===============================================================================

                              UNITED STATES
                   SECURITIES AND EXCHANGE COMMISSION
                          Washington, D.C. 20549

                              FORM 10-K

(Mark One)

/X/  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES 
     EXCHANGE ACT OF1934 [Fee Required]

                  For the fiscal year ended December 31, 1997

/ /  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES 
     EXCHANGE ACT OF 1934
     [No Fee Required]

            For the transition period from __________ to __________

                   Commission file number 0-20939


                             CNET, INC.
          (Exact Name of registrant as specified in its charter)


                   Delaware                                13-3696170
    (State or other jurisdiction of         (I.R.S. Employer Identification No.)
     incorporation or organization)   

      150 Chestnut Street                          
       San Francisco, CA                                 94111
    (Address of principal executive offices)          (Zip Code)

     Registrant's telephone number, including area code  (415) 395-7800

Securities registered under Section 12(b) of the Exchange Act:

Title of each class                 Name of each exchange on which registered

Common Stock, $0.0001 par value     Nasdaq Stock Market


        Securities registered under Section 12(g) of the Exchange Act:

                              Title of class

                    Common Stock, $0.0001 par value


     Indicate by check mark whether the issuer (1) filed all reports required to
be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days.  Yes /X/   No / /

        Indicate by check mark if disclosure of delinquent filers 
pursuant to Item 405 of Regulation S-K ( 229.405 of this chapter) is 
not contained herein, and will not be contained, to the best of 
registrant's knowledge, in definitive proxy or information 
statements incorporated by reference in Part III of this Form 10-K 
or any amendment to this Form 10-K.  /X/  


     The aggregate market value of common stock held by non-affiliates, based on
the closing price at which the stock was sold, at February 27, 1998 approximated
$205 million.

     The total number of shares outstanding of the issuer's common stock (its
only class of equity securities), as of February 27, 1998, was 14,845,270.

        Information is incorporated by reference into Part III of this 
Form 10-K from the registrant's definitive proxy statement for its 
1998 annual meeting of stockholders, which will be filed pursuant to 
Regulation 14A under the Securities Exchange Act of 1934.



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<PAGE>

                                         PART I

ITEM 1.  BUSINESS

                                   BUSINESS

     CERTAIN INFORMATION IN THIS ANNUAL REPORT MAY CONTAIN "FORWARD-LOOKING
STATEMENTS" WITHIN THE MEANING OF SECTION 21E OF THE SECURITIES EXCHANGE ACT
OF 1934, AS AMENDED.  ALL STATEMENTS OTHER THAN STATEMENTS OF HISTORICAL FACT
ARE "FORWARD-LOOKING STATEMENTS" FOR PURPOSES OF THESE PROVISIONS, INCLUDING
ANY PROJECTIONS OF EARNINGS, REVENUES OR OTHER FINANCIAL ITEMS, ANY
STATEMENTS OF THE PLANS AND OBJECTIVES OF MANAGEMENT FOR FUTURE OPERATIONS,
ANY STATEMENTS CONCERNING PROPOSED NEW PRODUCTS OR SERVICES, ANY STATEMENTS
REGARDING FUTURE ECONOMIC CONDITIONS OR PERFORMANCE, AND ANY STATEMENT OF
ASSUMPTIONS UNDERLYING ANY OF THE FOREGOING.  IN SOME CASES, FORWARD-LOOKING
STATEMENTS CAN BE IDENTIFIED BY THE USE OF TERMINOLOGY SUCH AS "MAY," "WILL,"
"EXPECTS," "BELIEVES," "PLANS," "ANTICIPATES," "ESTIMATES," "POTENTIAL," OR
"CONTINUE," OR THE NEGATIVE THEREOF OR OTHER COMPARABLE TERMINOLOGY. 
ALTHOUGH THE COMPANY BELIEVES THAT THE EXPECTATIONS REFLECTED IN ITS
FORWARD-LOOKING STATEMENTS ARE REASONABLE, IT CAN GIVE NO ASSURANCE THAT SUCH
EXPECTATIONS OR ANY OF ITS FORWARD-LOOKING STATEMENTS WILL PROVE TO BE
CORRECT, AND ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE PROJECTED OR
ASSUMED IN THE COMPANY'S FORWARD-LOOKING STATEMENTS. THE COMPANY'S FUTURE
FINANCIAL CONDITION AND RESULTS, AS WELL AS ANY FORWARD-LOOKING STATEMENTS,
ARE SUBJECT TO INHERENT RISKS AND UNCERTAINTIES, SOME OF WHICH ARE SUMMARIZED
IN ITEM 7, "MANAGEMENT'S DISCUSSION AND ANALYSIS - OUTLOOK AND UNCERTAINTIES".





        CNET: The Computer Network is a media company focused on 
providing original Internet content and television programming 
relating to information technology and the Internet. The Company also 
operates Snap!, a free online service that aggregates Internet 
content and offers Internet directory and searching capabilities.

        The Company's technology publishing division is comprised of 
the following eight technology-focused Internet sites: CNET.COM, 
NEWS.COM, GAMECENTER.COM, SHAREWARE.COM, SEARCH.COM, BUILDER.COM, 
DOWNLOAD.COM and COMPUTERS.COM.  The Company seeks to use its 
editorial, technical, and programming expertise to create compelling 
content to engage technology-oriented consumers and attract 
advertisers wishing to reach this audience.  The Company believes 
that its strategy of combining Internet and television-based 
programming enhances its ability to promote the CNET brand, improves 
its ability to create high quality content, and provides the Company 
with a source of competitive advantage and differentiation.  The 
Company is focused on leveraging its market position, the awareness 
of its brand among consumers and its relationship with advertisers to 
create new Internet sites and services related to information 
technology and the Internet, and to capitalize on new business 
opportunities such as Internet-based electronic commerce.  Based on 
the volume of traffic on its Internet sites and the size of its 
television audience, the Company believes that it has established a 
leadership position in its targeted content market.  Nevertheless, 
because of the substantial expenses incurred by the Company in 
developing, operating and promoting its Internet sites, the Company 
has incurred significant operating losses and net losses.  As of 
December 31, 1997, the Company had an accumulated deficit of $54.1 
million.  The Company may continue to incur losses in the future.  
See Item 7, "Management's Discussion and Analysis."

        Snap! is a free online service built for the Internet 
consisting of two complementary components - a robust Web site that 
provides a comprehensive overview of the Internet organized by 
channel, and the Snap! Starter Kit, a CD-ROM designed to help new 
users learn how to use the Internet and get online easily.  The Snap! 
Web site is organized into sixteen channels, which are regularly 
infused with editorial content, news, headlines, and customizable 
data from a range of well recognized brands on the Web.  Snap! also 
features its own directory of Web sites for fast, efficient and high-
quality searches.  The site is designed to make searching the Web 
easy by organizing leading search engines into a consistent and 
powerful user experience.  As part of its distribution strategy for 
Snap!, CNET builds customized, co-branded versions of the service for 
Internet service providers, computer hardware manufacturers, 
telecommunication companies and others, helping them offer their 
customers a compelling Internet experience and maintain a 
relationship with their customers online.  Since the service was 
first announced in June 1997, Snap! has signed distribution 
agreements with more than 35 companies, including 20 Internet service 
providers.

        The Company produces four television series.  CNET CENTRAL 
launched in April 1995 and is a half-hour magazine format  program 
devoted to exploring the world of information technology and the 
Internet.  THE NEW EDGE launched in July 1996 and is a half-hour 
magazine format program showcasing technological breakthroughs and 
how they will change our lives.  THE WEB also launched in July 1996 
and is a one hour program showing viewers the hottest Web sites and 
technologies and includes interviews with industry leaders. TV.COM is 
a syndicated program, which launched in September 1996 and showcases 
for a broadcast audience the world of the Internet and digital 
technologies.  CNET's television shows are produced by the Company 
and, with the exception of TV.COM, are carried nationally on the USA 
Network and the Sci-Fi Channel, both of which are owned by USA 
Networks.  TV.COM is produced in conjunction with Trans World 
International ("TWI"), and is syndicated into over 115 markets 
nationally.  Additionally, CNET television has been licensed to 
broadcasters in Japan, Taiwan, Singapore, Panama, Canada, Spain, 
Sweden and Argentina.

        The Company is a Delaware corporation and was formed in 1992.  
The Company's principal executive offices are located at 150 Chestnut 
Street, San Francisco, California 94111, and its telephone number is 
(415) 395-7800. 


INDUSTRY BACKGROUND

        The Company believes that a significant opportunity exists to 
provide Internet content and television programming related to 
information technology and the Internet, and to develop a free online 
service providing users an easy way to locate information on the 
Internet.  Growing use of the Internet and the World Wide Web (the 
"Web") has created opportunities for content providers and their 
advertising customers to reach and interact with millions of Internet 
users. Due to its interactive nature, the Web is emerging as a 
vehicle that is complementary and, in several respects, superior to 
traditional television and print media in terms of its ability to 
provide targeted content to consumers and to generate cost-effective 
results for certain advertisers. 

        The Company believes that the market for content relating to 
information technology and the Internet is growing rapidly and is 
emerging as an area well-suited to a combined Internet and 
television-based programming approach. According to Jupiter 
Communications, the market for U.S.... advertising on the Internet was 
approximately $560 million in 1997, up from $260 million in 1996, and 
is expected to grow to over $5 billion by the year 2000.

        The advertising model that is emerging on the Internet is 
similar to the model prevalent in print and television media and 
involves the payment by advertisers to Internet content and service 
providers of advertising fees, based primarily on the demographics of 
the audience and the number of impressions  delivered. The Company 
believes that the opportunities for Internet content providers to 
generate advertising revenues are growing due to increasing Internet 
usage by businesses and consumers and the growing recognition by 
advertisers of the potential advantages of Internet-based advertising 
over advertising in traditional media. 

STRATEGY

        The Company's objective is to be the leading provider of 
Internet content and television programming related to information 
technology and the Internet, and to develop Snap! into a leading free 
online service. Through the end of 1997, the Company has focused 
primarily on developing and launching premier Internet services 
designed to serve a broad audience of users interested in information 
technology and the Internet.  As a result of these efforts, the 
Company has incurred significant operating losses and net losses 
since its inception.  See Item 7, "Management's Discussion and 
Analysis."  Having completed development of sites that cover the key 
areas of interest for the Company's target audience, the Company is 
now focused on improving revenue growth and carefully managing costs 
with the goal of reducing losses and, ultimately, achieving 
profitability.  Key elements of the Company's strategy to achieve 
this goal include:

 Provide Compelling Content 

        The Company seeks to provide current, comprehensive and 
entertaining editorial content through its Internet sites and 
television programs and to provide a quality free online service, 
with the objective of building a loyal audience of repeat Internet 
users and television viewers. 

 Further Develop Market Awareness and Brand Recognition

        The Company believes that further leverage of the CNET and 
Snap! brands is a critical aspect of its efforts to attract and 
expand its Internet and television audiences. The Company seeks to 
promote and reinforce its brands through leveraging traffic on its 
network of Internet sites, through the continued launch of new sites 
which address the editorial needs of information technology 
consumers, and through its television programming.

 Leverage Television Programming

        In addition to using its television programming to promote the 
CNET and Snap! brands, the Company believes that its experience in 
developing and producing television programming complements and 
strengthens its ability to develop high-quality Internet content. The 
Company believes that the Internet as a medium is closely analogous 
to a hybrid between television and print, and that quality Internet 
sites should be produced as multimedia offerings, rather than being 
written like printed publications. 

 Leverage Technology to Enhance Content

        The Company seeks to capitalize on available technology to 
create compelling Internet content, to improve the speed and 
performance of its Internet sites and to enhance the user's 
experience through customization and personalization of content. The 
Company strives to improve the attractiveness and usefulness of its 
Internet content by using the latest software tools and supporting 
the latest technology standards, including Macromedia's Shockwave, 
Microsoft's ActiveX, Progressive Networks' RealAudio and Sun 
Microsystems' Java, as well as the leading Web browsers. 

 Create Value for Advertisers

        The Company believes that its Internet users, given their 
interest, ability and willingness to obtain information over the 
Internet, are generally an attractive audience for advertisers and 
are relatively comfortable buying goods and services over the 
Internet. The Company employs a combination of proprietary and third 
party advertising generation, placement, tracking and feedback 
technologies and services to help advertisers qualify and quantify 
the effectiveness of their Internet advertising campaigns. 

 Leverage Brand, Infrastructure and Existing Relationships

        The Company is continually exploring opportunities to leverage 
its brands, infrastructure, existing audience and advertising 
customer base. For example, the Company believes that the successful 
introduction of COMPUTERS.COM in November 1997 was facilitated by the 
Company's ability to use its existing knowledge and infrastructure.  
The Company's site management software is also available to enhance 
the functionality of all of the Company's sites, and features 
developed for one site can often be employed by other sites. The 
Company attempts to move quickly to take advantage of new 
opportunities, and believes that a significant competitive advantage 
could be obtained by seizing market initiatives more quickly and 
decisively than its competitors.   

        The Company's future success depends upon its ability to 
deliver original and compelling Internet content and services in 
order to attract and retain users. There can be no assurance that the 
Company's content and services will be attractive to a sufficient 
number of Internet users to generate advertising revenues. There also 
can be no assurance that the Company will be able to anticipate, 
monitor and successfully respond to rapidly changing consumer tastes 
and preferences so as to attract a sufficient number of users to its 
sites. Internet users can freely navigate and instantly switch among 
a large number of Internet sites, many of which offer competing 
content and services, making it difficult for the Company to 
distinguish its content and services and to attract users. In 
addition, many other Internet sites offer very specific, highly 
targeted content that could have greater appeal than the Company's 
sites to particular subsets of the Company's target audience. If the 
Company is unable to develop Internet content and services that allow 
it to attract, retain and expand a loyal user base possessing 
demographic characteristics attractive to advertisers, the Company 
will be unable to generate advertising revenues, and its business, 
financial condition and operating results will be materially 
adversely affected. 

INTERNET SITES AND SERVICES

        All of the Company's Internet sites are offered under the CNET 
and Snap! brands and provide content and services to users interested 
in information technology and the Internet. The Company's Internet 
sites attracted over 8 million unique users in February 1998 
according to Relevent Knowledge.


     Internet sites currently operated by the Company include:

<TABLE>
<CAPTION>
                 LAUNCH DATE    DESCRIPTION
                 -----------    ------------
<S>            <C>            <C>
CNET.COM         June 1995         The Company's flagship site, offering news, product
                                   reviews, feature stories, interviews and other editorial
                                   content about information technology and the Internet

SHAREWARE.COM    November 1995     Editorial site, search engine and
                                   download facility focused on freeware and shareware

SEARCH.COM       March 1996        Organized collection of over 450 search
                                   engines and directories, including
                                   popular, broad-based search engines and
                                   directories and those dedicated to
                                   specific subject areas

NEWS.COM         September 1996    Editorial site featuring the latest news and
                                   analysis about the Internet and the
                                   computer industry

DOWNLOAD.COM     October 1996      Editorial site, search engine
                                   and download facility focused on software

GAMECENTER.COM  November 1996      Editorial site featuring reviews and
                                   information about popular computer games and
                                   links to downloadable games
SNAP.COM       September 1997      Free online service consisting of a proprietary directory combined
                                   with search and content aggregation features.  Snap! allows for the
                                   creation of co-branded services with Internet providers, computer
                                   hardware manufacturers, telecommunications companies and others 
                                   seeking to provide Internet access to their customers.
COMPUTERS.COM  November 1997       Computer hardware information site combining broad product listings,
                                   descriptions and review, updated daily with real-time pricing and 
                                   where to-buy links to manufacturers, retailers and resellers.
BUILDER.COM    November 1997       Product review and industry news for the Web building community.


</TABLE>

CNET.COM.   CNET.COM  was launched in June 1995 and serves as a 
central point on the Internet for the members of the CNET community. 
The Company believes that CNET.COM has become a leading source on the 
Internet of news, reviews and other editorial content related to 
information technology and the Internet. 

SHAREWARE.COM. The Company's second Internet site, SHAREWARE.COM, was 
launched in November 1995. SHAREWARE.COM accesses CNET's Virtual 
Software Library ("VSL"), through which users can search, browse and 
download from a master index of over 290,000 shareware and freeware 
titles available on the Internet. Users of SHAREWARE.COM can search 
the VSL index based on their particular computer or operating system 
or by keywords related to the functions of the software. Users can 
also browse through the contents of the database by category (for 
example, utilities, games, business applications or communications) 
or browse through a listing of new arrivals or the most popular 
titles. 

SEARCH.COM. Launched in March 1996, SEARCH.COM is an organized 
collection of search engines and directories, including popular, 
broad-based search engines and directories and those dedicated to 
specific subject areas. As the amount of content on the Internet has 
grown, numerous companies have developed very specific search engines 
that allow users to find Internet sites or information related to 
specific subject areas. SEARCH.COM provides easy access to the 
Internet's most popular search engines, as well as specialty search 
engines, and currently presents them in the following fourteen 
categories: Automotive, Classifieds, Computing, Employment, 
Entertainment, Health, Learning, Living, Local, Money, News, 
Shopping, Sports and Travel. Users also have the ability through 
SEARCH.COM to personalize their default page with search boxes from 
pre-selected search engines and links to particular Internet sites 
chosen by the user. 

 NEWS.COM.  In September 1996, the Company launched NEWS.COM, which 
is an editorial site focused exclusively on providing daily coverage 
of breaking news and scheduled events, in-depth analyses and original 
reporting related to the computer industry, the Internet and computer 
industry personalities. NEWS.COM is  designed to provide broad 
coverage of these industries and to appeal to information technology 
professionals, as well as industry participants, corporate 
information systems officers and members of the financial community. 
The site competes with  weekly computer trade publications by 
offering more current news and information and by integrating text, 
audio and video to deliver high quality content. As a complement to 
its daily news, the Company produces daily audio reports on the 
latest digital news. Using Progressive Networks' RealAudio software 
(which users can download through the Company's Internet sites), 
users can hear the voices of the newsmakers themselves on the issues 
of the day, such as a U.S. Congressman responding to the morning's 
developments on telecommunications reform or the president of a 
technology company announcing a new Internet product.

DOWNLOAD.COM.  In October 1996, the Company  launched DOWNLOAD.COM to 
provide search, browse and download capabilities similar to 
SHAREWARE.COM.  Whereas SHAREWARE.COM is a search engine for users 
trying to find an ftp site for a specific title across a database 
encompassing hundreds of thousands of software titles, DOWNLOAD.COM 
is an organized directory of approximately 14,000 files which have 
descriptions and can be sorted by the user to find the most popular 
titles in a given category.

GAMECENTER.COM.  Launched in November 1996, GAMECENTER.COM provides 
the latest news and information about popular computer games and 
serves online game players with current information and interactive 
product reviews, as well as links to popular downloads of the newest 
games, tips and tricks, and information for connecting with other 
game players.

SNAP.COM.   Snap!, launched in September 1997, is a free online 
service consisting of a proprietary directory combined with search 
and content aggregation features.  The Snap! Directory is 
comprehensive, numbering nearly 200,000 sites and growing, organized 
around sixteen topics.  All directory entries are developed to fit 
intuitively into these topics, which currently consist of Arts, 
Business & Money, Computing, Education, Entertainment, Health, Kids & 
Family, Living, Local, News, Oddities, People, Science, Shopping, 
Sports and Travel.  

