---

# 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 OF 1934

# For the Fiscal Year
Ended December 31, 2003

# OR

[
] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934

# For the transition
period from ________to _________

# Commission file number
0-20939

# CNET Networks, Inc. (Exact name of
registrant as specified in its charter)

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

# 235 Second Street, San
Francisco, CA 94105 (Address of principal
executive offices including zip code)

# Telephone Number (415)
344-2000(Registrants
telephone number, including area code)

---

# Securities registered
pursuant to Section 12(b) of the Act:

# Title of each class       
                     
    
Name of each exchange on which registered 
None                          
                      
                        None

# Securities registered
pursuant to Section 12(g) of the Act:

# Title of classCommon Stock, $0.0001
par value

Indicate by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file 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 the 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]

Indicate by check mark whether the  registrant  is an  accelerated  filer (as defined in Rule 12b-2 of the Act. YES [X]  NO [ ]

The aggregate market value of common equity held by non-affiliates computed by reference
to the price at which the stock was last sold, or the average bid and asked price of such
common equity, as of the last business day of the registrants most recently
completed second fiscal quarter approximated $830.7 million.

The total number of shares outstanding of the issuers common stock (its only class
of equity securities), as of February 25, 2004 was 142,722,362.

Information is incorporated by reference into Part III of this Form 10-K from the
registrants definitive proxy statements for its 2003 annual meeting of stockholders,
which will be filed pursuant to Regulation 14A under the Securities Exchange Act of 1934.

---

# PART I.

# Item 1. Business

OVERVIEW

CNET Networks, Inc. is a leading
global media company. Known for its editorial expertise, CNET Networks combines its
award-winning content with the power of interactive technology to inform and connect
buyers, users and sellers of personal technology, games and entertainment, and business
technology. CNET Networks has a strong presence in the United States and in 15 countries
internationally.

With an average of 66.3 million
unique users per month during the fourth quarter 2003, CNET Networks has established a
leadership position in the creation, management, and monetization of interactive content.
Our products and services provide a platform for advertisers to create brand awareness and
sell products to our targeted audiences.

CNET Networks portfolio of
online brands encompasses three distinct content categories: personal technology, games
and entertainment, and business technology. The personal technology category is anchored
by top brands such as CNET.com, Download.com and Shopper.com. The games and entertainment
category primarily consists of the GameSpot and MP3.com brands. MP3.com was added to the
portfolio in late 2003. Industry leading brands such as ZDNet, TechRepublic, News.com and
Builder.com are components of the business technology category.

We use our unbiased editorial,
technical and programming expertise and our product database to provide new product
information, product reviews, pricing and availability to help individuals and businesses
make informed decisions across each of these content categories. We believe our content
environments provide a highly relevant and targeted platform for marketers to reach
consumers.

We have built scalable technology
platforms that support our online properties in the U.S. across each of our content
categories. The delivery of our Internet sites relies on sophisticated systems to deliver
search results, content and advertising, enable commerce and create data collection and
registration systems.

In addition to our Internet
operations, we also have publishing operations. Our Computer Shopper magazine boasts a
total average paid circulation of more than 500,000 copies per month and a total
readership of more than threemillion per month. We also publish technology and
game oriented publications in Australia, China, France, Korea, Singapore and the United
Kingdom with an aggregate monthly circulation of more than 400,000 copies.

Through our CNET Channel business, we
license our comprehensive product database to U.S. and European online computer retailers,
resellers, wholesale distributors and e-commerce companies. CNET Channel also operates
ChannelOnline, an Internet browser-based application for Value Added Resellers (VARs) that
streamlines transactions through a centralized product procurement marketplace using our
standardized product data.

We earn revenues from:

| | o | Marketing Services: sales of advertisements on our Internet network through
impression-based advertising (fees earned from the number of times an advertisement is
viewed by users of our websites) or activity-based advertising (fees earned when our users
click on an advertisement or text link to visit the websites of our merchant partners, or
download a software application or a whitepaper)
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | Licensing, Fees and Users: licensing our product database and online content,
subscriptions to our online services, and other paid services.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------

| | o | Publishing:  sales of  advertisements  in our print  publications,  subscriptions  and newsstand  sales of
         publications, and custom publishing services.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------

CNET Networks, Inc. was incorporated
in the state of Delaware in December 1992. Our principal executive offices are located at
235 Second Street, San Francisco, California 94105. Our phone number is (415) 344-2000.
Our periodic and current reports are available, free of charge, on our website,
www.cnetnetworks.com, as soon as reasonably practicable after such material is
electronically filed with, or furnished to, the SEC.

