE COMPUTERS/ELECTRONICS TELECOMMUNICATIONS NETWORKING EARNINGS CONFERENCE CALLS SOURCE: CNET Networks, Inc.

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