        In addition to the editorially-driven Snap! Directory,  Snap! 
has formed strategic partnerships with key content providers to 
enhance each of  Snap!'s  sixteen information channels.  For example, 
CNET and Snap! recently announced an agreement with Bloomberg L.P., a 
premier provider of news and financial data, to create broad, in-
depth financial information resources for online users.  CNET, Snap! 
and Bloomberg have aligned themselves exclusively within the search 
and content aggregation and technology web site publishing 
industries.  Bloomberg services on CNET and Snap! are scheduled for 
launch in the second quarter of 1998.

        Snap! contains a built-in search feature in addition to one-
button links to other search services allowing users to quickly and 
seamlessly access the Web.  Snap! also includes many other search 
tools for items such as yellow pages, e-mail addresses, weather and 
classifieds.

        Snap! is designed to allow for the building of co-branded 
versions of the service for Internet service providers, computer 
hardware manufacturers and telecommunications companies, among 
others, helping them strengthen customer relationships through 
branded, client-focused access to the Web.  Since the service was 
first announced in June 1997, Snap! has developed co-branded versions 
and signed distribution agreements with more than 35 companies, 
including 20 Internet service providers.

COMPUTERS.COM.  Launched in November 1997, COMPUTERS.COM is focused 
on providing users the broadest and most in-depth source of real-time 
computer hardware information in a convenient, easy-to-use format.  
COMPUTERS.COM is organized intuitively into the following eleven 
categories: desktops, servers, notebooks, modems, monitors, memory, 
storage, printers, graphics, cameras and handhelds.  Within each 
category, COMPUTERS.COM gives users the ability to customize hardware 
configurations feature-by-feature including by price and 
manufacturer.  

        During the customization process, COMPUTERS.COM provides access 
to industry-wide product research for improved decision making prior 
to purchase.  Throughout the customization process each user has 
access to COMPUTERS.COM's proprietary, comprehensive database of 
product listings by price and manufacturer which is updated many 
times each day.  This feature gives users an efficient means of 
comparing products.  At the point of purchase, COMPUTERS.COM helps 
connect buyers with sellers by providing buyers with an easy-to-use, 
extensive database of where-to-buy and how-to-buy listings of product 
manufacturers, retailers and resellers.

BUILDER.COM.  Launched in November 1997, BUILDER.COM is the 
Internet's central source for product reviews and industry news for 
the Web building community, including designers, developers and 
producers.  The site features reviews of Web development tools, 
industry and technology news and downloadable software for Web 
production.  BUILDER.COM also offers interactive forums and sponsors 
trade shows.

        There can be no assurance that any of the Company's recently 
developed Internet sites or television programming will achieve 
market acceptance. The Company's newly launched Internet sites could 
also divert users from the Company's pre-existing sites and bring the 
Company into direct competition with new competitors. In addition, 
any new Internet site or television program launched by the Company 
that is not favorably received by consumers could damage the 
Company's reputation or its brands. Any effort by the Company to 
launch new Internet sites or television programs will require 
significant additional expenses and programming and editorial 
resources and will strain the Company's management, financial and 
operational resources.  A failure by the Company to achieve and 
maintain market acceptance of existing sites and television programs 
or an inability to generate revenues from new sites or television 
programs sufficient to offset the associated costs could have a 
material adverse effect on the Company's business, financial 
condition or operating results. 

        The launch of Snap! in 1997 represented a significant expansion 
of the Company's business and has required a substantial investment 
of capital and additional, substantial burdens on the Company's 
management personnel and its financial and operational systems.  The 
expenditures required in connection with Snap! significantly 
increased the Company's operating loss during 1997 and could result 
in large and prolonged operating losses for the Company in the 
future.  There can be no assurance that the Snap! service will 
achieve market acceptance or reach profitability, and a failure by 
the Company to recover the substantial investment required could have 
a material adverse effect on the Company's business, financial 
condition and operating results.

        The Company relies on the cooperation of owners and operators 
of other Internet sites in connection with the operation of its Snap! 
service, which aggregates content from a range of providers, as well 
as its software downloading sites and its SEARCH.COM site. There can 
be no assurance that such cooperation will be available on acceptable 
commercial terms or at all. The Company's ability to develop original 
and compelling Internet content is also dependent on maintaining 
relationships with and using products provided by third party vendors 
of Internet development tools and technologies, such as Macromedia's 
Shockwave, Microsoft's ActiveX, Progressive Networks' RealAudio and 
Sun Microsystems' Java. The Company's ability to advertise on other 
Internet sites and the willingness of the owners of such sites to 
direct users to the Company's Internet sites through hypertext links 
are also critical to the success of the Company's Internet 
operations. Other Internet sites, particularly search engines, 
directories and other navigational tools managed by Internet service 
providers and Web browser companies, significantly affect traffic to 
the Company's technology sites. Developing and maintaining 
satisfactory relationships with third parties could become more 
difficult and more expensive as competition increases among Internet 
content providers. If the Company is unable to develop and maintain 
satisfactory relationships with such third parties on acceptable 
commercial terms, or if the Company's competitors are better able to 
leverage such relationships, the Company's business, financial 
condition and operating results will be materially adversely 
affected. 

        Rapid growth in the use of and interest in the Internet is a 
recent phenomenon, and there can be no assurance that acceptance and 
use of the Internet will continue to develop or that a sufficient 
base of users will emerge to support the Company's business. Revenues 
from the Company's Internet operations will depend largely on the 
widespread acceptance and use of the Internet as a source of 
information and entertainment and as a vehicle for commerce in goods 
and services. The Internet may not be accepted as a viable commercial 
medium for a number of reasons, including potentially inadequate 
development of the necessary network infrastructure, timely 
development of enabling technologies or commercial support for 
Internet-based advertising. To the extent that the Internet continues 
to experience an increase in users, an increase in frequency of use 
or an increase in the bandwidth requirements of users, there can be 
no assurance that the Internet infrastructure will be able to support 
the demands placed upon it. In addition, the Internet could lose its 
viability as a commercial medium due to delays in the development or 
adoption of new standards and protocols required to handle increased 
levels of Internet activity, or due to increased government 
regulation. Changes in the pricing or quality of, or insufficient 
availability of, telecommunications services to support the Internet 
also could result in higher prices to end users or slower response 
times and could adversely affect use of the Internet generally and of 
the Company's Internet sites in particular. If use of the Internet 
does not continue to grow or grows more slowly than expected, or if 
the Internet infrastructure does not effectively support growth that 
may occur, the Company's business, financial condition and operating 
results would be materially adversely affected. 

        From time to time, the Company entertains new business 
opportunities and ventures in a broad range of areas. Any decision by 
the Company to pursue a significant business expansion or new 
business opportunity would likely require a substantial investment of 
capital, which could have a material adverse effect on the Company's 
financial condition and its ability to implement its existing 
business strategy. Such an investment could also result in large and 
prolonged operating losses for the Company. Further, the pursuit of 
expansion or new business opportunities would place additional, 
substantial burdens on the Company's management personnel and its 
financial and operational systems. There can be no assurance that any 
new Internet site or service or other new business venture would be 
developed in a cost effective or timely manner or would achieve 
market acceptance. Any such venture that is not favorably received by 
consumers could damage the Company's reputation or the CNET and Snap! 
brands. There can be no assurance that any significant business 
expansion or new business opportunity would ever be profitable, and a 
failure by the Company to recover the substantial investment required 
could have a material adverse effect on the Company's business, 
financial condition and operating results.

TELEVISION

        The Company produces television programming for viewers 
interested in information technology and the Internet. The Company's 
television programming is intended to complement and strengthen the 
Company's Internet operations by building brand awareness, attracting 
new users and generating content that can also be presented through 
the Internet. Three of the Company's programs are carried nationally 
on cable television through the USA Network and the Sci-Fi Channel, 
both of which are owned by USA Networks, and one program is aired 
nationally on broadcast television. All the programs are produced 
in-house by the Company in its San Francisco headquarters studio. 
CNET employs a permanent staff of producers, researchers, editors and 
directors to create its programs and hires additional freelance 
camera crews and freelance producers as appropriate. 

        DIGITAL DOMAIN. Three of the Company's programs, CNET CENTRAL, 
THE WEB, and THE NEW EDGE, are aired in a two hour programming block 
on the Sci-Fi Channel and are referred to as The DIGITAL DOMAIN. 
Additionally, CNET CENTRAL is aired nationally on USA Network and 
locally on KPIX-TV, the San Francisco CBS affiliate. The USA Network 
reaches over 73 million cable television homes, and the Sci-Fi 
Channel (an affiliate of USA Networks) reaches over 48 million cable 
homes. Based on Nielsen Ratings, the three programs reached an 
average weekly audience of 1.1 million viewers during the fourth 
quarter of 1997. 

        CNET CENTRAL. Launched in April 1995 as the Company's first 
television program, CNET CENTRAL covers the latest in news, features 
and human interest stories relating to information technology and the 
Internet. The series includes news updates from CNET's news staff and 
demonstrations of new and interesting Internet sites. CNET CENTRAL 
also covers new product introductions, such as the release of new 
games, applications and tools, and related product reviews and 
demonstrations. Viewers are encouraged to visit CNET's Internet sites 
for more detailed information and reviews and to download available 
software. 

        THE WEB.  Launched in July 1996, The Web is an hour long show 
focused on the Internet and online services and is similar in style 
to CNET CENTRAL, but with increased use of in-studio interviews and 
demonstrations.  THE WEB shows viewers the hottest Web sites, 
explains the latest tools and covers the Internet culture.

        THE NEW EDGE.  Launched in July 1996, THE NEW EDGE is a  
half-hour, magazine format show that focuses on new technological 
breakthroughs and how they will change our lives.  Each program 
contains four segments that cover topics from action/adventure and 
entertainment, to the healthcare industry and computer science.

        TV.COM.  Launched in September 1996, TV.COM is a half-hour 
program that offers the latest news, gossip and interviews relating 
to information technology and the Internet. TV.COM is distributed 
under a syndication agreement with TWI and airs nationally on 
broadcast television in over 115 markets. During the fourth quarter 
of 1997, TV.COM achieved an average weekly audience of approximately 
800,000 viewers.

        Using material from its tape library, the Company also produces 
90-second inserts about information technology and the Internet for 
syndication to local news operations around the country. These 
inserts are designed to help promote the CNET brand and typically 
feature a host from CNET CENTRAL standing in the CNET studio in front 
of the CNET logo. The inserts are syndicated into 41 local markets 
(including Los Angeles, California and Cleveland, Ohio) and achieve 
an average cumulative audience estimated at over 6 million viewers 
per week. The Company's technology inserts are sold by Preview Media 
pursuant to an agreement between the two companies under which CNET 
is responsible for producing the inserts and Preview Media is 
responsible for syndicating and distributing them into local news 
markets. The Company and Preview Media share all net revenues of the 
venture equally. 

        There can be no assurance that the Company's television 
programming will be accepted by television broadcasters, cable 
networks or their viewers. The successful development and production 
of television programming is subject to numerous uncertainties, 
including the ability to anticipate and successfully respond to 
rapidly changing consumer tastes and preferences, obtain favorable 
distribution rights, fund new program development and attract and 
retain qualified producers, writers, technical personnel and 
television hosts. If the Company is unable to develop television 
programming that allows it to attract, retain and expand a loyal 
television audience, the Company will be unable to achieve its 
strategic objectives, and its business, financial condition and 
operating results will be materially adversely affected. 

AGREEMENT WITH USA NETWORKS

        Through June 30, 1996, CNET CENTRAL was carried nationally by 
USA Networks pursuant to an agreement between the Company and USA 
Networks, entered into in February 1995, under which the Company paid 
USA Networks a monthly fee of approximately $147,000 and received the 
right to sell all of the available advertising during the program and 
to retain all advertising revenues. In connection with this 
agreement, the Company issued USA Networks a warrant to purchase an 
aggregate of 516,750 shares of Common Stock at an exercise price of 
$2.41 per share. The warrant was scheduled to vest in eight equal 
quarterly installments beginning July 1, 1996, provided that USA 
Networks continued to carry CNET CENTRAL in accordance with the 
agreement. 

        In April 1996, the Company and USA Networks amended their 
agreement, effective July 1, 1996. Under the amended agreement, USA 
Networks licensed the right to carry CNET CENTRAL, THE WEB and The 
New Edge for an initial one year term and became entitled to sell all 
available advertising on the three programs. In exchange, USA 
Networks agreed to pay a fee to the Company which was limited to the 
Company's costs of producing the three programs, up to a maximum of 
$5.2 million for the initial one year term. In January 1997, USA 
Networks extended the agreement with respect to the three programs 
for an additional year (until June 30, 1998), during which the fee 
payable to the Company will be limited to the costs of producing such 
programs, subject to a maximum amount of $5.5 million. USA Networks 
is not required to carry any of the programming that it purchases 
from the Company under the agreement. Although the Company is in 
negotiations with USA Networks to extend its relationship, there can 
be no assurance that the contract with USA Networks will be extended 
after June 30, 1998. If USA Networks chooses not to carry the 
Company's television programming, there can be no assurance that the 
Company would be able to obtain alternative distribution through 
other cable channels or networks on acceptable commercial terms or at 
all. If the Company is unable to secure and maintain distribution for 
its television programming on acceptable commercial terms, the 
Company will be unable to achieve the strategic objectives of its 
television programming, which would have a material adverse effect on 
the Company's business, financial condition and operating results. 

        Pursuant to the amended agreement, the Company and USA Networks 
also agreed to modify the vesting provisions of the warrant 
previously granted to USA Networks. Under the amended agreement, the 
warrant became exercisable with respect to 206,700 shares of Common 
Stock (40% of the total) on July 1, 1996. The warrant became 
exercisable with respect to an additional 155,025 shares (30% of the 
total) on June 30, 1997, based on USA Networks' transmission of the 
three programs during the first year of the agreement. The warrant 
will become exercisable with respect to the remaining 155,025 shares 
(30% of the total) on June 30, 1998, if during the year ended 
June 30, 1998, USA Networks has transmitted at least 90% of the 
episodes of such programs during their regularly scheduled time 
periods, or during other times at least as favorable. If USA Networks 
transmits less than 90% but more than 70% of the required programs 
during such year, then the warrant will vest with respect to a 
portion of the scheduled amount based on the extent to which such 
percentage exceeds 70%. 

        In connection with the extension of the agreement in January 
1997, the Company agreed that the warrants will vest in full on 
December 31, 2006, to the extent they have not previously vested. As 
a result of this change, the Company incurred a one-time charge to 
earnings of approximately $7.0 million during the first quarter of 
1997.

        During the initial one-year term of the amended agreement, 
which ended on June 30, 1997, the Company agreed to pay USA Networks 
a fee of $1.0 million for the right to cross-market the Company's 
Internet sites on the television programs produced by the Company for 
USA Networks. During the second year extension, the Company will pay 
a fee of $750,000 for the right to continue such cross-marketing 
activities. These fees are reported by the Company as marketing 
expenses. 

SALES AND MARKETING

        The Company's sales and marketing staff consisted of 68 
full-time employees at December 31, 1997, located in the Company's 
headquarters in San Francisco, California, and in a sales office in 
New York, New York. 

        The Company's Internet revenues are derived from the sale of 
advertising by the Company's direct sales organization. The Company 
provides discounts from its rate card for multiple package purchases 
and for longer-term agreements. CNET provides a number of services 
free of charge to its advertisers, including advertising response 
tools and advertising targeting. 

        Under the Company's amended agreement with USA Networks, USA 
Networks is entitled to sell all available advertising on the three 
programs covered by the agreement, and the Company receives a license 
fee payable to the Company by USA Networks.  Consequently, the 
Company's direct sales force is not involved in the sale of 
television advertising for its programs aired on USA Networks.  
Beginning March 1, 1998 the Company began to use its direct sales 
organization to sell advertisements on TV.COM.

        The Company's revenues through December 31, 1997 were derived 
primarily from the sale of advertising on its Internet sites and from 
advertising and license fees from producing its television programs. 
Most of the Company's advertising contracts can be terminated by the 
customer at any time on very short notice. Consequently, the 
Company's advertising customers may move their advertising to 
competing Internet sites or from the Internet to traditional media, 
quickly and at low cost, thereby increasing the Company's exposure to 
competitive pressures and fluctuations in net revenues and operating 
results. In selling Internet advertising, the Company also depends to 
a significant extent on advertising agencies, which exercise 
substantial control over the placement of advertising for the 
Company's existing and potential advertising customers. If the 
Company loses advertising customers, fails to attract new customers 
or is forced to reduce advertising rates in order to retain or 
attract customers, the Company's business, financial condition and 
operating results will be materially adversely affected. See Note 7 
of Notes to Financial Statements. 

        The Company's marketing activities are designed to promote the 
CNET and Snap! brands and to attract consumers to its Internet sites 
and television programming. The Company currently retains up to 20% 
of its inventory of Internet advertising banners on certain of its 
Web sites to promote its own content and services. The Company also 
uses its electronic newsletters, NEWS.COM DISPATCH, DIGITAL DISPATCH 
and SOFTWARE DISPATCH, to promote and cross-market its services. The 
Company's marketing efforts also include participation in trade 
shows, conferences, speaking engagements, print, television, radio 
and Internet advertising campaigns and efforts to generate exposure 
in trade magazines and general interest magazines and newspapers. 

        The Company's Internet advertising customers have only limited 
experience with the Internet as an advertising medium and neither 
such customers nor their advertising agencies have devoted a 
significant portion of their advertising budgets to Internet-based 
advertising in the past. A significant portion of the Company's 
potential customers have no experience with the Internet as an 
advertising medium and have not devoted any significant portion of 
their advertising budgets to Internet-based advertising in the past. 
In order for the Company to generate advertising revenues, 
advertisers and advertising agencies must direct a significant 
portion of their budgets to the Internet and, specifically, to the 
Company's Internet sites. There can be no assurance that advertisers 
or advertising agencies will be persuaded to allocate or continue to 
allocate significant portions of their budgets to Internet-based 
advertising, or, if so persuaded, that they will find Internet-based 
advertising to be more effective than advertising in traditional 
media such as print, broadcast and cable television, or in any event 
decide to advertise or continue to advertise on the Company's 
Internet sites. Acceptance of the Internet among advertisers and 
advertising agencies will also depend to a large extent on the level 
of use of the Internet by consumers, which is highly uncertain, and 
on the acceptance of new methods of conducting business and 
exchanging information. Advertisers and advertising agencies that 
have invested substantial resources in traditional methods of 
advertising may be reluctant to modify their media buying behavior or 
their systems and infrastructure to use Internet-based advertising. 
Furthermore, no standards to measure the effectiveness of 
Internet-based advertising have yet gained widespread acceptance, and 
there can be no assurance that such standards will be adopted or 
adopted broadly enough to support widespread acceptance of 
Internet-based advertising. If Internet-based advertising is not 
widely accepted by advertisers and advertising agencies, the 
Company's business, financial condition and operating results will be 
materially adversely affected. 

        Promotion of the CNET and Snap! brands will depend largely on 
the Company's success in providing high quality Internet and 
television programming, which cannot be assured. If consumers do not 
perceive the Company's existing Internet and television content to be 
of high quality, or if the Company introduces new Internet sites or 
television programs or enters into new business ventures that are not 
favorably received by consumers, the Company will be unsuccessful in 
promoting and maintaining its brands. Any expansion of the focus of 
the Company's operations beyond providing Internet and television 
content related to information technology and the Internet, including 
the expansion represented by the launch of Snap!, creates a risk of 
diluting the Company's brands, confusing consumers and decreasing the 
attractiveness of its audience to advertisers. Furthermore, in order 
to attract and retain Internet users and television viewers, and to 
promote and maintain the CNET and Snap! brands in response to 
competitive pressures, the Company may find it necessary to increase 
its budgets for Internet content and television programming or 
otherwise to increase substantially its financial commitment to 
creating and maintaining a distinct brand loyalty among consumers. If 
the Company is unable to provide high quality content or otherwise 
fails to promote and maintain its brands, or if the Company incurs 
excessive expenses in an attempt to improve its content or promote 
and maintain its brands, the Company's business, financial condition 
and operating results will be materially adversely affected. 