MARKET OPPORTUNITY

The Internet has emerged as a global
medium enabling millions of people to share information, communicate and conduct business
electronically. The growth in Internet users combined with the interactive nature of the
medium has created a powerful channel for conducting commerce. We believe that buyers of
high value products, such as technology and consumer electronics products, typically
research product capabilities and compare prices before making a purchase decision. The
interactive nature of the Internet has caused the Internet to emerge as the medium that
best allows buyers to complete that research. We feel that content sites like those
created by CNET Networks, which use strong brands and original content to create rich
informational environments, are effective at creating demand for products. We also believe
that the identifiable brands and editorial expertise that go into creating content sites
are difficult for new entrants to replicate, while providing margins that are attractive
over the long-term. CNET Networks is a leader and innovator in creating focused content in
the categories of personal technology, games and entertainment, and business technology
which gives advertisers the ability to deliver targeted messages to buyers.

Revenues from our personal technology
content categories have historically come from traditional personal technology categories,
such as desktop and notebook computers. However, the definition of personal technology
products has been expanding rapidly to include products such as cellular telephones,
televisions, cameras, etc. This expansion is reflected in industry research. Interactive
Data Corporation (IDC) expects total worldwide IT spending is expected to increase 5% to
$915 billion in 2004 from $871 billion in 2003. Of that spending, IDC expects personal
computer spending to increase 4% to $152 billion and peripherals, which includes many
consumer electronics products such as PDAs, are expected to increase 11% to $68
billion in 2004 as compared to 2003. The Consumer Electronics Association expects U.S.
manufacturer-to-dealer sales of consumer electronics products could increase 5% to $101
billion in 2004. We expect the overall growth of consumer electronics to be an added
growth opportunity for us going into 2004 as consumer adoption of these products
increases. We are in a superior position to educate consumers on these new products and
innovations through our editorial reviews and at the same time provide marketers with the
right audience to showcase their products.

In addition, another area of
opportunity for us is continued growth in our games and entertainment properties. GameSpot
is well-positioned within the 18-34 male demographic and at the forefront in providing
information to consumers of the $10 billion U.S. video game market (source: The NPD
Group). We believe that our current games and entertainment sites, along with addition of
sites such as the recently acquired MP3.com, are an attractive environment for marketers
to target a highly relevant demographic.

As a leading interactive content
provider, we should benefit from the expected overall increase in online advertising
dollars. According to eMarketer, the U.S. online advertising market is expected to grow
13% in 2004 and represent over $7.5 billion in advertising spending. We are positioned to
capture an increased share as more marketing dollars shift to online from traditional
media.

PRODUCTS AND SERVICES

# U.S. MEDIA

We surround the buying process with
content and commerce services in the areas of personal technology, games and
entertainment, and business technology. In our U.S. Media business, we derive revenue from
three primary sources: marketing services; licensing, fees and users; and publishing.

Internet

Our U.S. Media Internet business
includes all aspects of our U.S.-based online media brands. This business offers
information and commerce services in areas of personal technology, games and
entertainment, and business technology to millions of users each day. Our online content
properties are the leading sources of information for people who want to learn what is new
in personal technology, games and entertainment, and business technology, including what
to buy, where to buy it and how to use it. This content is delivered using sophisticated
and scalable technology platforms that include several key components, such as content and
advertising delivery, comprehensive product and user data powering commerce services, and
search functionality.

CONTENT CATEGORIES AND BRANDS

|Personal Technology | Games and Entertainment | Business Technology
|------------------- | ----------------------- | -------------------
|CNET.com            | GameSpot                | ZDNet              
|Shopper.com         | GameFaqs                | News.com           
|Download.com        | GameRankings.com        | TechRepublic       
|                    | MP3.com                 | Builder.com        

SCALABLE TECHNOLOGY PLATFORMS

|Content and Advertising Delivery
|--------------------------------
|
|

Personal Technology

Our personal technology category
includes sites such as CNET.com and Download.com, which enables consumers to make informed
and educated technology and consumer electronics purchasing decisions. CNET.com provides
expert and unbiased advice on technology and consumer electronics products and services to
inform users and expedite purchasing. Through detailed reviews, recommendations and
product specifications, pricing and availability information, CNET.com and Shopper.com, a
price-comparison shopping site, give users one of the most up-to-date and efficient
shopping resources on the Internet. Download.com is a trusted source for information for
buyers and sellers of try-before-you-buy software, enabling IT professionals, developers,
business users and personal technology enthusiasts to experience a hands-on evaluation of
products they are considering for purchase. With millions of visitors each day and tens of
thousands of content titles represented, Download.com is an established and active
marketplace for digital content distribution.

