The news wires were ablaze last Thursday with word that CBS was moving to extend its online reach by acquiring CNET Networks for a cool $1.8 billion—a 45 percent premium over CNET’s trading price the day before. That wasn’t a local story, and we were just following along because we like big online media buys. But then it occurred to us as we were perusing the Yahoo finance page that Boston’s own local media venture firm, Spark Capital, had purchased a big chunk of CNET back in January—and is listed as CNET’s fourth-largest direct shareholder.
We decided to do some math on how Spark fared in the CBS deal.
It fared quite well, thank you. On January 8, according to SEC filings, Spark Management Partners exercised options to buy 2,583,979 shares of CNET for $7.74 per share at a total cost of $19,999,997 (call it 20M). Last week’s sale price was $11.50 per share, meaning that Spark will cash in $29,715,758 (before any fees). That’s a profit of just over $9.7 million, or 48 percent, in just four months. Nice.
Spark was part of a consortium led by hedge fund Jana Partners that was trying to take control of CNET at the upcoming annual meeting slated for June—it alleged current management had “consistently underperformed peers and destroyed enormous shareholder value”—and Spark co-founder Santo Politi was one of the group’s board nominees. I sent a note to Spark asking for comment, but they were probably still working their way through all the congratulatory e-mail.
Wade profiled Spark and co-founder Todd Dagres back in July, after the firm—which focuses chiefly on early-stage companies at the crossroads of media, entertainment, and technology—closed its second ($360 million) fund. “In Fund I we validated that this ‘confluence’ theme is powerful, and in Fund II we’ve decided to expand on that,” Dagres told Wade. Spark is an investor in Eqal (producers of the Lonelygirl15 web series), KickApps, Inform Technologies, 5min, Buzzwire, Bug Labs, and many other startups that have turned up in Xconomy’s pages.