TECHNOLOGY

        The Company maintains a technology office in Bridgewater, New 
Jersey, which focuses on designing, developing, modifying and 
maintaining proprietary and third-party tools to manage and improve 
the Company's Internet sites and advertising services. The Company's 
efforts to develop Internet site management technologies are focused 
on improving the speed and reliability of the Company's Internet 
sites, creating publishing tools for Internet content, and 
developing advertisement tracking and management tools and building 
an infrastructure for doing advanced traffic and user analysis. 
Using its internally developed publishing tools, the Company is able 
to separate its Internet content, which resides in databases, from 
the presentation or formatting of the content on the Internet. This 
separation of content and presentation allows the Company to quickly 
incorporate new presentation technologies into its sites and to 
customize the presentation of content. In addition, the technology 
also speeds the production process by enabling the Company's 
editorial staff of journalists and editors to enter information 
quickly and to post time-sensitive material with minimal lead time. 
The Company uses a modified version of the commercial Accipiter 
AdManager system that allows the Company to customize the delivery 
of advertisements by placing advertisements on specific Internet 
pages based on the user's method of Internet access and hardware and 
software configuration. The Company has also developed an 
Advertising Response and Monitoring program, which allows 
advertisers to track and test the effectiveness of their 
Internet-based marketing programs.

        In July 1996, the Company invested $512,000 in cash and 
transferred rights to certain of its proprietary site content 
management software systems to Vignette Corporation ("Vignette"), an 
Austin, Texas, based software development company, in exchange for a 
minority equity interest in Vignette. Vignette is marketing an 
Internet site management system to operators of large Internet 
sites, such as those operated by the Company. As a result of the 
Company's investment in Vignette, certain site management 
technologies that were previously proprietary to the Company are now 
available to the Company's competitors.  

        The market for Internet products and services is characterized 
by rapid technological developments, frequent new product 
introductions and evolving industry standards. The emerging 
character of these products and services and their rapid evolution 
will require that the Company continually improve the performance, 
features and reliability of its Internet content, particularly in 
response to competitive offerings. There can be no assurance that 
the Company will be successful in responding quickly, cost 
effectively and sufficiently to these developments. In addition, the 
widespread adoption of new Internet technologies or standards could 
require substantial expenditures by the Company to modify or adapt 
its Internet sites and services and could fundamentally affect the 
character, viability and frequency of Internet-based advertising, 
either of which could have a material adverse effect on the 
Company's business, financial condition or operating results.  New 
Internet services or enhancements offered by the Company may contain 
design flaws or other defects that could require costly 
modifications or result in a loss of consumer confidence, either of 
which could have a material adverse effect on the Company's 
business, financial condition or operating results. In addition, 
failure of any equipment or software used by the Company to operate 
properly with regard to the Year 2000 and thereafter could require 
the Company to incur unanticipated expenses to remedy any problems, 
which could have a material adverse effect on the Company's business 
results of operations or financial condition. See Item 7, 
"Managements Discussion and Analysis - Year 2000 Compliance"

        The satisfactory performance, reliability and availability of 
the Company's Internet sites and its network infrastructure are 
critical to attracting Internet users and maintaining relationships 
with advertising customers. The Company's Internet advertising 
revenues are directly related to the number of advertisements 
delivered by the Company to users. System interruptions that result 
in the unavailability of the Company's Internet sites or slower 
response times for users would reduce the number of advertisements 
delivered and reduce the attractiveness of the Company's Internet 
sites to users and advertisers. The Company has experienced periodic 
system interruptions in the past and believes that such 
interruptions will continue to occur from time to time in the 
future. Additionally, any substantial increase in traffic on the 
Company's Internet sites may require the Company to expand and adapt 
its network infrastructure.  The Company's inability to add 
additional software and hardware to accommodate increased traffic on 
its Internet sites may cause unanticipated system disruptions and 
result in slower response times. There can be no assurance that the 
Company will be able to expand its network infrastructure on a 
timely basis to meet increased demand. Any increase in system 
interruptions or slower response times resulting from the foregoing 
factors could have a material adverse effect on the Company's 
business, financial condition or operating results. 

        A party who is able to circumvent the Company's security 
measures could misappropriate proprietary information or  cause 
interruptions in the Company's Internet operations. The Company may 
be required to expend significant capital and resources to protect 
against the threat of such security breaches or to alleviate 
problems caused by such breaches. Concerns over the security of 
Internet transactions and the privacy of users may also inhibit the 
growth of the Internet generally, particularly as a means of 
conducting commercial transactions. To the extent that activities of 
the Company or third party contractors involve the storage and 
transmission of proprietary information, such as computer software 
or credit card numbers, security breaches could expose the Company 
to a risk of loss or litigation and possible liability. There can be 
no assurance that contractual provisions attempting to limit the 
Company's liability in such areas will be successful or enforceable, 
or that other parties will accept such contractual provisions as 
part of the Company's agreements.


COMPETITION

        Competition among content providers is intense and is expected 
to increase significantly in the future. The Company's Internet and 
television operations compete against a variety of firms that provide 
content through one or more media, such as print, broadcast, cable 
television and the Internet. As with any other content provider, the 
Company competes generally with other content providers for the time 
and attention of consumers and for advertising revenues. To compete 
successfully, the Company must provide sufficiently compelling and 
popular Internet content and television programming to attract 
Internet users and television viewers and to support advertising 
intended to reach such users and viewers. Within the content niche of 
information technology and the Internet, the Company competes in 
particular with the publishers of computer-oriented magazines, such 
as Ziff-Davis Publishing Company, International Data Group and CMP 
Publications, and with television companies that offer 
computer-related programming, such as the Cable News Network, the 
Discovery Channel, Jones Computer Network, Mind Extension University 
and MSNBC, a joint venture between Microsoft Corporation and General 
Electric's NBC Television Network. Each of these competitors also 
offers one or more Internet sites with content designed to complement 
its magazines or television programming. 

        In the market for Internet content, the Company competes with 
other Internet content and service providers, including Web 
directories, search engines, shareware archives, sites that offer 
original editorial content, commercial online services and sites 
maintained by Internet service providers. These competitors include 
Excite, Inc., Infoseek Corporation, Lycos, Inc., Microsoft 
Corporation, Netscape Communications Corporation, Time Warner, Inc., 
PointCast Incorporated, SOFTBANK Corporation, Starwave Corporation 
and Yahoo! Inc., as well as America Online, Inc., CompuServe, Inc. 
and Prodigy Services Co. The market for Internet content and services 
is new, intensely competitive and rapidly evolving. There are minimal 
barriers to entry, and current and new competitors can launch new 
sites at relatively low cost. In addition, the Company competes for 
the time and attention of Internet users with thousands of non-profit 
Internet sites operated by individuals, government and educational 
institutions. Existing and potential competitors also include 
magazine and newspaper publishers, cable television companies and 
startup ventures attracted to the Internet market. Accordingly, the 
Company expects competition to persist and intensify and the number 
of competitors to increase significantly in the future. As the 
Company expands the scope of its Internet content and services, it 
will compete directly with a greater number of Internet sites and 
other media companies. Because the operations and strategic plans of 
existing and future competitors are undergoing rapid change, it is 
extremely difficult for the Company to anticipate which companies are 
likely to offer competitive services in the future. There can be no 
assurance that the Company's Internet operations will compete 
successfully. 

        With respect to its television operations, the Company competes 
directly with established broadcast and cable television networks and 
with other distributors and producers of programming about 
information technology and the Internet. The Company also faces 
potential competition from a wide range of existing broadcast and 
cable television companies, and from joint ventures between 
television companies and computer-oriented magazine publishers or 
computer hardware or software vendors, any of which could produce 
television programming that competes directly with the Company's 
television programming. For example, Ziff-Davis has announced plans 
to launch a 24 hour cable television network. 


EMPLOYEES

        As of December 31, 1997, the Company had a total of  581 
employees, all of whom are based in the United States. Of the total, 
350 were involved in the Company's Internet operations, 68 were 
engaged in marketing and sales, 45 were involved in television 
production, 62 provided creative services for the Company's Internet 
and television operations and 56 were in administration and finance. 
The Company's performance is substantially dependent on the continued 
services of Halsey M. Minor, Shelby W. Bonnie and the other members 
of its senior management team, as well as on the Company's ability to 
retain and motivate its other officers and key employees. The Company 
does not have "key person" life insurance policies on any of its 
officers or other employees. The Company's future success also 
depends on its continuing ability to attract and retain highly 
qualified personnel. The production of content for the Internet and 
television requires highly skilled writers and editors and personnel 
with sophisticated technical expertise, and the number of such 
personnel available is extremely limited. Competition for such 
personnel among companies with operations involving computer 
technology, the Internet and television production is intense, and 
there can be no assurance that the Company will be able to retain its 
existing employees or that it will be able to attract, assimilate or 
retain sufficiently qualified personnel in the future. In particular, 
the Company has encountered difficulties in attracting qualified 
software developers for its Internet sites and related technologies, 
and there can be no assurance that the Company will be able to 
attract and retain such developers. The inability to attract and 
retain the necessary technical, managerial, editorial and sales 
personnel could have a material adverse effect on the Company's 
business, financial condition or operating results. None of the 
Company's employees is represented by a labor union. The Company has 
not experienced any work stoppages and considers its relations with 
its employees to be good.

        The Company has rapidly and significantly expanded its 
operations and anticipates that further expansion of its operations 
may be required in order to address potential market opportunities. 
This rapid growth has placed, and is expected to continue to place, a 
significant strain on the Company's management, operational and 
financial resources. From January 1, 1997 to December 31, 1997, the 
Company grew from 372 to 581 employees. The increase in the number of 
employees and the Company's market diversification and product 
development activities have resulted in increased responsibility for 
the Company's management. The Company's management will be required 
to successfully maintain relationships with various advertising 
customers, advertising agencies, other Internet sites and services, 
Internet service providers and other third parties and to maintain 
control over the strategic direction of the Company in a rapidly 
changing environment. There can be no assurance that the Company's 
current personnel, systems, procedures and controls will be adequate 
to support the Company's future operations, that management will be 
able to identify, hire, train, motivate or manage required personnel 
or that management will be able to successfully identify and exploit 
existing and potential market opportunities. If the Company is unable 
to manage growth effectively, the Company's business, financial 
condition and operating results will be materially adversely 
affected. 

INTELLECTUAL PROPERTY

        The Company's success and ability to compete is dependent in 
part on the protection of its original content for the Internet and 
television and on the goodwill associated with its trademarks, trade 
names, service marks and other proprietary rights. The Company relies 
on copyright laws to protect the original content that it develops 
for the Internet and television, including its editorial features and 
the various databases of information that are maintained by the 
Company and made available through its Internet sites. In addition, 
the Company relies on federal trademark laws to provide additional 
protection for the appearance of its Internet sites. A substantial 
amount of uncertainty exists concerning the application of copyright 
and trademark laws to the Internet, and there can be no assurance 
that existing laws will provide adequate protection for the Company's 
original content or its Internet domain names. In addition, because 
copyright laws do not prohibit independent development of similar 
content, there can be no assurance that copyright laws will provide 
any competitive advantage to the Company. 

        The Company owns two Federal trademark registrations for the 
name "CNET" for use in connection with certain software applications 
and consulting services that it acquired by assignment.  The Company 
has filed applications to register a number of its trademarks and 
service marks, including the name "CNET" and the related logo and the 
names CNET.COM, SHAREWARE.COM, SEARCH.COM and DOWNLOAD.COM, but no 
federal registrations have been granted for such names or marks.  The 
Company also asserts common law protection on certain names and marks 
that it has used in connection with its business activities. Two 
third parties objected to the Company's application to register the 
service mark "c|net: the computer network," and, in connection with 
one of these objections, the Company agreed not to use such mark for 
any real estate or insurance related services. The Company is also a 
defendant in pending litigation concerning its use of the name "Snap! 
Online".  See Item 3, "Legal Proceedings." There can be no assurance 
that the Company will be able to secure registration for any of its 
marks. The Company has also invested significant resources in 
purchasing Internet domain names for existing and potential Internet 
sites from the registered owners of such names. There is a 
substantial degree of uncertainty concerning the application of 
federal trademark law to the protection of Internet domain names, and 
there can be no assurance that the Company will be entitled to use 
such domain names. 

        The Company relies on trade secret and copyright laws to 
protect the proprietary technologies that it has developed to manage 
and improve its Internet sites and advertising services, but there 
can be no assurance that such laws will provide sufficient protection 
to the Company, that others will not develop technologies that are 
similar or superior to the Company's, or that third parties will not 
copy or otherwise obtain and use the Company's technologies without 
authorization. The Company has filed patent applications with respect 
to certain of its software systems, methods and related technologies, 
but there can be no assurance that such applications will be granted 
or that any future patents will not be challenged, invalidated or 
circumvented, or that the rights granted thereunder will provide a 
competitive advantage for the Company. In addition, the Company 
relies on certain technology licensed from third parties, and may be 
required to license additional technology in the future, for use in 
managing its Internet sites and providing related services to users 
and advertising customers. The Company's ability to generate revenues 
from Internet commerce may also depend on data encryption and 
authentication technologies that the Company may be required to 
license from third parties. There can be no assurance that these 
third party technology licenses will be available or will continue to 
be available to the Company on acceptable commercial terms or at all. 
The inability to enter into and maintain any of these technology 
licenses could have a material adverse effect on the Company's 
business, financial condition or operating results. 

        Policing unauthorized use of the Company's proprietary 
technology and other intellectual property rights could entail 
significant expense and could be difficult or impossible, 
particularly given the global nature of the Internet and the fact 
that the laws of other countries may afford the Company little or no 
effective protection of its intellectual property. In addition, there 
can be no assurance that third parties will not bring claims of 
copyright or trademark infringement against the Company or claim that 
the Company's use of certain technologies violates a patent. The 
Company anticipates an increase in patent infringement claims 
involving Internet-related technologies as the number of products and 
competitors in this market grows and as related patents are issued. 
Further, there can be no assurance that third parties will not claim 
that the Company has misappropriated their creative ideas or formats 
or otherwise infringed upon their proprietary rights in connection 
with its Internet content or television programming. Any claims of 
infringement, with or without merit, could be time consuming to 
defend, result in costly litigation, divert management attention, 
require the Company to enter into costly royalty or licensing 
arrangements or prevent the Company from using important technologies 
or methods, any of which could have a material adverse effect on the 
Company's business, financial condition or operating results. 

        As a publisher and a distributor of content over the Internet 
and television, the Company also faces potential liability for 
defamation, negligence, copyright, patent or trademark infringement 
and other claims based on the nature and content of the materials 
that it publishes or distributes. Such claims have been brought, and 
sometimes successfully pressed, against online services. In addition, 
the Company could be exposed to liability with respect to material 
indexed in its Virtual Software Library or its various search 
services. Although the Company carries general liability insurance, 
the Company's insurance may not cover potential claims of this type 
or may not be adequate to indemnify the Company for all liability 
that may be imposed. Any imposition of liability that is not covered 
by insurance or is in excess of insurance coverage could have a 
material adverse effect on the Company's business, financial 
condition or operating results. 


GOVERNMENT REGULATION

        Although there are currently few laws and regulations directly 
applicable to the Internet, a range of new laws and regulations have 
been proposed, and could be adopted, covering issues such as 
privacy, copyrights, obscene or indecent communications and the 
pricing, characteristics and quality of Internet products and 
services. During 1996, Congress enacted the Communications Decency 
Act (the "CDA"), which, among other things, purported to impose 
criminal penalties on anyone that distributes "obscene" or "indecent" 
material over the Internet.  A number of states have adopted or 
proposed similar legislation.  Although certain provisions of the CDA 
have been held to be unconstitutional, the manner in which the CDA 
and similar existing or future federal and state laws will ultimately 
be interpreted and enforced and their effect on the Company's 
operations cannot yet be fully determined, such laws could subject 
the Company to substantial liability. For example, the Company does 
not and cannot practically screen the contents of the various 
Internet sites that are indexed or accessible through the Company's 
directories and search engines.  Restrictive laws or regulations 
could also dampen the growth of the Internet generally and decrease 
the acceptance of the Internet as an advertising medium, and could, 
thereby, have a material adverse effect on the Company's business, 
financial condition or operating results. Application to the Internet 
of existing laws and regulations governing issues such as property 
ownership, libel and personal privacy is also subject to substantial 
uncertainty. 

        The television industry is subject to extensive regulation at 
the federal, state and local levels. In addition, legislative and 
regulatory proposals under consideration by Congress and federal 
agencies may materially affect the industry and the Company's ability 
to obtain distribution for its television programming. 

        There can be no assurance that current or new government laws 
and regulations, or the application of existing laws and regulations, 
will not subject the Company to significant liabilities, 
significantly dampen growth in Internet usage, prevent the Company 
from obtaining distribution for its television programming, prevent 
the Company from offering certain Internet content or services or 
otherwise cause a material adverse effect on the Company's business, 
financial condition or operating results. 

ITEM 2.  PROPERTIES

        The Company leases approximately 143,000 square feet of office 
and studio space in various facilities in San Francisco, California, 
that house the Company's principal administrative, finance, sales, 
marketing, Internet production and television production operations. 
In addition, the Company leases approximately 19,000 square feet of 
office space in Bridgewater, New Jersey, that is used primarily by 
technology personnel and 4,000 square feet of office space in New 
York, New York, that is used primarily by sales personnel and has 
short term operating leases in Portland, Oregon; Cambridge, 
Massachusetts and Chicago, Illinois.

        The Company's San Francisco headquarters facility and 
television production studio is approximately 54,000 square feet and  
is leased through December 31, 1999, with two five year renewal 
options. The Company's additional San Francisco, California offices 
are located in three buildings under four leases, range in size from 
11,000 square feet to 34,000 square feet and expire between May 2001 
and October 2004.  In September 1997, the Company entered into a 
lease for approximately 97,000 square feet of additional office 
space in San Francisco for a ten year term commencing June 1, 1998.  
The Company plans to use the additional office space to consolidate 
its operations and for future growth.  During the fourth quarter 
1997, the Company determined that the additional office space would 
be sufficient to consolidate operations as well as accommodate 
growth and determined that it would attempt to sublease two of its 
existing facilities totaling 45,000 square feet.  The Company 
believes that the general condition of its leased real estate is good 
and that its facilities are generally suitable for the purposes for 
which they are being used.

        The Company's Internet and television operations are vulnerable 
to interruption by fire, earthquake, power loss, telecommunications 
failure and other events beyond the Company's control. All of the 
Company's servers and television production equipment is currently 
located in San Francisco, California, an area that is susceptible to 
earthquakes. Since launching its first Internet site in June 1995, 
the Company has experienced system downtime for limited periods of up 
to a few hours due to power loss and telecommunications failures, and 
there can be no assurance that interruptions in service will not 
materially adversely affect the Company's operations in the future. 
The Company does not carry sufficient business interruption insurance 
to compensate the Company for losses that may occur, and any losses 
or damages incurred by the Company could have a material adverse 
effect on its business, financial condition or operating results. 