Games and Entertainment

Our Internet network includes game
and entertainment content sites such as GameSpot and MP3.com. GameSpot, the
Internets most highly trafficked gaming site (complimented by GameFaqs and
GameRankings.com), gives users instant access to thousands of game reviews, previews,
downloads, guides, hints and news stories related to games and gaming. CNET Networks
acquired the MP3.com domain and brand in December 2003. CNET plans on relaunching the
MP3.com site as a comprehensive music information site in mid-2004.

Business Technology

CNET Networks business
technology brands include leading sites such as ZDNet, News.com, TechRepublic and
Builder.com, which provide business leaders and IT professionals with tools and
information to make informed decisions. ZDNet operates a worldwide network of Internet
sites that offer content, services and commerce opportunities that enable IT professionals
and business influencers to gain an edge in business. Our business technology brands also
include our award-winning news site, News.com, which focuses on the latest breaking news
and in-depth coverage of industries, such as technology, games and entertainment.
TechRepublic serves the needs of IT professionals, providing information and tools for IT
decision support and professional advice by job function, and Builder.com provides content
and services for the software developer community.

Scalable Technology
Platforms

During 2001, 2002 and 2003, we
invested approximately $18.4 million in the development of standardized technology
platforms to deliver content and advertising, search results, enable commerce and create
universal data collection and registration systems. These projects were completed in 2003.
This investment has simplified our operations and creates a scalable and leveragable
infrastructure. We have transitioned the majority of our U.S. operations to these new
platforms.

Supporting our personal technology,
games and entertainment, and business technology sites is a common content and advertising
delivery platform. The creation of this technology has allowed for the ease of efficient
publication of our content and effective delivery of network-wide advertising. In
addition, the creation of a standardized platform has enabled us to lower our operating
costs.

As part of our technology platform,
we provide commerce services across our content categories, which are designed to link
buyers and sellers of products and services. We help individuals and businesses decide
what products to buy by providing news, reviews, recommendations, detailed product
specifications, real-time prices from competing vendors, merchant ratings, product
availability and shipping costs. We believe our innovative shopping services are valuable
to users because they provide unbiased information and choice. These shopping services are
valuable to merchants and advertisers because they provide a platform for creating brand
awareness and generating sales leads.

Another important component of our
technology platforms is the product data that powers these commerce services. Our product
database contains over 1.5 million products and related product images, descriptions and
specifications. Because consistent, comprehensive and accurate product data is important
not only to our commerce services but also to every business engaged in online commerce,
we have been able to leverage this data by licensing it to third parties through our
Channel Services business. As we continue to see a convergence of customer relationships
between U.S. Media and the Channel Service product offerings, we will evaluate combining
the reporting of the results of the Channel Services segment within our U.S. Media segment
in 2004.

With the integration of search
functionality across our content categories, our users are provided with additional access
to relevant contextual content.

Publishing

Computer Shopper magazine is a
leading source of technology information and commerce services. Dedicated to helping
active buyers of technology products and services, Computer Shopper magazine is a trusted,
in-depth reference for expert guidance on what to buy, where to buy, and how to buy
technology products and services. Although not a strategic focus, custom publishing
(providing printing and distribution of marketing materials for specific customers) has
contributed revenue to our publishing business over the last three years.

# INTERNATIONAL MEDIA

Internet

CNET Networks provides relevant
content in local language to the various markets we serve worldwide. We maintain an
Internet presence in 15 countries, including wholly-owned operations in, Australia,
France, Germany, Japan, Singapore and the United Kingdom, as well as a number of
licensees around the world. In addition to online content, we also produce technology
events. We are able to leverage CNET Networks online users and infrastructure
internationally through our businesses, such as CNET Research, a division that provides
global market intelligence information to our clients, and CNET Direct, a one-to-one
marketing service for technology marketers, as well as technology events and production
throughout Asia. In aggregate, our international Internet sites delivered approximately
7.7 million total page views during 2003, which represented approximately 20% of CNET
Networks total, worldwide page views in the year ended December 31, 2003.

Publishing

We operate five technology and game
oriented print publications in China with a combined circulation of over 300,000 copies
per month. In Australia, France, Singapore and the United Kingdom, we publish several print
publications which have a combined average monthly circulation of over 100,000 copies.

MARKETING

We design our marketing activities to
promote our multiple brands and to attract users, viewers and readers to our online
network and print publications. Our marketing programs include Internet and print
advertising campaigns, and participation in trade shows, conferences and speaking
engagements. In 2003, we spent approximately $16.0 million (which includes approximately
$11.9 million in barter advertising expenses) to market our brands and services. We expect
to continue to market our brands, products and services in the future.