ITEM 3.  LEGAL PROCEEDINGS

        On August 15, 1997, Snap-on Incorporated and Snap-on 
Technologies commenced an action against the Company in the U.S. 
District Court of the Northern District of Illinois alleging 
trademark infringement and trademark dilution in connection with the 
Company's announcement of its Snap! Online  service.  The plaintiffs 
sought a temporary restraining order, which was denied, and are now 
seeking an injunction to require modification of the name of the 
service.  The plaintiffs are not seeking monetary damages.  The 
Company will continue to defend the case vigorously, but there can be 
no assurance as to whether, or on what terms, the Company will be 
able to continue using the Snap! Online  name.

        The Company is from time to time a party to other legal 
proceedings that arise in the ordinary course of business. There is 
no pending or threatened legal proceeding to which the Company is a 
party that, in the opinion of the Company's management, is likely to 
have a material adverse effect on the Company's business, financial 
condition or operating results.


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None




                             PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     The Company's common stock is traded on the National Market System of
the Nasdaq Stock Market ("Nasdaq") under the symbol "CNWK".

     On July 2, 1996 the Company effected its initial public offering (the
"IPO"). The following table sets forth the ranges of high and low trading prices
of the common stock for the quarterly periods indicated, as reported by Nasdaq.

                                               High    Low
                                             -------  -------
     Year ended December 31, 1996:

     Third quarter                          $20.500   $12.000
     Fourth quarter                         $29.000   $14.188


     Year ended December 31, 1997:
     First quarter                          $35.750   $18.750
     Second quarter                         $34.625   $15.750
     Third quarter                          $46.500   $24.250
     Fourth quarter                         $39.750   $19.313


        At February 27, 1998, the closing price for the Company's 
common stock, as reported by Nasdaq, was $36.25, and the approximate 
number of holders of record of the Company's common stock was 128.

The Company has never declared or paid a cash dividend on the 
Common Stock.  Management intends to retain any earnings to cover 
operating losses and working capital fluctuations and to fund 
capital expenditures and expansion and does not anticipate paying 
cash dividends on the Common Stock in the foreseeable future.

        On December 18, 1997, the Company sold 733,000 shares of 
common stock at $24.75 per share in a private placement to three 
"accredited investors" (as defined in Rule 501(a) under the 
Securities Act of 1933).  Net proceeds from the offering totaled 
approximately $18.1 million.  No underwriters were involved in the 
transaction, and the Company did not pay any underwriting discounts 
or commissions.  The private placement was exempt from the 
registration requirements of the Securities Act of 1933 pursuant to 
Section 4(2) thereof.

ITEM 6.  SELECTED CONSOLIDATED FINANCIAL DATA

         The following table sets forth selected consolidated financial data and
other  operating  information  of the Company.  The financial  data and
operating  information is derived from the consolidated  financial statements of
the Company  and should be read in  conjunction  with the  consolidated
financial  statements,  related notes, and other financial  information included
herein.
<TABLE>
<CAPTION>
                                                            Fiscal Year Ended
                                ---------------------------------------------------------------------
                                    1997           1996           1995           1994         1993 
                                -------------  -------------  -------------  ------------  ----------

<S>                             <C>            <C>            <C>            <C>           <C>
Consolidated statements of
   operations data:
Total revenues                   $33,639,589    $14,830,348     $3,500,097            $0          $0
Gross profit(deficit)              6,922,514       (503,156)    (2,132,870)            0           0
Operating loss                   (34,137,871)   (15,535,311)    (8,470,220)   (2,826,549)   (945,598)
Net loss                        ($24,728,092)  ($16,948,662)   ($8,607,358)  ($2,826,549)  ($945,598)

Basic and diluted loss per share      ($1.82)        ($2.13)        ($3.19)       ($0.38)     ($0.18)


Consolidated balance sheet data:
Working capital                  $19,430,761    $20,222,631       $719,195      $871,078    ($95,514)
 Property and equipment, net      19,553,537     11,743,291      2,392,788       288,453      11,748
Non-current portion of long-term   2,611,815        577,543        467,339             0           0
Stockholders' equity              40,642,804     33,098,154      2,798,790     1,192,097     (55,316)
Total assets                     $58,261,678    $39,841,869     $4,656,804    $1,608,634     $50,569

Number of employees at year-end          581            372            105            16           4

<FN>
</FN>
</TABLE>






ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
         AND RESULTS OF OPERATIONS

        The Company was formed in December 1992, and began to recognize 
revenues in April 1995 with the launch of CNET CENTRAL on the USA 
Network and the Sci-Fi Channel. The Company's first Internet site on 
the World Wide Web, CNET.COM, became operational in June 1995 and 
began to generate advertising revenues in October 1995.  The 
Company's revenues, cost of revenues and operating expenses have 
grown substantially since the Company's inception and the Company has 
incurred net losses of $24.8 million, $16.9 million and $8.6 million 
in 1997, 1996 and 1995, respectively.  These losses reflect 
substantial expenditures to develop and launch the Company's various 
Internet sites and television programs.  In addition, the Company 
believes that newly launched services require a certain period of 
growth before they begin to achieve adequate revenues to support 
their operation.  The increase in television programming and Internet 
sites has also required increased sales and marketing expenses as 
well as increased general and administrative costs.  As the Company's 
audience for its Internet sites and television programs grows 
management believes it will be able to attract additional advertising 
customers and increased advertising revenues. 

        The Company has a limited operating history upon which an 
evaluation of the Company and its prospects can be based. The 
Company's prospects must be considered in light of the risks, 
expenses and difficulties frequently encountered by start-up 
companies in the television programming industry and in the new and 
rapidly evolving market for Internet products, content and services. 
To address these risks, the Company must, among other things, 
effectively develop new relationships and maintain existing 
relationships with its advertising customers, their advertising 
agencies and other third parties, provide original and compelling 
content to Internet users and television viewers, develop and upgrade 
its technology, respond to competitive developments and attract, 
retain and motivate qualified personnel. There can be no assurance 
that the Company will succeed in addressing such risks and the 
failure to do so could have a material adverse effect on the 
Company's business, financial condition or operating results. 
Additionally, the limited operating history of the Company makes the 
prediction of future operating results difficult or impossible, and 
there can be no assurance that the Company's revenues will increase 
or even continue at their current level or that the Company will 
achieve or maintain profitability or generate cash from operations in 
future periods. Since inception, the Company has incurred significant 
losses and, as of December 31, 1997, had an accumulated deficit of 
$54.1 million. The Company may continue to incur losses in the 
future. 

RESULTS OF OPERATIONS

REVENUES

TOTAL REVENUES.  The Company began to generate revenues in 
April 1995, and total revenues were $33.6 million,  $14.8 million and 
$3.5 million for 1997, 1996 and 1995, respectively.

TELEVISION REVENUES.  Revenues attributable to television operations 
were $6.9 million, $4.7 million and $3.1 million for 1997, 1996 and 
1995, respectively. From April 1995 through June 1996, television 
revenues were derived primarily from the sale of advertising during 
the Company's CNET CENTRAL television program, which was carried 
nationally on USA Network and the SciFi Channel pursuant to an 
agreement with USA Networks.  Effective July 1, 1996, the Company and 
USA Networks amended their agreement, whereby USA Networks licensed 
the right to carry the DIGITAL DOMAIN, a two hour programming block 
which includes CNET CENTRAL, THE NEW EDGE and THE WEB, on its 
networks for an initial one-year term for a fee equal to the cost of 
production of those programs up to a maximum of $5.2 million. In 
January 1997, USA Networks agreed to extend the agreement for an 
additional year beginning July 1, 1997 and  revenues will again be 
limited to the costs of producing such programs, subject to a maximum 
amount of $5.5 million.

        In August 1996, the Company entered into an agreement with 
Golden Gate Productions, L.P. ("GGP"), whereby the Company produces a 
television program, TV.COM, which was exclusively distributed by GGP. 
Revenue from the distribution of TV.COM was first used to offset 
costs of distribution and production, with any excess being shared 
equally by CNET and GGP.  In August 1997 the assets of GGP were 
acquired by a third party, Trans World International ("TWI") who have 
agreed to distribute the program under the same terms as the original 
GGP agreement.  Beginning March 1, 1998, the Company will be 
responsible for the sale of advertisements on TV.COM and will pay a 
distribution fee to TWI.

        The increase in television revenues of $2.2 million from 1996 
to 1997 was primarily related to twelve months of distribution for 
the DIGITAL DOMAIN and TV.COM during 1997 as compared to six months 
of distribution for the DIGITAL DOMAIN in 1996 and three months of 
distribution of TV.COM in 1996.  The increase in television revenues 
of $1.6 million from 1995 to 1996 was primarily related to the 
addition of three television programs during 1996.

INTERNET REVENUES.  Revenues attributable to the Company's Internet 
operations commenced October 1, 1995 and were $26.7 million,  $10.1 
million and $393,000 for 1997, 1996 and 1995, respectively. Internet 
revenues consist primarily of revenues derived from the sale of 
advertisements on pages delivered to users of the Company's Internet 
sites.  The delivery of an advertisement is recognized by the Company 
as an "impression".  Advertising revenues are derived principally 
from arrangements with the Company's advertising customers that 
provide for a guaranteed number of impressions.  Advertising rates 
vary depending primarily on the particular Internet site on which 
advertisements are placed, the total number of impressions purchased 
and the length of the advertiser's commitment. Advertising revenues 
are recognized in the period in which the advertisements are 
delivered. The Company's ability to sustain or increase revenues for 
Internet advertising will depend on numerous factors, which include, 
but are not limited to, the Company's ability to increase its 
inventory of delivered Internet pages on which advertisements can be 
displayed and its ability to maintain or increase its advertising 
rates.

        The increase in revenues of $16.6 million from 1996 to 1997 was 
primarily attributable to increased pages delivered and increased 
advertisements sold on each of its sites.  Average daily pages 
delivered on the Company's Internet sites during 1997 approximated 
4.3 million pages, an increase of 187% over 1.5 million average daily 
pages in 1996.  The increase in pages delivered was attributable to a 
full year of  operations for SEARCH.COM, NEWS.COM, DOWNLOAD.COM, and 
GAMECENTER..COM,  which ran for 10 months, 4 months, 3 months and 2 
months, respectively, in 1996, as well as increased traffic growth on 
all of the Company's Internet sites during 1997.  In addition, 
Internet revenues include non-advertising revenues of $5.1 million 
and $144,000  for 1997 and 1996 respectively.  Non-advertising 
revenues include fees earned from Company sponsored trade shows, 
electronic commerce revenues, content licensing revenues, technology 
licensing and consulting.  The Company first recognized non-
advertising revenues in the third quarter of 1996.

        The increase in Internet revenues of $9.7 million from 1995 to 
1996 is attributable to three months of revenue generating activities 
on the Company's Internet sites that were operating during 1995 as 
compared to a full year during 1996, plus the additional revenues 
attributable to sites launched during 1996.

        During 1997, 1996 and 1995, approximately $905,000, $760,000 
and $104,000, respectively, of Internet revenues were derived from 
barter transactions whereby the Company delivered advertisements on 
its Internet sites in exchange for advertisements on the Internet 
sites of other companies. These revenues and marketing expenses were 
recognized at the fair value of the advertisements received and 
delivered, and the corresponding revenues and marketing expenses were 
recognized when the advertisements were delivered. 

REVENUE MIX. Television operations accounted for 21%, 32% and 89% 
and Internet operations accounted for 79%,  68% and 11% of total 
revenues for 1997, 1996 and 1995, respectively. This revenue mix was 
significantly impacted by the different commencement dates of the 
Company's television and Internet operations in 1995, and 
additionally by the increase in Internet sites produced by the 
Company from two at the end of 1995 to nine at the end of 1997. 

        The Company expects to experience fluctuations in television 
and Internet revenues in the future that may be dependent on many 
factors, including demand for the Company's Internet sites and 
television programming, and the Company's ability to develop, market 
and introduce new and enhanced Internet content and television 
programming. 

SIGNIFICANT CUSTOMERS.  For 1997 and 1996, two customers accounted 
for over 10% of the Company's revenues, with USA Networks accounting 
for approximately 16% and 19% and Microsoft Corporation accounting 
for 10% and 12% of total revenues, respectively. Three customers 
accounted for over 10% of total revenues during 1995, with MCI, IBM 
and Hewlett-Packard accounting for approximately 23%, 19% and 14% of 
total revenues, respectively. There can be no assurance that any of 
these customers will continue to account for a significant portion of 
total revenues in any future period. The Company's success will 
depend on its ability to broaden and diversify its base of 
advertising customers. If the Company loses advertising customers, 
fails to attract new customers or is forced to reduce advertising 
rates in order to retain or attract customers, the Company's 
business, financial condition and operating results will be 
materially adversely affected. 

COST OF REVENUES

TOTAL COST OF REVENUES. Total cost of revenues were $26.7 million, 
$15.3 million and $5.6 million for 1997, 1996 and 1995, respectively. 
Cost of revenues includes the costs associated with the production 
and delivery of the Company's television programming and the 
production of its Internet sites. The principal elements of cost of 
revenues for the Company's television programming have been the 
production costs of its television programs, which primarily consist 
of payroll and related expenses for the editorial and production 
staff, and costs for facilities and equipment. In addition, prior to 
June 30, 1996, cost of revenues for the Company's television 
programming included the fee payable to USA Networks under the 
Company's agreement with USA Networks as then in effect. The 
principal elements of cost of revenues for the Company's Internet 
sites have been payroll and related expenses for the editorial, 
production and technology staff, as well as costs for facilities and 
equipment. 

COST OF TELEVISION REVENUES.  Cost of revenues related to television 
programming were $6.9 million,  $6.2 million and $4.7 million, or 
100%, 132% and 153% of the related revenues, for 1997, 1996 and 1995, 
respectively. 

        The increase in cost of revenues for television of $700,000 
from 1996 to 1997 was primarily related to $1.6 million of additional 
production costs for twelve months of production of the Digital 
Domain and TV.COM in 1997 as compared to six months of production for 
the DIGITAL DOMAIN in 1996 and three months of production of TV.COM 
in 1996.  The increase in production costs were offset by $869,000 in 
fees payable to USA Networks in 1996 under the Company's initial 
agreement with USA Networks.

        The increase in cost of revenues for television of $1.5 million 
from 1995 to 1996 was primarily related to additional production 
costs of $2.0 million for the three new programs added during 1996.  
These additional productions costs were offset by a reduction in the 
fees paid to USA Networks.

COST OF INTERNET REVENUES.  Cost of revenues for Internet operations 
were $19.8 million,  $9.1 million and $891,000 or  74%, 90% and 226% 
of the related revenues for 1997, 1996 and 1995, respectively. The 
recognition of cost of revenues for Internet operations commenced on 
October 1, 1995, the date on which the Company began to sell 
advertising on its first Internet site. Costs incurred prior to 
October 1, 1995 were recognized as development costs.

        The increase in cost of revenues for Internet operations of 
$10.7 million from 1996 to 1997 was primarily attributable  to costs 
associated with Internet sites which operated for a full year in 
1997, as compared to a partial year during 1996, and sites which 
launched in 1997.  Sites that were operational for a partial year in 
1996 include SEARCH.COM, NEWS.COM, DOWNLOAD.COM, GAMECENTER.COM, and 
BUYDIRECT.COM, which were launched in March 1996, September 1996, 
October 1996, November 1996 and November 1996, respectively.  Sites 
which launched during 1997 include Snap! and COMPUTERS.COM, which 
launched in September 1997 and November 1997, respectively. 

        The increase in cost of revenues for Internet operations of 
$8.2 million from 1995 to 1996 was attributable to twelve months of 
Internet operations in 1996 as compared to three months of operation 
in 1995, and additionally, to the increase in Internet sites produced 
by the Company from two at the end of 1995 to six at the end of 1996. 
The increase in Internet sites produced by the Company required 
significant additional expenditures in payroll and related expenses, 
and for facilities and equipment. 

        The Company anticipates substantial increases in cost of 
revenues for Internet production in the future. Until September 30, 
1997 and November 30, 1997, the costs of the production of  Snap! and 
COMPUTERS.COM, respectively, were classified as development expenses. 
Commencing October 1, 1997 and December 1, 1997, the Company began to 
classify the expenses for Snap! and COMPUTERS.COM, respectively, as 
cost of Internet revenues. The classification of Snap! expenses and 
COMPUTERS.COM expenses as cost of Internet revenues will 
significantly increase cost of revenues in 1998.  The increase may 
cause a significant reduction in gross profit depending on revenues 
generated by the newly launched services.

COST OF REVENUES MIX. Cost of television revenues accounted for 26%, 
41% and 84% and cost of Internet revenues accounted for 74%, 59% and 
16% of total cost of revenues for 1997, 1996 and 1995, respectively. 
This mix of cost of revenues was significantly impacted by the 
different commencement dates of the Company's television and Internet 
operations in 1995 and by more rapid growth of Internet operations in 
1996 and 1997. The Company anticipates that its cost of Internet 
revenues will continue to account for an increasing percentage of 
total cost of revenues in future periods. 

SALES AND MARKETING

        Sales and marketing expenses consist primarily of payroll and 
related expenses, consulting fees and advertising expenses. Sales and 
marketing expenses were $11.6 million, $7.8 million, $2.4 million for 
1997, 1996, and 1995, respectively. Sales and marketing expense 
represented 34 %, 53% and 68% of total revenue in 1997, 1996 and 
1995, respectively. The increase in sales and marketing expenses of  
$3.8 million from 1996 to 1997 was attributable to $2.3 million in 
expenses related to Snap!, which were primarily related to 
advertising costs.  The additional increase in sales and marketing 
expenses from 1996 to 1997 were attributable to increased salaries 
and related expenses due to an increase in the size of the Company's 
sales force. Sales and marketing expenses increased by $5.4 million 
from 1995 to 1996, primarily a result of increased salaries and 
related expenses of $1.7 million and increased advertising expenses 
of $2.7 million. The Company expects sales and marketing expenses to 
increase substantially in the future. 

DEVELOPMENT

        Development expenses consist of expenses incurred in the 
Company's initial development of new television programming prior to 
the commencement of its production activities in 1995, the 
development of new Internet sites and in research and development of 
new or improved technologies designed to enhance the performance of 
the Company's Internet sites. Development expenses for television 
programming included salaries and related expenses, facilities and 
production equipment and costs for research and development of new 
programming. Development expenses for Internet operations include 
expenses for the development and production of new Internet sites and 
research and development of new or improved technologies, including 
payroll and related expenses for editorial, production and technology 
staff, as well as costs for facilities and equipment. Costs 
associated with the development of a new Internet site are no longer 
recognized as development expenses when the new site begins 
generating revenue. 

        Development expenses were $13.6 million, $3.4 million and $2.3 
million for 1997, 1996 and 1995, respectively. Development expenses 
represented 41%, 23% and 65% of total revenues for 1997, 1996 and 
1995, respectively.  The increase in development expenses of $10.2 
million from 1996 to 1997, was primarily attributable to $8.3 million 
in development expenses for Snap! and $3.8 million in development 
expenses for COMPUTERS.COM.  Snap! and COMPUTERS.COM became 
operational in October 1997 and December 1997, respectively, and 
costs incurred to operate the sites were classified as cost of 
revenues commencing on those dates.  The increases in development 
expenses attributable to Snap! and COMPUTERS.COM in 1997 were 
partially offset by expenses incurred to develop and launch sites 
during 1996, such as DOWNLOAD.COM and BUYDIRECT.COM.  Development 
expenses increased $1.2 million from 1995 to 1996, primarily due to 
the development of the four new Internet sites that the Company 
launched at various times during 1996. The costs associated with the 
development of new sites are primarily personnel related but also 
include other costs, such as facilities and equipment. 