CUSTOMERS

For the year ended December 31, 2003,
there was no single customer that contributed more than 10% of our revenues. Our top one
hundred advertisers contributed approximately 78%, 75% and 80% of our U.S. revenues in
2003, 2002 and 2001, respectively.

GEOGRAPHIC REGIONS

We have wholly-owned operations in
Australia, France, Germany, Japan, Singapore, Switzerland and the United Kingdom. In
addition, we have an international presence through majority-owned joint ventures in China
and Korea. We also have license arrangements in various other countries throughout the
world. Revenue is attributed to individual countries according to the international online
property or print publication that generated the revenue. Non-U.S. sourced revenues
accounted for 21%, 17% and 14% of net revenues during the years ended December 31, 2003,
2002 and 2001, respectively. No single foreign country accounted for more than 10% of net
revenues for the year ended December 31, 2003.

EMPLOYEES

At December 31, 2003, 2002 and 2001,
we had approximately 1,700, 1,800 and 2,000 employees on a worldwide basis.

INTELLECTUAL PROPERTY

Our success and ability to compete
are dependent in part on the goodwill associated with our trademarks, trade names, service
marks and other proprietary rights and on our ability to use U.S. and foreign laws to
protect our intellectual property, which includes our original content, our editorial
features, the technology that we use to deliver our products and services, the various
databases of information that we maintain and make available through our Internet sites or
by license, and the appearance of our Internet sites.

We have obtained federal trademark
registrations for a number of our marks in the United States, including CNET, ZDNet,
TechRepublic, GameSpot and Computer Shopper. U.S. trademark registrations may be renewed
indefinitely based on our continued use. While we have applied for and obtained
registration of many of our marks in countries outside of the U.S. where we do business,
we have not been able to obtain registration of all of our key marks in such
jurisdictions, in some cases due to opposition by people employing similar marks. We also
claim common law protection on certain names and marks that we have used in connection
with our business activities.

We rely on copyright law to protect
our original content. We rely on trade secret, copyright laws, patent laws,
confidentiality agreements with our employees and third parties, and protective
contractual provisions to protect the proprietary technologies that we have developed. We
have over 20 patent applications pending with respect to certain of our software systems,
methods and related technologies, of which nine were filed in 2003. We have been issued
four U.S. patents. U.S. patents have a duration of 20 years. We can offer no assurance
that patents for any other applications will be granted. We cannot assure you that
intellectual property laws, our agreements or our patents will be sufficient to prevent
others from copying or otherwise obtaining and using our content or technologies or that
others have not developed or will not develop technologies that are similar or superior to
ours.

We also rely on certain technology
licensed from third parties. We may be required to license additional technology in the
future for use in managing our Internet sites and providing related services to users and
advertising customers.

Notwithstanding the efforts that we
have taken to ensure that we have sufficient rights to the intellectual property that we
use, we could still be subject to claims of infringement. These claims could result in
costly litigation and the need to develop alternative trademarks, content or technology or
to enter into costly royalty or licensing agreements, which could have a material adverse
effect on our business, results of operations and financial condition. We are a defendant
in pending litigation in which a jury found that our use of the name mySimon
infringes the trademark rights of a third party. This litigation is more fully described
under Item 3  Legal Proceedings.

COMPETITION

The market for Internet content and
services is intensely competitive and rapidly evolving. It is not difficult to enter this
market, and current and new competitors or companies from traditional media can launch new
Internet sites rapidly.

We compete for advertisers, users and
business partners with numerous companies offering information and content in our primary
areas of focus: personal technology, games and entertainment, and business technology.
These companies generally fall into the following categories:

| | o | Traditional offline media, such as television, radio and print, each of which has numerous
content providers offering content in our areas of focus. In particular, we compete for users
and advertisers with mainstream business publicaations such as The New York Times,
The Wall Street Journal, Fortune, Forbes, and Business Week, as well as publications devoted
to personal and business technology such as PC Magazine, PC World and eWeek;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | Internet sites, including large general purpose portals, some of whom have sought to
expand their content offerings in our areas of expertise, as well as niche sites focused
on the same vertical markets that we are.  For example, our gaming properties compete with
other gaming sites such as IGN and GameSpy;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | Online comparison shopping services such as Shopping.com, PriceGrabber.com and
BizRate.com, as well as shopping services operated by the large general purpose
portals, many of whom have sought to expand the
reviews and information offerings on their sites;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | Online retail and auction companies offering goods and services similar to those that can
be obtained through our sites, such as Amazon.com, eBay and BestBuy.com; and
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | Search engines such as Google and Yahoo!, which attract users looking for goods and services similar to those
offered on our sites, as well as marketing expenditures by companies trying to reach those
users.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

We believe that the Internet offers
a competitive advantage over other media for creating a rich and interactive environment
for both users and marketers.  Within the Internet, we believe that CNETs significant
experience and editorial expertise and strong brands provide us with many advantages over our
competitors.  However, we cannot assure you that we will
compete successfully with current or future competitors. Increased competition
could result in price reductions, reduced margins or loss of market share, any of which
could have a material adverse effect on our future revenue and profits. If we do not
compete successfully for new users and advertisers, our financial results may be
materially and adversely affected.