GENERAL AND ADMINISTRATIVE

        General and administrative expenses consist of payroll and 
related expenses for executive, finance and administrative personnel, 
professional fees and other general corporate expenses. General and 
administrative expenses were $6.8 million, $3.8 million and $1.7 
million for 1997, 1996 and 1995 respectively. General and 
administrative costs represented 20%, 25% and 49% of total revenues 
for 1997, 1996 and 1995, respectively. The increase in general and 
administrative expense of $3.1 million from 1996 to 1997 was 
primarily attributable to increased salaries and related expenses and 
other costs related to facilitating the growth of the Company during 
1997. The increase in general and administrative expenses of $2.1 
million from 1995 to 1996 was primarily attributable to increased 
salaries and related expenses for additional personnel. 

UNUSAL ITEMS

        In the first quarter of 1997, the Company incurred a one-time, 
non-cash expense of $7.0 million related to an amendment to the 
warrant agreement with USA Networks whereby the Company agreed that 
the warrants held by USA Networks will vest in full on December 31, 
2006, to the extent that they have not previously vested.  
Additionally, USA Networks exercised its option to extend its 
agreement with the Company to carry three of the Company's television 
programs through June 30, 1998.

        In the fourth quarter of 1997, the Company recognized an 
expense of $1.3 million related to reorganizing its real estate 
needs.  Also in the fourth quarter of 1997, the Company recognized an 
expense of $700,000 relating to a write-off of Internet domain names 
that the Company determined it would not use.

OTHER INCOME(EXPENSE)

        Other income (expense) consists of interest income, interest 
expense and losses from the Company's investments, including the 
Company's minority interest in Vignette and the Company's interest in 
a joint venture with E! Entertainment Television, Inc. ("E! 
Entertainment"). The joint venture was formed in January 1996 to 
operate an Internet site, E! Online, and was originally owned 50% by 
the Company and 50% by E! Entertainment. The Company provided 
approximately $3.0 million in debt financing to the joint venture 
through June 30, 1997, which was the venture's sole source of 
financing.  As a result of the Company's financing commitment to the 
joint venture, the Company recognized 100% of any losses incurred by 
the joint venture.  In June 1997 the Company sold its 50% equity 
interest and certain technology licenses and marketing and consulting 
services to its joint venture partner for $10.0 million in cash, a 
$3.2 million note receivable, and certain additional payments for up 
to three years.

        Total other income (expense) was $9.4 million, $(1.4) million 
and $(137,000) for 1997, 1996 and 1995, respectively.  Included in 
other income (expense) were gains of $11.0 million for 1997, which 
primarily related to the sale of the Company's equity interest in the 
joint venture with E! Entertainment.  The gain was offset by $1.8 
million of losses recognized prior to the sale of the Company's 
equity interest in the joint venture and approximately $400,000 in 
losses recognized related to the Company's investment in Vignette.  
Losses of $1.9 million for the comparable period in 1996 were 
primarily related to the recognition of 100% of the losses by the 
joint venture.

INCOME TAXES

        The Company had a net loss for each of 1997, 1996 and 1995. As 
of December 31, 1997, the Company has approximately $45.0 million of 
net operating loss carryforwards for federal income tax purposes, 
which expire between 2008 and 2012. The Company also has 
approximately $18.5 million of net operating loss carryforwards for 
state income tax purposes, which expire between 1998 and 2002. The 
Company experienced an "ownership change" as defined by Section 382 
of the Internal Revenue Code in October 1994. As a result of the 
ownership change, the Company's use of its federal and state net 
operating loss carryforwards is subject to limitation. The ability to 
use net operating loss carryforwards may be further limited should 
the Company experience another "ownership change" as defined by 
Section 382 of the Internal Revenue Code. See Note 3 of Notes to 
Consolidated Financial Statements. 

NET LOSS

        Net losses were $24.7 million, $16.9 million and $8.6 million 
for 1997, 1996 and 1995 respectively.  Net loss for each of the years 
was primarily attributable to cost of revenues and operating expenses 
in excess of total revenues.  The increase in net loss of $7.8 
million from 1996 to 1997 was primarily attributable to increased 
cost of revenues of $11.4 million, increased sales and marketing 
expenses of $3.8 million, increased development costs of $10.2 
million and increased general and administrative costs of $3.1 
million, totaling $28.5 million in increased expenses, which were 
offset by an increase of $18.8 million in total revenues.  The 
increase in net loss of $8.3 million from 1995 to 1996 was primarily 
attributable to increased cost of revenues of $9.7 million, increased 
sales and marketing expenses of $5.5 million, increased development 
expenses of $1.2 million and increased general and administrative 
expenses of $2.1 million, totaling $18.5 million which were offset by 
an increase in total revenues of $11.3 million.

LIQUIDITY AND CAPITAL RESOURCES

        The Company initially financed its operations through private 
sales of preferred stock which totaled approximately $23.8 million in 
gross proceeds (including approximately $3.6 million in principal and 
$118,000 in accrued interest on notes that were canceled in exchange 
for preferred stock). In July 1996, the Company effected an initial 
public offering (IPO) of 2,000,000 shares of common stock and 
simultaneously sold 600,000 shares of common stock to Intel 
Corporation ("Intel"). The net proceeds from the two offerings were 
$37.8 million.

        On July 21, 1997, the Company sold 201,253 shares of common 
stock in a private placement to Intel for aggregate net proceeds of 
approximately $5.3 million.  On December 18, 1997, the Company sold 
733,000 shares of common stock in a private placement to three 
"accredited investors" (as defined in Rule 501(a) under the 
Securities Act of 1933) for aggregate net proceeds of approximately 
$18.1 million.

        Cash flows provided by financing activities in 1997 consisted 
primarily of proceeds from the issuance of common stock in private 
placements.  Cash flows provided by financing activities in 1996 
consisted primarily of proceeds from the Company's IPO, the private 
sale of common stock to Intel and the issuance of preferred stock.  
Cash flows provided by financing activities in 1995 consisted 
primarily of proceeds from the issuance of preferred stock.  In 
addition, the issuance of debt provided cash flows from financing 
activities in 1997, 1996 and 1995.

        Net cash used in operating activities of $5.9 million, 
$8.9 million and $5.3 million for 1997, 1996 and 1995 respectively, 
were primarily attributable to net losses in such periods. Net cash 
used in investing activities of $19.7 million, $18.5 million and $5.0 
million for 1997, 1996 and 1995, respectively, were primarily 
attributable to purchases of equipment. 

        As of December 31, 1997, the Company had obligations 
outstanding under a note payable and under certain capital leases of 
$4.0 million.  Such obligations were incurred to finance equipment 
purchases and are payable through May 2008.

        As of December 31, 1997 the Company's principal source of 
liquidity was approximately $22.6 million in cash and cash 
equivalents.  During 1997 the Company secured a $10.0 million line of 
credit from a bank.  The line of credit consists of a $5.0 million 
operating line of credit  secured by all of the Company's tangible 
and intangible assets and a $5.0 million line of credit for up to 65% 
of capital equipment purchases.  The capital proceeds from the 
equipment line will convert to a two year term loan in July, 1998.  
As of December 31, 1997, the Company had not yet drawn any of the 
operating line of credit and had drawn $768,000 on the capital 
equipment line of credit.  In February 1998, the Company issued a 
letter of credit as a security deposit for a lease of office space in 
the amount of $3.3 million.  The letter of credit is secured by $3.3 
million of the $5.0 million operating line of credit.  In addition, 
the Company had proceeds of $2.5 million from an asset based loan 
secured by certain capital  equipment.  Both the $10.0 million bank 
financing and the $2.5 million asset based loan are subject to 
certain financial covenants.  At December 31, 1997, the Company was 
not in compliance with certain financial covenants, but obtained 
waivers from both lenders.  The Company believes that these funds 
will be sufficient to meet its anticipated cash needs for working 
capital and capital expenditures for at least the next 12 months.  
See "Outlook and Uncertainties" below.

SEASONALITY

        The Company believes that advertising sales in traditional 
media, such as television, are generally lower in the first and 
third calendar quarters of each year than in the respective 
preceding quarters and that advertising expenditures fluctuate 
significantly with economic cycles.  Depending on the extent to 
which the Internet is accepted as an advertising medium, seasonality 
and cyclicality in the level of advertising expenditures generally 
could become more pronounced for Internet advertising.  Seasonality 
and cyclicality in advertising expenditures generally, or with 
respect to Internet-based advertising specifically, could have a 
material adverse effect on the Company's business, financial 
condition or operating results.

        The Company's quarterly operating results may fluctuate 
significantly in the future as a result of a variety of factors, 
many of which are outside the Company's control.  Factors that may 
adversely affect the Company's quarterly operating results 
attributable to its Internet operations include the level of use of 
the Internet, demand for Internet advertising, seasonal trends in 
both Internet use and advertising placements, the addition or loss 
of advertisers, advertising budgeting cycles of individual 
advertisers, the level of traffic on the Company's Internet sites, 
the amount and timing of capital expenditures and other costs 
relating to the expansion of the Company's Internet operations, the 
introduction of new sites and services by the Company or its 
competitors, price competition or pricing changes in the industry, 
technical difficulties or system downtime, general economic 
conditions and economic conditions specific to the Internet and 
Internet media.  Quarterly operating results attributable to the 
Company's television operations are generally dependent on the costs 
incurred by the Company in producing its television programming.  If 
the cost of producing television programs for USA Networks exceeds 
the maximum licensing fee payable by USA Networks, or if production 
costs for TV.COM exceed distribution revenues, the Company could 
incur a gross deficit with respect to its television operations. 
Further, the size and demographic characteristics of the Company's 
television viewing audience may be adversely affected by the 
popularity of competing television programs, including special 
events, the time slots chosen for the Company's programs by the 
cable network carrying such programs and the popularity of programs 
immediately preceding the Company's programs. As a result of the 
Company's strategy to cross market its television and Internet 
operations, the Company believes that any decrease in the number of 
viewers of its television programs will have a negative effect on 
the usage of its Internet sites.  Accordingly, a decrease in 
viewership of the Company's television programs could have a 
material adverse effect on the Company's business, financial 
condition or operating results.

        Due to all of the foregoing factors, it is likely that the 
Company's operating results may fall below the expectations of the 
Company, securities analysts or investors in some future quarter.  
In such event, the trading price of the Company's Common Stock would 
likely be materially adversely affected. 

YEAR 2000 COMPLIANCE

        In the next two years, most companies could face a potentially 
serious information systems problem because many software 
applications and operational programs written in the past were 
designed to handle date formats with two-digit years and thus may not 
properly recognize calendar dates beginning in the Year 2000.  This 
problem could result in computers either outputting incorrect data or 
shutting down altogether when attempting to process a date such as 
"0/01/00."  The Company has examined all of its critical software and 
operational applications and in the opinion of management, there 
should be no significant conversion issues related to the Year 2000 
issue.  In addition, however, the Company could be exposed to a 
potential adverse impact resulting from the failure of financial 
institutions and other third parties to adequately address the Year 
2000 problem.  The Company intends to devote the necessary resources 
to identify and resolve Year 2000 issues that may exist with third 
parties.  However, the Company cannot estimate the cost of this 
effort at this time, nor can any assurance be given that the Year 
2000 problem will not have a material adverse effect on the Company's 
business, operating results or financial condition.

OUTLOOK AND UNCERTAINTIES

        The Company's future financial condition and results are 
subject to substantial risks and uncertainties, some of which are 
summarized in this section.

        LIMITED OPERATING HISTORY; ACCUMULATED DEFICIT; ANTICIPATED
LOSSES.  The Company was founded in December 1992 and first 
recognized revenues from its television operations in April 1995 and 
from its Internet operations in October 1995.  Accordingly, the 
Company has an extremely limited operating history upon which an 
evaluation of the Company and its prospects can be based.  See 
introduction to Item 7, "Management's Discussion and Analysis." 
Since inception, the Company has incurred significant losses and, as 
of December 31, 1997, had an accumulated deficit of $54.1 million. 
The Company expects to continue to incur significant losses on a 
quarterly and annual basis in the future. If currently available 
cash and cash generated by operations is insufficient to satisfy the 
Company's liquidity requirements, the Company may be required to 
sell additional equity or debt securities. The sale of additional 
equity or convertible debt securities would result in additional 
dilution to the Company's stockholders. There can be no assurance 
that financing will be available to the Company in amounts or on 
terms acceptable to the Company. See Item 7, "Management's 
Discussion and Analysis - Liquidity and Capital Resources."

        POTENTIAL FLUCTUATIONS IN QUARTERLY OPERATING RESULTS. The 
Company's quarterly operating results may fluctuate significantly in 
the future as a result of a variety of factors, many of which are 
outside the Company's control, including, the level of use of the 
Internet, demand for Internet advertising, seasonal trends in both 
Internet use and advertising placements, the addition or loss of 
advertisers, advertising budgeting cycles of individual advertisers, 
the level of traffic on the Company's Internet sites, the amount and 
timing of capital expenditures and other costs relating to the 
expansion of the Company's Internet operations, the introduction of 
new sites and services by the Company or its competitors, price 
competition or pricing changes in the industry, technical 
difficulties or system downtime, general economic conditions and 
economic conditions specific to the Internet and Internet media.  
Due to the foregoing factors, among others, it is likely that the 
Company's operating results may fall below the expectations of the 
Company, securities analysts or investors in some future quarter.  
In such event, the trading price of the Company's Common Stock would 
likely be materially adversely affected.  See Item 7, "Management's 
Discussion and Analysis - Seasonality."

        DEPENDENCE ON ADVERTISING REVENUES; CUSTOMER CONCENTRATION.  A 
substantial percentage of the Company's revenues are derived from 
the sale of advertising on its Internet sites and television 
programs.  Most of the Company's advertising contracts can be 
terminated by the customer at any time on very short notice.  
Furthermore, most of the Company's revenues have been derived from a 
limited number of advertising customers.  If the Company loses 
advertising customers, fails to attract new customers or is forced 
to reduce advertising rates in order to retain or attract customers, 
the Company's business, financial condition and operating results 
will be materially adversely affected.  See Item 1, "Business - 
Sales and Marketing" and Note 6 of Notes to Financial Statements.

        UNCERTAIN ACCEPTANCE OF THE INTERNET AS AN ADVERTISING MEDIUM.  
Use of the Internet by consumers is at a very early stage of 
development, and market acceptance of the Internet as a medium for 
information, entertainment, commerce and advertising is subject to a 
high level of uncertainty.  If Internet-based advertising is not 
widely accepted by advertisers and advertising agencies, the 
Company's business, financial condition and operating results will 
be materially adversely affected.  See Item 1, "Business - Sales 
and Marketing."

        UNCERTAIN ACCEPTANCE OF THE COMPANY'S INTERNET CONTENT.  The 
Company's future success depends upon its ability to deliver 
original and compelling Internet content and services in order to 
attract users with demographic characteristics valuable to the 
Company's advertising customers.  There can be no assurance that the 
Company's content and services will be attractive to a sufficient 
number of Internet users to generate advertising revenues.  See Item 
1, "Business - Strategy."

        UNCERTAIN ACCEPTANCE OF THE COMPANY'STELEVISION PROGRAMMING.  
The Company's television programming is critical to its overall 
business strategy, and the Company expects to rely to a significant 
extent on its television programming to promote the CNET and Snap! 
brands and to attract users to its Internet sites.  To achieve these 
objectives, the Company must develop original and compelling 
television programming and obtain distribution for such programming.  
The successful development, production and distribution of 
television programming is subject to numerous uncertainties, and 
there can be no assurance that the Company's television programming 
will be accepted by television broadcasters, cable networks or their 
viewers.  See Item 1, "Business - Television."

        COMPETITION.  The market for Internet content and services is 
new, intensely competitive and rapidly evolving; there are minimal 
barriers to entry, and current and new competitors can launch new 
sites at relatively low cost.  There can be no assurance that the 
Company will compete successfully with current or future 
competitors.  See Item 1, "Business - Competition."

        UNCERTAIN ACCEPTANCE AND MAINTENANCE OF BRANDS.  The Company 
believes that establishing and maintaining the CNET and Snap! brands 
is a critical aspect of its efforts to attract and expand its 
Internet and television audience and that the importance of brand 
recognition will increase due to the growing number of Internet 
sites and the relatively low barriers to entry in providing Internet 
content and services.  If the Company is unable to provide high 
quality content and services or otherwise fails to promote and 
maintain its brands, or if the Company incurs excessive expenses in 
an attempt to improve its content and services or promote and 
maintain its brands, the Company's business, financial condition and 
operating results will be materially adversely affected.  See Item 
1, "Business - Sales and Marketing."

       MANAGING POTENTIAL GROWTH.  The Company has rapidly and 
significantly expanded its operations, including the substantial 
recent expansion represented by Snap!.  This rapid growth has 
placed, and is expected to continue to place, a significant strain 
on the Company's management, operational and financial resources.  
If the Company is unable to manage growth effectively, the Company's 
business, financial condition and operating results will be 
materially adversely affected.  See Item 1, "Business - Sites and 
Services" and Item 1, "Business - Employees."

        DEPENDENCE ON KEY PERSONNEL.  The Company's performance is 
substantially dependent on the continued services of Halsey M. 
Minor, Shelby W. Bonnie, and the other members of its senior 
management team, as well as on the Company's ability to retain and 
motivate its other officers and key employees.  The Company's future 
success also depends on its continuing ability to attract and retain 
highly qualified personnel.  The inability to attract and retain the 
necessary technical, managerial, editorial and sales personnel could 
have a material adverse effect on the Company's business, financial 
condition or operating results.  See Item 1, "Business - 
Employees."

        RISKS OF TELEVISION DISTRIBUTION; DEPENDENCE ON USA NETWORKS.  
The Company's television programming is currently carried primarily 
on the USA Network and the Sci-Fi Channel, both of which are owned 
by USA Networks, pursuant to an agreement between the Company and 
USA Networks, which expires on June 30, 1998.  There can be no 
assurance that the Company will be able to obtain distribution for 
its television programming after June 30, 1998.  See Item 1, 
"Business - Television - Agreement with USA Networks."

        DEPENDENCE ON THIRD PARTIES FOR INTERNET OPERATIONS. The 
Company relies on the cooperation of owners and operators of other 
Internet sites and on its relationships with third party vendors of 
Internet development tools and technologies.  The Company's ability 
to advertise on other Internet sites and the willingness of the 
owners of such sites to direct users to the Company's Internet sites 
through hypertext links are also critical to the success of the 
Company's Internet operations. There can be no assurance that the 
necessary cooperation from third parties will be available on 
acceptable commercial terms or at all.    If the Company is unable 
to develop and maintain satisfactory relationships with such third 
parties on acceptable commercial terms, or if the Company's 
competitors are better able to leverage such relationships, the 
Company's business, financial condition and operating results will 
be materially adversely affected.  See Item 1, "Business - Internet 
Sites and Services."

        RISKS OF TECHNOLOGICAL CHANGE..  The market for Internet 
products and services is characterized by rapid technological 
developments, frequent new product introductions and evolving 
industry standards.  The emerging character of these products and 
services and their rapid evolution will require that the Company 
continually improve the performance, features and reliability of its 
Internet content, particularly in response to competitive offerings.  
There can be no assurance that the Company will be successful in 
responding quickly, cost effectively and sufficiently to these 
developments.  See Item 1, "Business - Technology."

        DEPENDENCE ON CONTINUED GROWTH IN USE OF THE INTERNET.  Rapid 
growth in the use of and interest in the Internet is a recent 
phenomenon, and there can be no assurance that acceptance and use of 
the Internet will continue to develop or that a sufficient base of 
users will emerge to support the Company's business.  If use of the 
Internet does not continue to grow or grows more slowly than 
expected, or if the Internet infrastructure does not effectively 
support growth that may occur, the Company's business, financial 
condition and operating results would be materially adversely 
affected.  See Item 1, "Business - Internet Sites and Services."