SEASONALITY AND
CYCLICALITY

We believe that marketing spending on
the Internet, as in traditional media, fluctuates significantly with economic cycles and
during the calendar year, with spending being weighted towards the end of the year to
reflect trends in the retail industry. Our historical revenues have exhibited some degree
of seasonality with higher revenues in the fourth quarter due to increased marketing
spending by our customers and with lower revenues in the first quarter reflecting lower
levels of marketing spending. Marketing expenditures account for a majority of our
revenues. Fluctuations in marketing expenditures generally, or with respect to
Internet-based marketing specifically, could therefore have a material adverse effect on
our business, financial condition or operating results.

# Item 2. Properties

We are headquartered in San
Francisco, California, where we occupy approximately 283,000 square feet of leased office
space. In addition to our San Francisco office, we have several leased offices throughout
the U.S., including Cambridge, Massachusetts, Louisville, Kentucky and New York City. We
also have offices in Europe, Asia and Australia.

During our realignment activities in
2001 and 2002, we abandoned several leased properties. From the time we abandoned those
properties through December 31, 2003, we have been able to reach termination agreements or
were able to sublease several, but not all of the properties. We currently have several
properties that have been abandoned but not subleased. We
have an accrued liability of $5.1 million, as of December 31, 2003, related to our
abandoned properties. (Also see Footnote (10) of our consolidated financial statements
included in Item 8).

# Item 3. Legal Proceedings

In August 1999, Simon Property Group
(SPG) filed a trademark infringement suit in federal district court in Indianapolis
against mySimon, Inc. (mySimon), a subsidiary of CNET acquired on February 29, 2000. SPG
alleged that the mySimon trademark infringed SPGs Simon trademark. On
August 31, 2000, following a trial on the subject, the jury found in favor of SPG and
awarded damages against mySimon in the amount of $11.5 million in compensatory damages,
$5.3 million for corrective advertising, and $10.0 million in punitive damages. On
September 25, 2000, the court entered an order establishing an escrow for royalties
pending final resolution of the litigation where mySimon pays into escrow 2% of its gross
cash receipts each month.

On December 7, 2001, mySimon filed a
motion for a dismissal of the case or, alternatively a new trial based on newly discovered
evidence it believes SPG should have produced prior to the August 2000 trial. On March 26,
2003, the court granted mySimons motion for a new trial on all issues, thereby
eliminating the original jury verdict. The court also granted mySimons motion that
sanctions be imposed against SPG and reserved a decision about what the appropriate
sanctions should be until later proceedings. No date for a new trial has been set. It is
not possible to predict the amount of damages, if any, that could be awarded in a
re-trial; however, such amounts could be material to our results of operations and
financial condition.

Two shareholder class action lawsuits
were filed in the United States District Court for the Southern District of New York on
August 16, 2001 and September 26, 2001, against Ziff-Davis, Eric Hippeau and Timothy
OBrien, and investment banks that were the underwriters of the public offering of
ZDNet series of Ziff-Davis stock (the ZDNet Offering). One of the complaints also names
CNET as a defendant, as successor in liability to Ziff-Davis. The complaints are similar
and allege violations of the Securities Act of 1933, and one of the complaints also
alleges violations of the Securities Exchange Act of 1934. The complaints allege the
receipt of excessive and undisclosed commissions by the underwriters in connection with
the allocation of shares of common stock to certain investors in the ZDNet Offering and
agreements by those investors to make additional purchases of stock in the aftermarket at
pre-determined prices. Plaintiffs allege that the prospectus for the ZDNet Offering was
false and misleading and in violation of the securities laws because it did not disclose
the arrangements. The action seeks damages in an unspecified amount. The action is being
coordinated with over 300 nearly identical actions filed against other companies and their
underwriters. On February 19, 2003, the Court granted CNETs motion to dismiss the
Section 10(b) claim with leave to replead, and denied the motion to dismiss the Section 11
claim.

The majority of the issuers,
including CNET, and their insurers have entered into a Memorandum of Understanding with
the plaintiffs to dismiss the issuers from the litigation in exchange for a
back-stop guarantee from the issuers and their insurers pursuant to which they
will pay the plaintiffs any shortfall between $1 billion and the amounts recovered in the
ongoing litigation against the underwriters. The parties are currently negotiating
definitive settlement documents, which are subject to the approval of the court. Based on
its insurance coverage and the number of issuers participating in the settlement, if the
settlement is finalized CNET does not believe that it will face any material liability as
a result of the litigation. If the settlement does not occur, CNET intends to seek
indemnification from the underwriters, and it is not possible to predict whether the
litigation will have a material adverse effect on CNETs financial condition or
results of operations.

There are no other legal proceedings
to which we are a party, other than ordinary routine litigation incidental to our business
that is not expected to be material to our business or financial condition.

# Item 4. Submission of
Matters to a Vote of Security Holders

None.

# PART II.

# Item 5. Market for
Registrants Common Equity and Related Stockholder Matters

Our common stock is traded on the
National Market System of the Nasdaq Stock Market (Nasdaq) under the symbol
CNET.

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.

|               | 2003 | 2002
|-------------- | ---- | ----
|
|               |      |     
|First quarter  |      |     
|               |      |     
|Second quarter |      |     
|               |      |     
|Third quarter  |      |     
|               |      |     
|Fourth quarter |      |     

We have never declared or paid a cash
dividend on our common stock. We intend to retain any earnings to cover operations and
working capital fluctuations and to fund capital expenditures and expansion. We do not
anticipate paying cash dividends on our common stock in the foreseeable future.

At February 25, 2004, the closing
price for our common stock as reported by NASDAQ was $9.92, and the approximate number of
holders of record of our common stock was 940.

# Item 6. Selected
Consolidated Financial Data

The following table sets forth
selected consolidated financial data and other operating information. The financial data
and operating information do not purport to indicate results of operations as of any
future date or for any future period. The financial data and operating information is
derived from our audited consolidated financial statements and should be read in
conjunction with the consolidated financial statements, related notes and other financial
information included herein.

|(in thousands, except shareand per share data)   | Fiscal Year Ended December 31,
|------------------------------------------------ | ------------------------------
|
|Consolidated Statement of Operations Data:       |                               
|Total revenues                                   |                               
|Total operating expenses (b)                     |                               
|Operating loss                                   |                               
|Total non-operating income (expense)(c)(d)(e)(f) |                               
|Net income (loss)                                |                               
|Basic net income (loss) per share                |                               
|Diluted net income (loss) per share              |                               
|Shares used in basic per share calculation       |                               
|Shares used in diluted per share calculation     |                               
|                                                 |                               
|Consolidated Balance Sheet Data:                 |                               
|Cash and cash equivalents                        |                               
|Total marketable debt securities                 |                               
|Working capital                                  |                               
|Total assets                                     |                               
|Total debt (d)(e)(f)                             |                               
|Stockholders' equity                             |                               