        CAPACITY CONSTRAINTS AND SYSTEM DISRUPTIONS.  The satisfactory 
performance, reliability and availability of the Company's Internet 
sites and its network infrastructure are critical to attracting 
Internet users and maintaining relationships with advertising 
customers.  System interruptions that result in the unavailability 
of the Company's Internet sites or slower response times for users 
would reduce the number of advertisements delivered and reduce the 
attractiveness of the Company's Internet sites to users and 
advertisers.  See Item 1, "Business - Technology."  The Company's 
Internet and television operations are also vulnerable to 
interruption by fire, earthquake, power loss, telecommunications 
failure and other events beyond the Company's control.  All of the 
Company's servers and television production equipment is currently 
located in San Francisco, California, an area that is susceptible to 
earthquakes.  See Item 2, "Properties."

        LIABILITY FOR INTERNET AND TELEVISION CONTENT.  As a publisher 
and a distributor of content over the Internet and television, the 
Company faces potential liability for defamation, negligence, 
copyright, patent or trademark infringement and other claims based 
on the nature and content of the materials that it publishes or 
distributes.  See Item 1, "Business - Intellectual Property."  The 
Company's operations, particularly its Internet directories and 
search, which facilitate access to third party content, could also 
be subject to a range of existing and proposed laws concerning the 
distribution of "obscene" or "indecent" material over the Internet.  
See Item 1, "Business - Government Regulation."

        RISKS ASSOCIATED WITH POTENTIAL ACQUISITIONS AND INVESTIMENTS.  
The Company's current strategy is to broaden the number, scope and 
content of its Internet sites through the acquisition of existing 
sites and businesses specializing in Internet-related technologies 
and content, as well as through internally developed Internet sites 
and services.  Any such investments would involve many of the same 
risks posed by acquisitions, particularly risks related to the 
diversion of resources, the inability to generate revenues, the 
impairment of relationships with third parties and potential 
additional expenses.  There can be no assurance that the Company 
would be successful in overcoming these risks or any other problems 
encountered in connection with such acquisitions or new investments.  
See Item 1 "Business - Business Strategy" and Item 1, "Business - 
Employees."

        SECURITY.  A party who is able to circumvent the 
Company's security measures could misappropriate proprietary 
information or cause interruptions in the Company's Internet 
operations.  The Company may be required to expend significant 
capital and resources to protect against the threat of such security 
breaches or to alleviate problems caused by such breaches.  See Item 
1, "Business - Technology."

        DEPENDENCE ON INTELLECTUAL PROPERTY RIGHTS; RISKS OF  
INFRINGEMENT.  The Company relies on trade secret and copyright laws 
to protect its proprietary technologies, but there can be no 
assurance that such laws will provide sufficient protection to the 
Company, that others will not develop technologies that are similar 
or superior to the Company's, or that third parties will not copy or 
otherwise obtain and use the Company's technologies without 
authorization.  See Item 1, "Business - Intellectual Property." The 
Company is also a defendant in pending litigation concerning its use 
of the name "Snap!." See Item 3, "Legal Proceedings."

        DEPENDENCE ON LICENSED TECHNOLOGY.  The Company relies on 
certain technology licensed from third parties, and there can be no 
assurance that these third party technology licenses will be 
available or will continue to be available to the Company on 
acceptable commercial terms or at all.  See Item 1, "Business - 
Intellectual Property."

        GOVERNEMT REGULATION AND LEGAL UNCERTAINTY.  Although there 
are currently few laws and regulations directly applicable to the 
Internet, it is possible that new laws and regulations will be 
adopted covering issues such as privacy, copyrights, obscene or 
indecent communications and the pricing, characteristics and quality 
of Internet products and services.  The adoption of restrictive laws 
or regulations could decrease the growth of the Internet or expose 
the Company to significant liabilities.  See Item 1, "Business - 
Government Regulation."






ITEM  7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

<PAGE>


ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Independent Auditors Report

The Board of  Directors, 
CNET, Inc.

We have audited the accompanying consolidated balance sheets of CNET, 
Inc. and subsidiaries as of December 31, 1997 and 1996 and the 
related consolidated statements of operations, stockholders' equity, 
and cash flows for each of the years in the three-year period ended 
December 31, 1997.  These consolidated financial statements are the 
responsibility of the Company's management. Our reponsibility is to 
express an opinion on these consolidated financial statements based on
our audits.

We conducted our audits in accordance with generally accepted 
auditing standards.  Those standards require that we plan and perform 
the audit to obtain reasonable assurance about whether the financial 
statements are free of material misstatements.  An audit includes 
examining, on a test basis, evidence supporting the amounts and 
disclosures in the financial statements.  An audit also includes 
assessing the accounting principles used and significant estimates 
made by management, as well as evaluating the overall financial 
statement presentation.  We believe that our audits provide 
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to 
above present fairly, in all material respects, the consolidated 
financial position of CNET, Inc. and subsidiaries as of December 31, 
1997 and 1996, and the results of their operations and their cash 
flows for each of the years in the three-year period ended December 
31, 1997, in conformity with generally accepted accounting 
principles.

                                                        KPMG Peat Marwick LLP
San Francisco, California
February 3, 1998, except as to Note 9
which is as of March 30, 1998


<PAGE>


                                CNET, INC.
                       CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
                                                          December 31,
                                                  --------------------------
                                                      1997          1996
                                                  ------------  ------------
<S>                                               <C>           <C>
                     ASSETS
Current assets:
  Cash and cash equivalents                       $22,553,988   $20,155,935
  Accounts receivable, net of allowance for
   doubtful accounts of $461,000 and $100,000
   in 1997 and 1996, respectively                   9,149,762     5,292,177
  Other current assets                              1,134,957       940,691
  Restricted cash                                   1,599,113          --
                                                  ------------  ------------
   Total current assets                            34,437,820    26,388,803

Property and equipment, net                        19,553,537    11,743,291
Other assets                                        4,270,321     1,709,775
                                                  ------------  ------------
   Total assets                                   $58,261,678   $39,841,869
                                                  ============  ============

        LIABILITIES AND  STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable                                 $3,567,783    $3,338,852
  Accrued liabilities                              10,080,504     2,546,175
  Current portion of long-term debt                 1,358,772       281,145
                                                  ------------  ------------
     Total current liabilities                     15,007,059     6,166,172

Long-term debt                                      2,611,815       577,543
                                                  ------------  ------------
     Total liabilities                             17,618,874     6,743,715

Commitments and contingencies

Stockholders' equity:
  Common stock; $0.0001 par value;
    25,000,000 shares authorized; 14,662,185
    and 13,281,462 shares issued and
    outstanding in 1997 and 1996,
    respectively                                        1,468         1,328
  Additional paid-in capital                       94,697,595    62,424,993
  Accumulated deficit                             (54,056,259)  (29,328,167)
                                                  ------------  ------------
     Total stockholders' equity                    40,642,804    33,098,154
                                                  ------------  ------------
     Total liabilities and stockholders' equity   $58,261,678   $39,841,869
                                                  ============  ============
<FN>
     See accompanying notes to consolidated financial statements.
</FN>
</TABLE>
<PAGE>

                                     CNET, INC.
                           CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE> 
<CAPTION> 
                                                Year Ended December 31,
                                     ------------------------------------------
                                         1997           1996           1995
                                     -------------  -------------  ------------
<S>                                  <C>            <C>            <C>
Revenues:
   Television                          $6,922,309     $4,696,664    $3,106,642
   Internet                            26,717,280     10,133,684       393,455
                                     -------------  -------------  ------------
     Total revenues                    33,639,589     14,830,348     3,500,097
                                     -------------  -------------  ------------
Cost of revenues:
   Television                           6,904,471      6,212,959     4,742,109
   Internet                            19,812,604      9,120,545       890,858
                                     -------------  -------------  ------------
      Total cost of revenues           26,717,075     15,333,504     5,632,967
                                     -------------  -------------  ------------
      Gross profit (deficit)            6,922,514       (503,156)   (2,132,870)
                                     -------------  -------------  ------------
Operating expenses:
   Sales and marketing                 11,602,746      7,821,454     2,369,759
   Development                         13,608,846      3,438,333     2,264,455
   General and administrative           6,848,793      3,772,368     1,703,136
   Unusual items                        9,000,000          --             --
                                     -------------  -------------  ------------
     Total operating expenses          41,060,385     15,032,155     6,337,350
                                     -------------  -------------  ------------
     Operating loss                   (34,137,871)   (15,535,311)   (8,470,220)

Other income(expense):
   Gain (loss) on joint venture         8,798,306     (1,865,299)         --
   Interest income                        897,012        766,952        89,448
   Interest expense                      (285,539)      (315,004)     (226,586)
                                     -------------  -------------  ------------
     Total other income(expense)        9,409,779     (1,413,351)     (137,138)
                                     -------------  -------------  ------------
     Net loss                        ($24,728,092)  ($16,948,662)  ($8,607,358)
                                     =============  =============  ============

Basic and diluted net loss per share       ($1.82)        ($2.13)       ($3.19)
                                     =============  =============  ============

Shares used in calculating basic
 and diluted per share data            13,611,821      7,963,897     2,700,000
                                     =============  =============  ============
<FN>
     See accompanying notes to consolidated financial statements.
</FN>
</TABLE>
<PAGE>

                                  CNET, INC.
                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
                                 Convertible
                               Preferred Stock        Common Stock     Additional                   Total
                            --------------------- -------------------   Paid-in     Accumulated  Stockholders'
                              Shares     Amount     Shares    Amount    Capital       Deficit       Equity
                            ----------- --------- ----------- ------- ------------ ------------- ------------
<S>                         <C>         <C>       <C>         <C>     <C>          <C>           <C>
Balances as of
 December 31, 1994           2,854,804   $28,548   2,700,000    $270   $4,935,426   ($3,772,147)  $1,192,097
Issuance of Series C
 convertible preferred
 stock                           --         --          --        --    2,500,000         --       2,500,000
Issuance of Series D
 convertible preferred
 stock                         342,290     3,423        --        --    4,405,273         --       4,408,696
Conversion of debt to
 Series D convertible
 preferred stock               242,108     2,421        --        --    3,115,934         --       3,118,355
Issuance of warrants             --         --          --        --      187,000         --         187,000
Net loss                         --         --          --        --          --     (8,607,358)  (8,607,358)
                            ----------- --------- ----------- ------- ------------ ------------- ------------
Balances as of
 December 31, 1995           3,439,202    34,392   2,700,000     270   15,143,633   (12,379,505)   2,798,790
Issuance of Series B
 convertible preferred
 stock                         366,144     3,661        --        --      362,483         --         366,144
Issuance of Series D
 convertible preferred
 stock                           2,588        26        --        --       33,307         --          33,333
Issuance of Series E
 convertible preferred
 stock                         453,169     4,532        --        --    8,364,102         --       8,368,634
Issuance of warrants             --         --          --        --      164,000         --         164,000
Public stock offering,
 net of $3,151,406
 issuance costs                  --         --     2,600,000     260   37,776,334         --      37,776,594
Conversion of preferred
 stock into common stock    (4,261,103)  (42,611)  7,816,673     782       41,829         --           --
Exercise of stock options        --         --       153,000      15      369,545         --         369,560
Employee stock purchase
 plan                            --         --        11,789       1      169,760         --         169,761
Net loss                         --         --          --        --          --    (16,948,662) (16,948,662)
                            ----------- --------- ----------- ------- ------------ ------------- ------------
Balances as of
 December 31, 1996               --         --    13,281,462   1,328   62,424,993   (29,328,167)  33,098,154
Exercise of stock options        --         --       411,457      43    1,175,537         --       1,175,580
Employee stock purchase
 plan                            --         --        35,013       4      705,407         --         705,411
Issuances of common stock        --         --       934,253      93   23,391,658         --      23,391,751
Warrant compensation             --         --          --        --    7,000,000         --       7,000,000
Net loss                         --         --          --        --          --    (24,728,092) (24,728,092)
                            ----------- --------- ----------- ------- ------------ ------------- ------------
Balances as of
 December 31, 1997               --       $ --    14,662,185  $1,468  $94,697,595  ($54,056,259) $40,642,804
                            =========== ========= =========== ======= ============ ============= ============
<FN>
         See accompanying notes to consolidated financial statements.
</FN>
</TABLE>

<PAGE>



                                    CNET, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                   Year Ended December 31,
                                        ----------------------------------------
                                            1997          1996          1995
                                        ------------- ------------- ------------
<S>                                     <C>           <C>           <C>
Cash flows from operating activities:
  Net loss                              ($24,728,092) ($16,948,662) ($8,607,358)
  Adjustments to reconcile net loss
   to net cash used in operating
   activities:
    Depreciation and amortization          5,054,980     1,928,496      475,836
    Amortization of program costs          6,548,937     4,673,201    3,154,893
    Interest expense converted into
     preferred stock                              --       222,141      118,356
    Allowance for doubtful accounts          361,214        75,000       25,000
    Reserve for joint venture             (1,248,799)    1,865,299           --
    Warrant compensation expense           7,000,000            --           --
    Changes in operating assets and
     liabilities:
      Accounts receivable                 (4,218,799)   (4,165,939)  (1,226,238)
      Other current assets                  (916,690)       29,750     (164,049)
      Other assets                        (1,515,407)   (1,237,499)     (76,580)
      Accounts payable                       228,931     2,807,549      453,769
      Accrued liabilities                  7,534,213     1,839,558      510,199
                                        ------------- ------------- ------------
        Net cash used in operating
          activities                      (5,899,512)   (8,911,106)  (5,336,172)
                                        ------------- ------------- ------------
Cash flows from investing activities:
  Purchases of equipment, excluding
   capital leases                        (12,213,050)  (10,739,354)  (1,861,607)
  Purchases of programming assets         (5,826,476)   (5,438,092)  (3,132,700)
  Loan to joint venture                   (1,639,139)   (1,776,588)          --
  Investment in Vignette Corporation             --       (511,500)          --
                                        ------------- ------------- ------------
        Net cash used in investing
          activities                     (19,678,665)  (18,465,534)  (4,994,307)
                                        ------------- ------------- ------------
Cash flows from financing activities:
  Net proceeds from issuance of
   convertible preferred stock                   --      4,543,826    6,908,695
  Net proceeds from initial public
   offering                                      --     37,776,594           --
  Net proceeds from issuance of
   common stock                           23,391,751            --           --
  Allocated proceeds from issuance of
   warrants                                      --        164,000      187,000
  Proceeds from stockholder receivable           --        594,654           --
  Proceeds from employee stock
   purchase plan                             705,411       169,761           --
  Proceeds from debt                       3,280,806     3,636,000    3,000,000
  Proceeds from exercise of options        1,175,580       141,050           --
  Principal payments on capital leases      (238,688)     (104,542)    (230,909)
  Principal payments on equipment note      (338,630)      (91,851)     (55,146)
                                        ------------- ------------- ------------
        Net cash provided by
          financing activities            27,976,230    46,829,492    9,809,640
                                        ------------- ------------- ------------
Net increase (decrease) in cash and
 cash equivalents                          2,398,053    19,452,852     (520,839)
Cash and cash equivalents at
 beginning of period                      20,155,935       703,083    1,223,922
                                        ------------- ------------- ------------
Cash and cash equivalents at end
 of period                               $22,553,988   $20,155,935     $703,083
                                        ============= ============= ============

Supplemental disclosure of cash flow
 information:
  Interest paid                             $254,790       $88,792      $73,587


Supplemental disclosure of noncash
 transactions:
  Non cash portion of Investment                --        $105,000          --


  Capital lease obligations incurred        $408,408      $297,436     $169,896


  Note issued in exchange for
   equipment                                    --        $137,551     $548,668


  Exercise of stock options through
   issuance of note receivable from
   stockholder                                  --        $594,654          --


  Conversion of preferred stock into
   common stock                                 --         $42,611          --


  Conversion of debt and interest
   into 0, 208,548, and 242,108
   shares of convertible preferred
   stock, respectively                          --      $3,858,141   $3,218,356

<FN>
     See accompanying notes to consolidated financial statements.
</FN>
</TABLE>
<PAGE>



                                CNET, INC.
                       NOTES TO FINANCIAL STATEMENTS


(1)   DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 DESCRIPTION OF BUSINESS

     CNET, Inc. (the "Company") was incorporated in the state of 
Delaware in December 1992 and is a media company integrating television 
programming with a network of sites on the World Wide Web.  The Company 
produces four television programs and operates nine Internet sites. 
Revenues for television are derived primarily from licensing fees for 
the distribution of the television programming.  Internet revenues are 
primarily derived from the sale of advertising. 


PRINCIPLES OF CONSOLIDATION

     The consolidated financial statements include the accounts of 
CNET,Inc., and its majority owned subsidiaries.  All significant 
intercompany balances and transactions have been eliminated in 
consolidation.

 CASH AND CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS

     The Company considers all highly liquid investments with original 
maturities of three months or less to be cash equivalents.

     Short-term investments are classified as "available-for-sale" and 
are stated at fair value. Any unrealized gains and losses are reported 
as a separate component of stockholders' equity, but to date have not 
been significant. 

PROPERTY AND EQUIPMENT

     Property and equipment are stated at cost less accumulated 
depreciation and amortization. Depreciation is computed using the 
straight-line method over the estimated useful lives of the assets which 
range from three to seven years. Property and equipment recorded under 
capital leases and leasehold improvements are amortized on a straight-
line basis over the shorter of the lease terms or their estimated useful 
lives. 

 CONCENTRATION OF CREDIT RISK

     Financial instruments potentially subjecting the Company to 
concentration of credit risk consist primarily of cash equivalents and 
accounts receivable. The Company maintains substantially all of its cash 
equivalents with one financial institution. Management believes the 
financial risks associated with such deposits are minimal. Substantially 
all of the Company's accounts receivable are derived from domestic 
sales. Historically, the Company has not incurred material credit 
related losses. 

 DEVELOPMENT

     Development expenses include expenses which were incurred in the 
development of new television programming prior to the Company's 
commencement of production activities and include expenses incurred in 
the development of new Internet sites and in research and development of 
new or improved technologies that enhance the performance of the 
Company's Internet sites. Costs for development are expensed as 
incurred. Costs are no longer recognized as development expenses when a 
new Internet site is launched and is generating revenue. 

 INCOME TAXES

     The Company accounts for income taxes using the asset and liability 
method. Deferred tax assets and liabilities are recognized for the 
future tax consequences attributable to differences between the 
financial statement carrying amounts of existing assets and liabilities 
and their respective tax bases. Deferred tax assets and liabilities are 
measured using enacted tax rates expected to apply to taxable income in 
the years in which those temporary differences are expected to be 
recovered or settled. The effect on deferred income tax assets and 
liabilities of changes in tax rates is recognized in income in the 
period that includes the enactment date. 

 REVENUE RECOGNITION

     Through June 30, 1996, television revenues were principally derived 
from the sale of advertising during the Company's CNET CENTRAL 
television program and were recognized upon broadcast based on the 
number of viewers of the program. Effective July 1, 1996, the Company 
licenses CNET CENTRAL and two additional programs it produces for 
broadcast on a cable network.  Revenue recognized under the contract 
varies on a quarterly basis depending on the delivery of original or 
refreshed programming.  In September 1996, the Company began producing 
TV.COM, which was exclusively distributed by  Golden Gate Productions, 
L.P. ("GGP").  The revenue from this program was used first to offset  
costs of distribution and production and thereafter was shared equally 
by CNET and GGP. In August 1997, the assets of GGP were acquired by a 
third party who has agreed to distribute the program through Trans World 
international, ("TWI"), under the same terms.