| | a) | On July 1, 2001, we acquired TechRepublic, Inc. (TechRepublic). On October 17,
                    2000, we acquired ZDNet, Inc. (ZDNet). On February 29, 2000, we completed the
                    acquisition of mySimon, Inc. (mySimon). Also see Note (3) of our consolidated
                    financial statements included in Item 8. No financial data or operating
                    information related to these acquired companies is included in the Selected
                    Consolidated Financial Data prior to the dates of acquisition.
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | b) | Operating expenses include amortization of intangible assets of $6.3 million and
                    $34.7 million for the years ended December 31, 2003 and 2002, respectively.
                    Operating expenses include amortization of goodwill and intangible assets of
                    $678.6 million, $340.4 million and $15.0 million for the years ended December
                    31, 2001, 2000 and 1999, respectively. As part of the transition provisions of
                    SFAS 142, we reviewed for impairment all previously recognized intangible assets
                    that have been determined to have indefinite useful lives. The results of our
                    annual impairment test, as of August 31, 2002, indicated that an impairment
                    charge of $238.8 million for goodwill and of $40.5 million for intangible assets
                    of our U.S. Media reporting unit needed to be recorded. Additionally, a loss on
                    the disposal of fixed assets of $11.2 million was recorded in 2002. Also in 2003
                    and 2002, a total of $9.8 million and $12.4 million, respectively, was included
                    in operating expenses representing costs to realign our business.
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | c) | In 2001, a charge of $1.1 billion was taken to adjust the carrying value of our
                    goodwill to fair value. Also included in operating expenses in 2001, was a
                    charge of $21.3 million related to the consolidation of our office space, which
                    resulted in the abandonment of several leased facilities, as well as $21.7
                    million in other costs incurred to integrate the operations of ZDNet into our
                    operations.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | d) | During 2002, 2001 and 2000, we incurred impairment losses of $0.2 million, $26.9
                    million and $393.4 million, respectively, on marketable equity securities and
                    $15.4 million, $148.4 million and $5.7 million on privately held investments,
                    respectively, for which other-than-temporary declines in value were deemed to
                    have occurred.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | e) | On March 8, 1999, we completed a private placement of 5% Convertible
                    Subordinated Notes with gross proceeds of $172.9 million. On May 9, 1999, we
                    sold our effective 40% ownership interest in Snap.com. to NBCi. The transaction
                    resulted in a gain of $541.2 million in 1999. Also, during 1999, we sold a
                    portion of our holdings of Vignette Corporation for a gain of approximately
                    $172.3 million.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | f) | In 2002, we repurchased $59.2 million principal amount of our 5% Convertible
                    Subordinated Notes for $36.7 million, resulting in a gain of $21.6 million, net
                    of the write-off of related capitalized debt issuance costs of $0.9 million. On
                    August 31, 2001, NBC acquired any NBC Internet, Inc. (NBCi) shares it did not
                    already own. Upon the purchase of the NBCi shares owned by us, the maturity date
                    for our NBCi Trust Automatic Common Exchange Securities (TRACES) obligation
                    accelerated. In conjunction with this accelerated repayment, CNET recorded a
                    loss of $10.6 million, consisting of $9.0 million of early interest payment,
                    which was not refundable, and a write-off of $1.6 million of capitalized debt
                    issue costs.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Item 7. Managements
Discussion and Analysis of Financial Condition and Results of Operation

Overview

CNET Networks, Inc. is a leading
global media company. Known for its editorial expertise, CNET Networks combines its
award-winning content with the power of interactive technology to inform and connect
buyers, users and sellers of personal technology, games and entertainment, and business
technology.

We have determined that our business
segments are U.S. Media, International Media and Channel Services. U.S. Media consists of
an online network focused on three content categories: personal technology, games and
entertainment, business technology. International
Media includes the delivery of online technology information and several technology and
gaming print publications in non U.S. markets. Channel Services includes a product
database licensing business and an online technology marketplace for resellers,
distributors and manufacturers. As we continue to see a convergence of customer
relationships between U.S. Media and the Channel Service product offerings, we will
evaluate combining the reporting of the results of the Channel Services segment within our
U.S. Media segment in 2004. Within these business segments, we earn revenues from:

| | o | Marketing Services: sales of advertisements on our Internet network through
impression-based advertising (fees earned from the number of times an advertisement is
viewed by users of our websites) or activity-based advertising (fees earned when our users
click on an advertisement or text link to visit the websites of our merchant partners, or
download a software application or a whitepaper)
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | Licensing,  Fees and Users:  licensing  our product  database  and online  content,  subscriptions  to our
         online services, and other paid services
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | Publishing:  sales of  advertisements  in our print  publications,  subscriptions  and newsstand  sales of
         publications, and custom publishing services.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------

We evaluate our revenues according to
the classifications listed above. We classify our marketing services revenues and
licensing, fee and users revenues as Internet revenues and our publishing revenues as
Publishing revenues on our consolidated statements of operations. Revenues for the past
three years for these categories are as follows:

|                             | Year Ended December 31,
|---------------------------- | -----------------------
|
|Revenues:                    |                        
|Marketing service            |                        
|Licensing, fees and user     |                        
|                             |                        
|Internet                     |                        
|Publishing                   |                        
|                             |                        
|                             |                        
|                             |                        
|As a Percentage of Revenues: |                        
|Marketing Services           |                        
|Licensing, fees and user     |                        
|                             |                        
|Internet                     |                        
|Publishing                   |                        
|                             |                        
|                             |                        
|                             |                        

We are focused on growing revenues
from existing Internet properties by increasing revenues from our key customers and
expanding our services where we can meet the needs of both users and marketers.

We had over 66 million unique users
in the fourth quarter of 2003 as compared to 55 million unique users in the fourth quarter
of 2002, an increase of 20%. Daily page views averaged 38.2 million in 2003 compared with
33.5 million in 2002, a 14% increase. While increases or decreases in unique users and
daily average page views are not indicative of increases or decreases in financial
results, we believe that these statistics are helpful because they provide insight into
the growth of the Internet as an advertising medium resulting from increased user adoption
and into user demand for CNET Networks properties in particular.