     Internet revenues are principally derived from the sale of 
advertisements on pages delivered to users of the Company's Internet 
sites and are recognized in the period in which the advertisements are 
delivered.  The delivery of an advertisement is recognized by the 
Company as an "impression."  The Company guarantees to certain customers 
a minimum number of impressions to be delivered to users of its Internet 
sites for a specified period. To the extent minimum guaranteed 
impressions are not met, the Company would defer recognition of the 
corresponding revenues until guaranteed impression levels are delivered 


NET LOSS PER SHARE

      The Company has adopted Statement of Financial Accounting 
Standards ("SFAS") No. 128, "Earnings Per Share."  In accordance with 
SFAS No. 128, primary net loss per share has been replaced with basic 
net loss per share, and fully diluted net loss per share has been 
replaced with diluted net loss per share which includes potentially 
dilutive securities such as outstanding options and convertible 
securities, using the treasury stock method.  Prior periods have been 
restated to conform with SFAS No. 128 and Staff Accounting Bulletin 
("SAB") No. 98.  Accordingly, the number of shares used and the 
resulting net loss per share amounts for 1996 and 1995 differ from those 
amounts previously presented.  The stock options as described in Note 5, 
have been excluded from the calculation of diluted net loss per share as 
they are anti-dilutive.

     The following table sets forth the computation of net loss per 
share and proforma net loss per share (in thousands, except per share 
data):

                                                      Year ended December 31,
                                       ---------------------------------------
                                                1997         1996        1995
                                       -------------- ------------ -----------
Net loss                                   $(24,728)    $(16,949)    $(8,607)
Basic and diluted:                     ============== ============ ===========
 Weighted average common shares 
 outstanding used in computing basic         13,612        7,964       2,700 
  and diluted net loss per share       ============== ============ ===========
 Basic and diluted net loss per share        $(1.82)      $(2.13)     $(3.19)
                                       ============== ============ ===========

Proforma (1):
 Weighted average common shares outstanding                 7,964       2,700
 Preferred Stock                                            2,869       5,707
 Shares issued and stock options and
  warrants granted in accordance with SAB 83                  407         809
                                                      ------------ -----------
 Shares used in computing proforma net loss
  per share                                                11,240       9,216
                                                      ============ ===========
 Proforma net loss per share                              $(1.51)     $(0.93)
                                                      ============ ===========

(1) This proforma disclosure of net loss per share represents net loss per
    share as previously disclosed by the Company pursuant to rules in
    existence prior to the adoption of SAB No. 98 in February 98.


 STOCK-BASED COMPENSATION

      The Company accounts for its stock-based compensation plans using 
the intrinsic value method.  As such, compensation expense is recorded 
on the date of grant if the current market price of the underlying stock 
exceeded the exercise price.


FAIR VALUE OF FINANCIAL INSTRUMENTS

     The carrying value of the Company's cash and cash equivalents, 
accounts receivable, accounts payable and long-term debt approximate 
their respective fair values.


IMPAIRMENT OF LONG-LIVED ASSETS AND LONG-LIVED ASSETS TO BE DISPOSED OF

     SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets 
and Long-Lived Assets to Be Disposed Of," requires that long-lived 
assets and certain identifiable intangibles be reviewed for impairment 
whenever events or changes in circumstances indicate that the carrying 
amount of an asset may not be recoverable.  Recoverability of assets to 
be held and used is measured by a comparison of the carrying amount of 
an asset to future net cash flows expected to be generated by the asset. 
If such assets are considered to be impaired, the impairment to be 
recognized is measured by the amount by which the carrying amount of the 
assets exceed the fair value of the assets.  Assets to be disposed of 
are reported at the lower of the carrying amount or fair  value less 
costs to sell. 


USE OF ESTIMATES

     The Company's management has made a number of estimates and 
assumptions relating to the reporting of assets and liabilities, 
revenues and expenses, and the disclosure of contingent assets and 
liabilities to prepare these financial statements in conformity with 
generally accepted accounting principles. Actual results could differ 
from those estimates. 

 BARTER TRANSACTIONS

     The Company trades advertisements on its Internet sites in exchange 
for advertisements on the Internet sites of other companies. These 
revenues and marketing expenses are recorded at the fair market value of 
services provided or received, whichever is more determinable in the 
circumstances. Revenue from barter transactions is recognized as income 
when advertisements are delivered on the Company's Internet sites and 
expense from barter transactions is recognized when advertisements are 
delivered on the other companies' Internet sites.  Barter revenues were
approximately $905,000, $760,000 and $104,000 for the years ended 
December 31, 1997, 1996 and 1995, respectively. 


RECENT ACCOUNTING PRONOUNCEMENTS

      In June 1997, the FASB issued SFAS No. 130, "Reporting 
Comprehensive Income."  SFAS No. 130 establishes standards for reporting 
and displaying comprehensive income and its components in the 
consolidated financial statements.  It does not, however, require a 
specific format for the statement, but requires the Company to display 
an amount representing total comprehensive income for the period in that 
financial statement.  The Company is in the process of determining the 
preferred format.  This statement is effective for fiscal years 
beginning after December 15, 1997.

      In June 1997, the FASB issued SFAS No. 131, "Disclosures about 
Segments of an Enterprise and Related Information."  SFAS No. 131 
establishes standards for the way public business enterprises report 
information about operating segments in annual financial statements and 
requires those enterprises to report selected information about 
operating segments in interim financial reports issued to stockholders. 
SFAS No. 131 is effective for financial statements for periods beginning 
after December 31, 1997.  The Company has not yet determined whether it 
has any separately reportable business segments.

      In October 1997, the American Institute of Certified Public 
Accountants issued Statement of Position (SOP) 97-2, "Software Revenue 
Recognition," which supersedes SOP 91-1.  SOP 97-2 is effective for 
transactions entered into after December 31, 1997.  SOP No. 97-2 
generally requires revenue earned on software arrangements involving 
multiple elements to be allocated to each element based on the relative 
fair values of the elements.  The fair value of an element must be based 
on evidence that is specific to the vendor.  If a vendor does not have 
evidence of the fair value for all elements in a multiple-element 
arrangement, all revenue from the arrangement is deferred until such 
evidence exists or until all elements are delivered.  The Company is 
still considering the effect of adopting SOP 97-2, however, the Company 
does not anticipate that it will have a material impact on the Company's 
consolidated results of operations or financial position.


RECLASSIFICATION

      Certain items in the accompanying 1996 consolidated financial 
statements have been reclassified in order to conform to the current 
year's presentation.


(2)   BALANCE SHEET COMPONENTS


CASH AND CASH EQUIVALENTS

     The carrying value of cash and cash equivalents consisted of: 

                                            December 31,
                                       ---------------------------
                                            1997          1996
                                       -------------- ------------
      Commercial paper                    $2,004,131  $19,856,611
      Money market mutual funds           17,034,006      249,051
      Cash                                 3,515,851       50,273
                                       -------------- ------------
                                         $22,553,988  $20,155,935
                                       ============== ============

     All cash equivalents have been classified as available for sale
securities as of December 31, 1997 and 1996.  

     Restricted cash balance relates to certain deposits in escrow for 
leasehold improvements and as collateral for letters of credit relating   
to security deposits.


PROPERTY AND EQUIPMENT

     A summary of property and equipment follows: 

                                            December 31,
                                       ---------------------------
                                            1997          1996
                                       -------------- ------------
      Computer equipment                 $11,769,291   $6,389,144
      Production equipment                 2,241,597    2,017,546
      Office equipment, furniture & fix    2,230,267    1,174,728
      Software                             1,745,660      332,111
      Leasehold improvements               7,193,769    4,128,625
      Assets in progress                   1,533,198       50,169
                                       -------------- ------------
                                          26,713,782   14,092,323

      Less accumulated depreciation
        and amortization                   7,160,245    2,349,032
                                       -------------- ------------
                                         $19,553,537  $11,743,291
                                       ============== ============


     As of December 31, 1997 and 1996, the Company had equipment under capital
lease agreements of $1,168,134 and $759,797, respectively, and accumulated
amortization of $694,747 and $365,881, respectively. 

     As of December 31, 1997,  the Company had purchased equipment
pursuant to a loan agreements with the manufacturer on its balance sheet
n the amount of $948,982.  As of December 31, 1997 and 1996, the 
equipment had accumulated amortization of $512,612 and $322,816, respectively.
in the amount of $948,982.  As of December 31, 1997 and 1996, the 
equipment had accumulated amortization of $512,612 and $322,816, 
respectively. 

 ACCRUED LIABILITIES

   A summary of accrued liabilities follows:

                                            December 31,
                                       ---------------------------
                                            1997          1996
                                       -------------- ------------
   Compensation and related benefits      $2,594,386   $1,298,700
   Marketing and advertising                 619,101      734,934
   Deferred Revenue                        3,233,681           --
   Lease Abandonment                       1,300,000           --
   Other                                   2,333,336      512,541
                                       -------------- ------------
                                         $10,080,504   $2,546,175
                                       ============== ============

DEBT

   During 1997, the Company secured a $10.0 million line of credit from 
a bank.  The line of credit consists of a $5.0 million operating line of 
credit at an interest rate of prime (8.5%) plus 0.5%, secured by all of 
the Company's tangible assets and a $5.0 million equipment line at an 
interest rate of prime (8.5%) plus 1%, for up to 65% of capital 
equipment purchases. The capital proceeds from the equipment line will 
convert to a two-year term loan in July 1998. As of December 31, 1997, 
the Company had not yet drawn any of the operating line and had drawn 
$768,000 on the capital equipment line of credit.  In addition, the Company
had proceeds of $2.5 million for an asset based loan at an interest rate 
equal to the treasury rate plus 5.56%, secured by certain capital 
equipment.  Both the $10.0 million bank financing and the $2.5 million 
asset based loan are subject to certain financial covenants.  At 
December 31, 1997, the Company was not in compliance with certain 
financial covenants, but obtained waivers from both lenders.

   During 1996 and 1995, the Company financed certain production 
equipment through a note bearing an interest rate of 12.25%. The note is 
secured by the equipment financed. The current and long-term portion of 
the note is included in the current portion of long-term debt and long-
term debt, respectively, in the accompanying balance sheet (along with 
capital lease obligations, see Note 4). The aggregate annual principal 
payments for notes payable outstanding as of December 31, 1997, are 
summarized as follows:


     YEAR ENDING DECEMBER 31,          
     -----------------------
          1998                          $  975,721
          1999                           1,384,580
          2000                           1,095,314
          2001                              29,842
                                       -------------
                                        $3,485,457
                                       =============

(3)   INCOME TAXES

     The Company's effective tax rate differs from the statutory federal income
tax rate of 34% as shown in the following schedule: 

                                                Year Ended December 31,
                                       -----------------------------------------
                                           1997          1996          1995
                                       ------------- ------------- -------------
 Income tax benefit at statutory rate          34.0%         34.0%         34.0%
 Operating losses with no current tax
  benefit                                     (34.0%)       (34.0%)      (34.0%)
                                       ------------- ------------- -------------
  Effective tax rate                            --            --            --
                                       ============= ============= =============


The tax effects of temporary differences that give rise to significant portions
of deferred tax assets are presented below: 

                                                Year Ended December 31,
                                       -----------------------------------------
                                           1997          1996          1995
                                       ------------- ------------- -------------
 Capitalized "start-up" expenses        $   818,000    $1,217,000    $1,582,000
 Net operating losses                    16,268,000     9,596,000     2,960,000
 Accruals, reserves and other             6,289,000     1,027,000        94,000
                                       ------------- ------------- -------------
                                         23,375,000    11,840,000     4,636,000
 Less valuation allowance                23,375,000    11,840,000     4,636,000
                                       ------------- ------------- -------------
                                         $    --       $    --       $    --
                                       ============= ============= =============


      The Company has a valuation allowance as of December 31, 1997, 
which fully offsets its gross deferred tax assets due to the Company's 
historical losses and the fact that there is no guarantee the Company 
will generate sufficient taxable income in the future to be able to 
realize any or all of the deferred tax assets.  The net change in the 
total valuation allowance for the year ended December 31, 1997, was an 
increase of $11,535,000.

      As of December 31, 1997, the Company has approximately $45,000,000 
of net operating losses for federal income tax purposes, which expire 
between 2008 and 2012. The Company also has approximately $18,500,000 of 
net operating loss carryforwards for state income tax purposes, which 
expire between 1998 and 2002.  Included in the deferred tax assets above 
is approximately $2,100,000 related to stock option compensation for 
which the benefit, when realized, will be an adjustment to equity.

     The Company may have experienced an "ownership change" as defined 
by section 382 of the Internal Revenue Code.  If an ownership change has 
occurred, the Company's ability to utilize its net operating losses may 
be limited. 


(4)   LEASES

     The Company has several non-cancelable leases primarily for general office,
facilities, and equipment that expire over the next ten years. Future minimum
lease payments under these leases are as follows: 

                                          Capital      Operating
     YEAR ENDING DECEMBER 31,              Leases        Leases
     -----------------------           -------------- ------------
 1998                                       $416,670   $3,722,535
 1999                                        105,012    4,811,236
 2000                                           --      4,597,742
 2001                                           --      3,453,308
 2002                                           --      3,195,162
 Thereafter                                     --     36,589,177
                                       -------------- ------------
 Total minimum lease payments                521,682  $56,369,160
                                                      ============
 Less amount representing 
  interest                                    36,552
 Less current portion                        383,051
                                       --------------
                                            $102,079
                                       ==============


     Rental expense from operating leases amounted to $2,242,186, $789,678, and
$384,777 for the years ended December 31, 1997, 1996 and 1995, respectively. 


(5)   STOCKHOLDERS' EQUITY

ISSUANCE OF COMMON STOCK 

     On July 2, 1996 the Company effected an initial public offering 
(IPO) of 2,000,000 shares of its common stock for $16 per share. 
Simultaneously with the IPO, the Company sold 600,000 shares of common 
stock to Intel Corporation at 93% of the IPO price.  The net proceeds 
from these two offerings (after deducting underwriting discounts and 
commissions and offering expenses) were $37.8 million, and were received 
on July 8, 1996.

     On July 21, 1997, the Company sold 201,253 shares of common stock 
in a private placement to Intel for aggregate proceeds of approximately 
$5.3 million.  On December 18, 1997, the Company sold 733,000 shares of 
common stock in a private placement to three "accredited investors"(as 
defined in Rule 501(a) under the Securities Act of 1933) for aggregate 
net proceeds of approximately $18.1 million.

STOCK SPLIT

     In May 1996, the Company effected a three-for-two split of its 
common stock in connection with the IPO. The accompanying consolidated 
financial statements have been retroactively adjusted to reflect the 
stock split.



STOCK OPTION PLANS

     In 1994, the Board of Directors adopted a Stock Option Plan (the 
"1994 Plan") pursuant to which the Company's Board of Directors may 
grant stock options to officers and key employees. The 1994 Plan 
authorizes grants of options to purchase up to 2,750,000 shares of 
authorized but unissued common stock.  In 1997, the stockholders 
approved the 1997 Stock Option Plan, (the "1997 Plan").  The 1997 Plan 
authorizes grants of options to purchase up to 1,000,000 shares of 
authorized but unissued common stock.  Stock options for both the 1994 
and 1997 Plans are granted with an exercise price equal to the stock's 
fair market value at the date of grant.  All stock options have 10-year 
terms and generally vest and become fully exerciseable between three and 
four years from the date of grant.

     A summary of the status of the Company's stock option plans is 
presented below:
                                                       Weighted
                                          Number        Average
                                            of         Exercise
                                          Shares        Prices
                                       ------------- -------------
 Balance as of December 31, 1994          1,137,000         $1.25
 Granted                                    345,250          2.77
 Canceled                                    (6,000)         2.41
                                       ------------- -------------
 Balance as of December 31, 1995          1,476,250          1.60
 Granted                                    864,200         11.44
 Exercised                                 (696,967)         1.03
 Canceled                                   (79,017)         5.45
                                       ------------- -------------
 Balance as of December 31, 1996          1,564,466          7.09
 Granted                                  1,263,073         23.73
 Exercised                                 (444,696)         2.88
 Canceled                                  (121,752)        14.07
                                       ------------- -------------
 Balance as of December 31, 1997          2,261,091         16.78
                                       ============= =============

     As of December 31, 1997, 1996 and 1995 the number of options 
exerciseable was 429,444, 402,397 and 901,985, respectively, and the 
weighted-average exercise price of those options was $6.11, $2.21, and 
$1.20, respectively. As of December 31, 1997, there were 347,246 
additional shares available for grant under the Plan.

     The Company applies APB Opinion No. 25 in accounting for the  Plan 
and, accordingly, no compensation cost has been recognized for the Plan 
in the financial statements.  Had the Company determined compensation 
cost based on the fair value at the grant date for its stock options 
under SFAS 123, the Company's net loss and net loss per share would have 
been increased to the pro forma amounts indicated below:


                                                Year Ended December 31,
                                       -----------------------------------------
                                           1997          1996          1995
                                       ------------- ------------- -------------
          Net Loss                   
            As Reported               (24,728,092)   ($16,948,662)  ($8,607,358)
            Pro forma                 (29,872,164)   ($18,259,031)  ($8,647,971)
          Net Loss Per Share
            As Reported                     (1.82)         ($1.51)       ($0.93)
            Pro forma                       (2.19)         ($1.62)       ($0.94)


      The effects of applying SFAS 123 in this pro forma disclosure is 
not indicative of the effects on reported results for future years.  
SFAS 123 does not apply to awards prior to 1995, and additional awards 
in future years are anticipated.

      The weighted-average fair value of options granted in 1997, 1996 
and 1995 was $16.78, $6.07 and $0.31, respectively.  

The fair value of each option grant is estimated on the date of grant 
using Black Scholes option-pricing model with the following weighted-
average assumptions used for grants in 1997, 1996 and 1995, 
respectively: no dividend yield, expected volatility of 75%, 75% and 0%, 
risk-free interest rate of 6%, and an expected life of five years, one 
year and one year.

     The following table summarizes information about stock options 
outstanding as of December 31, 1997:

     The following table summarizes information about stock options 
outstanding as of December 31, 1997:
<TABLE>
<CAPTION>
                           Options Oustanding               Options Exercisable
                   ------------------------------------  ------------------------
                                 Weighted
                      Number      Average    Weighted       Number     Weighted
                   Outstanding   Remaining    Average    Exercisable    Average
     Range of         As of     Contractual  Exercise       As Of      Exercise
 Exercise Prices      12/31/97     Life        Price        12/31/97     Price
------------------ ------------ ----------- -----------  ------------ -----------
<S>                <C>          <C>         <C>          <C>          <C>

 $1.2000    $2.4100    330,651        7.39     $1.9781       252,581     $1.8445
 $8.5900    $8.5900    249,382        8.20     $8.5900        54,053     $8.5900
$12.0000   $13.0000    266,908        8.58    $12.3620        63,423    $12.3670
$13.3700   $20.1300    219,025        8.73    $15.1986        54,574    $14.3736
$20.7500   $20.7500    371,500        9.92    $20.7500            -            -
$21.3800   $24.0000    175,825        9.38    $22.5991         1,688    $22.8613
$24.1300   $24.1300    369,700        9.83    $24.1300            -            -
$24.2500   $28.7500    215,000        9.43    $27.0406         3,125    $27.5000
$32.8800   $32.8800     40,750        9.66    $32.8800            -            -
$34.0000   $34.0000     22,350        9.76    $34.0000            -            -
                   ------------                          ------------
 $1.2000   $34.0000  2,261,091        8.98    $16.7800       429,444     $6.1091
                   ============                          ============
</TABLE>

401(k) PROFIT SHARING PLAN

In 1996, the Company adopted a 401(k) Profit Sharing Plan (the "401(k) 
Plan") that is intended to qualify under Section 401(k) of the Internal 
Revenue Code of 1986, as amended. The 401(k) Plan covers substantially 
all of the Company's employees. Participants may elect to contribute a 
percentage of their compensation to this plan, up to the statutory 
maximum amount. The Company may make discretionary contributions to the 
401(k) Plan, but have not done so to date. 

     EMPLOYEE STOCK PURCHASE PLAN

     In July 1996, the Company adopted an Employee Stock Purchase Plan 
that covers substantially all employees. Participants may elect to 
purchase the Company's stock by contributing a percentage of their 
compensation. The maximum percentage allowed is 10%.


(6)   MAJOR CUSTOMERS AND CONTRACTS

 CUSTOMERS

     For the years ended December 31, 1997 and 1996, two customers 
accounted for over 10% of the Company's revenues, with USA Networks 
accounting for approximately 16% and 19%, and Microsoft Corporation 
accounting for approximately 10% and 12% of total revenues, 
respectively.  Three customers accounted for over 10% of the Company's 
revenues during 1995 with MCI Telecommunications Corporation, 
International Business Machines Corporation and Hewlett-Packard Company 
accounting for 23%, 19% and 14% of total revenues, respectively. 

CONTRACTS

     In February 1995, the Company entered into an agreement with USA 
Networks to carry its television program, CNET CENTRAL. The contract 
allowed the Company to sell the available advertising on the program. In 
connection with this agreement, the Company issued 516,750 common stock 
warrants at an exercise price of $2.41 per share to USA Networks. As of 
December 31, 1996, all such warrants were outstanding and 206,700 of 
such warrants were exercisable. The warrants expire on December 31, 1999 
to the extent they are vested on such date; otherwise the warrants 
expire on January 31, 2007. 

     In April 1996, the agreement with USA Networks was amended, 
effective July 1, 1996, to license USA Networks to carry CNET CENTRAL 
and two additional programs for broadcast on the USA Network and the 
SciFi Channel and certain affiliates for an initial term of one year. 
Under the amended agreement, USA Networks licenses the rights to all 
three programs for a fee equal to the cost of production of the three 
television programs up to a maximum of $5,250,000 for the first year 
with an option to extend the term for an additional year.  In January 
1997, USA Networks exercised this option. 

     In addition, pursuant to the amended agreement, the Company agreed 
to pay USA Networks, a fee of $1.0 million for the right to cross-market 
the Company's Internet sites on the television programs produced by the 
Company for USA Networks. During the second year extension the Company 
will pay a fee of $750,000 for the right to continue such cross-
marketing activities. These fees are reported by the Company as 
marketing expenses.

     In January 1997, USA Networks exercised its option to extend its 
agreement with the Company to carry the Company's three television 
programs through June 30, 1998. In connection with this extension to the 
agreement, the Company agreed that the warrants held by USA Networks 
will vest in full on December 31, 2006, to the extent they have not 
previously vested. As a result of this change, the Company incurred a 
one-time charge to earnings of approximately $7.0 million during the 
first quarter of 1997.

     In January 1996, the Company entered into a joint venture agreement 
with E! Entertainment Television, Inc. ("E! Entertainment") that 
launched an Internet site in August 1996, called E! ONLINE, focusing on 
entertainment, news, gossip, movies and television. The Company agreed 
to provide $3,000,000 in debt financing to the joint venture during its 
first two years of operations, which amount was advanced pursuant to a 
seven year note, bearing interest at 9% per annum. In addition, the 
Company agreed to provide up to an additional $3,000,000 in equity 
capital to the joint venture through January 1999.  The Company 
accounted for its financing and investments under the modified equity 
method. Accordingly, the Company recorded all of the losses incurred by 
the joint venture through June 30, 1997, in its consolidated statement 
of operations.  The joint venture, E! Online LLC, was owned 50% by the 
Company and 50% by E! Entertainment.

      In June 1997, the Company sold its 50% equity position and certain 
technology licenses and marketing and consulting services to its joint 
venture partner for $10.0 million in cash and a $3.2 million note 
receivable, which is included in other assets, and certain additional 
payments for up to three years.

      In August 1996, the Company entered into an agreement with  GGP 
whereby the Company produced a television program, TV.COM, which was 
exclusively distributed by GGP.  Any revenues from the distribution of 
TV.COM were first used to offset costs of distribution and production 
and thereafter were shared equally by CNET and GGP.  In August 1997, the 
assets of GGP were acquired by a third party who has agreed to 
distribute the program through TWI under the same terms and conditions. 

(7)   UNUSUAL ITEMS

      In the first quarter of 1997, the Company incurred a one-time, 
non-cash expense of $7.0 million related to an amendment to the warrant 
agreement with USA Networks whereby the Company agreed that the warrants 
held by USA will vest in full on December 31, 2006, to the extent that 
they have not previously vested. 

      In the fourth quarter of 1997, the Company recognized an expense 
of $1.3 million related to lease abandonment costs.  Also, in the fourth 
quarter of 1997, the Company recognized an expense of $700,000 relating 
to a write off of Internet domain names that the Company had determined 
it would no longer use.


(8)   RELATED PARTY TRANSACTIONS

     Included in other assets on the accompanying balance sheets is an 
advance to an officer of the Company for $26,250. 

     An officer and stockholder of the Company provided capital 
infusions to the Company of $165,405 during 1995.  An affiliate of this 
same stockholder loaned the Company $800,000 in 1996 at an interest rate 
of 8% and was granted 9,800 warrants to purchase Series D Convertible 
preferred stock at an exercise price of $12.88 per share. This loan was 
subsequently converted to Series E convertible preferred stock, which 
were subsequently converted to warrants for common stock. As of December 
31, 1997, all of these warrants were outstanding and exercisable and 
expire in January 2001. Such warrants were valued at estimated fair 
market value at the date of issuance. 

     A stockholder of the Company provided a capital infusion of 
$2,500,000 in exchange for 1,385,502 shares of Series C convertible 
preferred stock in 1994. The stockholder was obligated to pay an 
additional $2,500,000 for these shares if the Company entered into an 
agreement with a cable network to carry its television program with a 
launch date no later than June 10, 1995. An agreement was entered into 
with USA Networks in February 1995 and the Company received the 
additional $2,500,000. The same stockholder loaned the Company 
$3,000,000 during 1995 at an interest rate of 9%. Interest expense 
related to the loan was $118,356 in 1995. The entire principal amount 
and accrued interest was converted into 242,108 shares of Series D 
preferred stock during 1995. In connection with this loan agreement, the 
Company granted the stockholder 36,750 warrants to purchase Series C 
convertible preferred stock at an exercise price of $3.61 per share, 
which were subsequently converted into warrants for common stock. 
Further, the same stockholder loaned the Company an additional 
$3,000,000 in 1996 at an interest rate of 8%. Interest expense related 
to the loan was $34,000 in 1996.  This loan was subsequently converted 
to Series E Convertible preferred stock. In connection with this loan 
agreement, the Company granted the lender 36,750 warrants to purchase 
Series D convertible preferred stock at an exercise price of $12.88 per 
share, which were subsequently converted to warrants for common stock. 
As of December 31, 1996, all of these warrants were outstanding and 
exercisable and expire on dates from May 2000 to February 2001. Such 
warrants were valued at estimated fair market value at the date of 
issuance. 

     In April 1996, a stockholder exercised options to purchase 366,144 
shares of Series B preferred stock and 136,500 shares of common stock 
for an aggregate of $694,654. The consideration was paid by $100,000 in 
cash and the issuance of a note for $594,654, which was repaid in July 
1996. Such shares of Series B preferred stock were converted into  
549,216 shares of common stock at the IPO.

      In December 1997, an officer of the Company purchased 8,000 shares 
of common stock for $198,000 as a participant in a private placement.


(9)   SUBSEQUENT EVENTS

      In February 1998, the Company issued a letter of credit as a 
security deposit for a lease of office space in the amount of $3.3 
million.  The letter of credit is secured by $3.3 million of the $5.0 
million dollar operating line of credit.

<PAGE>


                                SCHEDULE II

                           CNET, INC.
                        VALUATION AND QUALIFYING ACCOUNTS
                     YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
                           (Numbers presented in thousands)
<TABLE>
<CAPTION>
                                 Additions
                                -----------------------

                   Balance at   Charged to  Charged to                  Balance
                    Beginning    Costs and     Other      Deductions    at End
                    of Period    Expenses    Accounts      Describe    of Period
                   ------------ ----------- -----------  ------------ -----------
<S>                <C>          <C>         <C>          <C>          <C>
             1997
------------------
Allowance for 
  doubtful accounts     $100        $578        --         $217 (1)       $461

             1996
------------------
Allowance for 
  doubtful accounts      $25        $75        --            --           $100

             1995
------------------
Allowance for 
  doubtful accounts      --          $25        --           --            $25

</TABLE>

(1) Accounts written off.

<PAGE>

S-2  Independent Auditors' Report on Schedule

The Board of Directors
CNET, Inc.

Under date of February 3, 1998, we reported on the consolidated 
balance sheets of CNET, Inc. and subsidiaries as of December 31, 1997 
and 1996, and the related consolidated statements of operations, 
stockholders' equity, and cash flows for each of the years in the 
three-year period ended December 31, 1997, which are listed in the 
accompanying index.  In connection with our audits of the 
aforementioned consolidated financial statements, we also audited the 
related consolidated financial statements schedule in the annual 
report on Form 10-K.  This financial statement schedule is the 
responsibility of the Company's management.  Our responsibility is to 
express an opinion on this financial statement schedule based on our 
audits.

In our opinion, such consolidated financial statement schedule, when 
considered in relation to the basic consolidated financial statements 
taken as a whole presents fairly, in all material respects, the 
information set forth therein.

                                                        KPMG Peat Marwick LLP
San Francisco, California
February 3, 1998


<PAGE>



ITEM 9.  CHANGES IN AND DISAGREEMENTS  WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

None.


                                  PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT


        Incorporated by reference from the Registrant's definitive Proxy 
Statement for its 1998 annual meeting, which will be filed pursuant 
to Regulation 14A (the "1998 Proxy Statement"), under the caption 
"Management."


ITEM 11.  EXECUTIVE COMPENSATION

        Incorporated by reference from the 1998 Proxy Statement, under 
the caption "Executive Compensation and Other Information," but 
specifically excluding the information under the captions "-- 
Performance Graph" and "-- Compensation Committee's Report on 
Executive Compensation."

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

        Incorporated by reference from the 1998 Proxy Statement under 
the caption "Security Ownership of Certain Beneficial Owners and 
Management."

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

        Incorporated by reference from the 1998 Proxy Statement under 
the caption "Certain Relationships and Related Transactions."


ITEM 14.  EXHIBITS,FINANCIAL STATEMENT SCHEDULES LIST AND REPORTS ON FORM 8-K

(a)   EXHIBITS:

(1) Financial Statements.  The following consolidated financial 
      statements are filed as a part of this report 
      under Item 8, "Financial Statements and Supplementary Data": 

    Consolidated Balance Sheets as of December 31, 1997 and 1996

    Consolidated Statements of Income for the years ended December 31, 
      1997, 1996 and 1995

    Consolidated Statements of Stockholders' Equity for the years 
      ended December 31, 1997, 1996 and 1995

    Consolidated Statements of Cash Flow for the years ended December 
      31, 1997, 1996 and 1995

    Notes to Consolidated Financial Statements

    Independent Auditors' Report of KPMG

(2) Financial Statement Schedules.  The following financial 
      statement schedules are filed as part of this report:

       S-1 Schedule II Valuation and Qualifying Accounts


       S-2  Independent auditors report on schedule


(3) Exhibits.

 3.1(1)       --    Finder.com, Inc. and Virtual Software Library, Inc. into
                    CNET, Inc.
 3.2(1)       --    Amended and Restated Bylaws of the Company
 4.1(1)       --    Specimen of Common Stock Certificate
10.1(1)       --    CNET, Inc. Amended and Restated Stock Option Plan
10.2(1)       --    Employment Agreement, dated as of October 19, 1994,
                    between the Company and Halsey M. Minor
10.3(3)       --    Employment Agreement, dated as of October 19, 1994,
                    between the Company and Shelby W. Bonnie
10.4(1)       --    Employment Agreement, dated to be effective as
                    of December 1, 1993 and amended as of August 1,
                    1995 and as of April 1, 1996, between the
                    Company and Kevin Wendle
10.5(1)       --    Employment Agreement, dated to be effective as
                    of February 20, 1995 and amended as of September
                    19, 1995, between the Company and Jonathan
                    Rosenberg
10.6(1)       --    Option Exercise Agreement, dated as of April 9,
                    1996, between the Company and Kevin Wendle
10.7(1)       --    Promissory Note of Kevin Wendle, payable to the
                    Company, dated as of April 9, 1996
10.8(1)       --    Lease Agreement, dated as of January 28, 1994,
                    between the Company and Montgomery/North
                    Associates and amended as of January 31, 1995
                    and as of October 19, 1995
10.9(1)       --    Lease, dated as of October 19, 1995, between the
                    Company and The Ronald and Barbara Kaufman
                    Revocable Trust, et al.
10.10(1)      --    Agreement, dated as of February 1, 1995, between the
                    Company to USA Networks.
10.11(1)      --    Warrant to Purchase Common Stock, dated February 9
                    1995, issued by the Company to USA Networks
10.12(1)      --    Series C Converible Preferred Stock Purchase Warrant,
                    dated as of May 25, 1995, issued by the Company to
                    Vulcan Ventures Incorporated
10.13(1)      --    Series D Converible Preferred Stock Purchase Warrant,
                    dated as of January 23, 1996.  issued by the Company to
                    the Bonnie Family Partnership
10.14(1)      --    Operating Agreement of E! Online, LLC, dated as of January 
                    30, 1996, between the Company and E! Entertainment 
                    Television, Inc.
10.15(1)      --    Series D Converible Preferred Stock Purchase Warrant,
                    dated as of February 20, 1996.  issued by the Company to
                    Vulcan Ventures Incorporated
10.16(1)      --    Amended and Restated Agreement , dated as of July 1, 1996,
                    between the Company and USA Networks               
10.17(1)      --    Subscription Agreement, dated as of April 26, 1996,
                    between the Company and the Series E Purchasers  
                    identified therein
10.18(1)      --    1996 Employee Stock Purchase Plan of the Company
10.19(1)      --    Stock Purchase Agreement between Intel Corporation and
                    the Company dated July 1, 1996
10.20(3)      --    Stock Purchase Agreement betweenVignette Corporation and
                    the Company
10.21(8)      --    Letter Agreement, dated February 20, 1997, between the
                    Company and Kevin Wendle.
10.22(4)      --    CNET, Inc. 1997 Stock Option Plan
10.23(5)      --    Stock Purchase Agreemtne, date as of June 4, 1997, between
                    Intel Corporation and the Company
10.24(6)      --    Master Agreement, dated as of June 30, 1997, amoung the
                    Company, E! Entertainment Television, Inc. and E! Online,
                    LLC
10.25(7)      --    Security and Loan Agreement between Imperial Bank and the
                    Company, dated July 24, 1997
10.26(7)      --    Note from the Company to Imperial Bank dated July 24, 1997
10.27(7)      --    Loan and Security Agreement between The CIT Group and the
                    Company dated September 5, 1997
10.28(7)      --    Office Lease between One Beach Street, LLC and the Company 
                    dated September 24, 1997
10.29*        --    Stock Purchase Agreement, dated as of December 18, 1997,
                    amoung the Company and the Purchasers identified therein
21.1(1)       --    List of Subsidiary Corporations
23.1*         --    Consent of Independent Auditors


*       Filed herewith.

(1)     Incorporated by reference from a previously filed exhibit to 
        the Company's Registration Statement on Form SB-2, registration no. 
        333-4752-LA.

(2)     Incorporated by reference from a previously filed exhibit to 
        the Company's Registration Statement on Form S-8, registration no.
        333-34491.

(3)      Incorporated by reference from a previously filed exhibit to the 
         Company's Quarterly Report on Form 10-QSB for the quarter ended
         June 30, 1996.

(4)      Incorporated by reference from an exhibit to the Company's definitive 
         proxy statement on Schedule 14A for the Company's 1997 annual meeting
         of stockholders.

(5)      Incorporated by reference from a previously filed exhibit to the 
         Company's Quarterly Report on Form 10-QSB for the quarter ended
         June 30, 1997.

(6)     Incorporated by reference from a previously filed exhibit to 
        the Company's Current Report on Form 8-K dated July 11, 1997.

(7)      Incorporated by reference from a previously filed exhibit to the 
         Company's Quarterly Report on Form 10-QSB for the quarter ended
         September  30, 1997.

(8)     Incorporated by reference from a previously filed exhibit to 
        the Company's Annual Report on Form 10-K for the year ended 
        December 31, 1996.


Incorporated by reference from a previously filed exhibit to the 
Company's Annual Report on Form 10-K for the year ended December 31, 
1996.


(b)  No reports on Form 8-K were filed during the last quarter of the 
period covered by this report.



                                        SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the 
registrant has caused this report to be signed on its behalf by the 
undersigned, thereunto duly authorized.


                          By   /s/ Halsey M. Minor
                               ----------------------------------
                                Halsey M. Minor
                                Chairman of the Board, President
                                 and Chief Executive Officer

                         Date   March 31, 1998
                               ----------------------------------




                         By     /s/  Douglas N. Woodrum
                               ----------------------------------
                                Douglas N. Woodrum
                                Chief Financial Officer
                                 and Principal Accounting Officer

                         Date   March 31, 1998
                               ----------------------------------


In accordance with the Exchange Act, this report has been signed 
below by the following persons on behalf of the registrant and in the 
capacities and on the dates indicated.



                         By     /s/ Halsey M. Minor
                               ----------------------------------
                                Halsey M. Minor
                                Chairman of the Board, President
                                 and Chief Executive Officer

                         Date   March 31, 1998
                               ----------------------------------




                         By     /s/  Shelby W. Bonnie
                               ----------------------------------
                                Shelby W. Bonnie
                                Director, Executive Vice President, Chief 
                                 Operating Officer and Secretary

                         Date   March 31, 1998
                               ----------------------------------

                         By      /s/  John C. "Bud" Colligan
                               ----------------------------------
                                John C. "Bud" Colligan
                                Director

                         Date   March 31, 1998
                               ----------------------------------





                         By      /s/  Douglas Hamilton
                               ----------------------------------
                                Douglas Hamilton
                                Director

                         Date   March 31, 1998
                               ----------------------------------




                         By      /s/  Mitchell Kertzman
                               ----------------------------------
                                Mitchell Kertzman
                                Director

                         Date   March 31, 1998
                               ----------------------------------




                         By      /s/  Eric Robison
                               ----------------------------------
                                Eric Robison
                                Director

                         Date   March 31, 1998
                               ----------------------------------



                         By      /s/  William Savoy
                               ----------------------------------
                                William Savoy
                                Director

                         Date   March 31, 1998
                               ----------------------------------



                         By      /s/ Kevin Wendle
                               ----------------------------------
                                Kevin Wendle
                                Director

                         Date   March 31, 1998
                               ----------------------------------


                         By     /s/  Douglas N. Woodrum
                               ----------------------------------
                                Douglas N. Woodrum
                                Director and Chief Financial Officer

                         Date   March 31, 1998
                               ----------------------------------