We evaluate our financial performance
primarily on the following key measurements:

| | o | Revenues
| | - | --------

| | o | Operating income (loss)
| | - | -----------------------

| | o | Operating income (loss) before depreciation, amortization and asset impairment
| | - | ------------------------------------------------------------------------------

| | o | Net income (loss)
| | - | -----------------

| | o | Earnings (loss) per share
| | - | -------------------------

Operating expenses included in our
operating income (loss) before depreciation, amortization and asset impairment consist of
cost of revenues, sales and marketing and general and administrative costs, which are
primarily cash related expense activities. Noncash related expenses consist of
depreciation, amortization of intangible assets and asset impairment and are included in
our operating income (loss).

Cost of revenues includes costs
associated with the production and delivery of our Internet sites, print publications and
creation of our product database and related technology. The principal elements of cost of
revenues for our Internet operations are payroll and related expenses for the editorial,
production and technology staff and related costs for facilities and equipment. Cost of
revenues for our Publishing operations includes payroll and related expenses for editorial
personnel and costs to print and distribute our magazines and related costs for facilities
and equipment. The majority of our cost of revenues do not necessarily fluctuate
proportionately with fluctuations in revenues.

Sales and marketing expenses consist
primarily of payroll and related expenses, consulting fees and advertising expenses and
related costs for facilities and equipment.

General and administrative expenses
consist of payroll and related expenses for executive, finance and administrative
personnel, professional fees and other general corporate expenses and related costs for
facilities and equipment.

As shown in the table below, we
incurred an operating loss of $20.8 million, $381.3 million and $1.9 billion for the years
ended December 31, 2003, 2002 and 2001, an operating income before depreciation and
amortization of $2.8 million in 2003 and an operating loss before depreciation,
amortization and asset impairment of $30.4 million and $89.1 million for 2002 and 2001,
respectively. Our net loss and net loss per share for each of the periods was $26.3
million, or $0.19 per share, $360.6 million, or $2.60 per share, and $2.0 billion, or
$14.52 per share, respectively.

|                               | Year Ended December 31,
|------------------------------ | -----------------------
|
|Operating loss                 |                        
|                               |                        
|Depreciation                   |                        
|Amortization                   |                        
|Asset impairment               |                        
|                               |                        
|Operating income (loss) before |                        
|depreciation, amortization and |                        
|asset impairment               |                        
|                               |                        
|                               |                        
|Net loss                       |                        
|                               |                        
|                               |                        
|Net loss per share             |                        
|                               |                        

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

Outlook

The demand for marketing services in
the online industry has begun to show signs of improvement. Through the efficiencies we
have implemented in the past few years, we believe we have an ability to generate profits
from increases in revenues. We are focused on revenue growth, and we believe that our
productivity improvements will result in operating leverage on incremental Internet
revenues. We anticipate revenues from our Publishing operations to decline due to a
decrease in custom publishing arrangements. We believe there will be continued growth in
revenues from Marketing Services in the personal technology and games and entertainment
sectors. Currently, our business technology sector, while exhibiting some growth, was
impacted by the continued slow economic environment affecting the enterprise computing
industry. In summary, we believe that any decline in our custom publishing arrangements
will be more than offset by increases in our Internet revenue growth rates so that we will
be able to achieve a higher level of growth in both profits and cash flow compared to
2003.

Results of Operations

2003 vs. 2002

# Revenues

Total Revenues

Total revenues were $246.2 million
and $237.0 million for the years ended December 31, 2003 and 2002, respectively. Total
revenues increased approximately 4% in 2003 primarily due to an increase in Internet revenues,
which are comprised of marketing services revenues and licensing, fees and users revenues.
Publishing revenues have decreased in 2003 as compared to 2002. We
believe that the trend of higher marketing services revenues and lower publishing revenues
may continue primarily due to lower custom publishing revenues.

For the year ended December 31, 2003,
approximately $11.8 million of our revenues were derived from barter transactions compared
to $11.6 million for the year ended December 31, 2002, whereby we delivered marketing
services in exchange for marketing services of other companies. These revenues and
marketing expenses were recognized at the fair value of the advertisements delivered.

Marketing Services
Revenues

Marketing services revenues were
$169.5 million and $159.0 million and represented 69% and 67% of total revenues in 2003
and 2002, respectively. The increase in marketing services revenues of $10.5 million, or
7%, in 2003 compared to the prior year was primarily due to an increase in marketing
spending by our customers. The mix of our marketing services revenues changed to reflect
an increase in revenues from online impression-based advertising partially offset by a
decline in activity-based revenues from our comparison shopping activities reflecting a
more competitive environment. We believe that our award-winning editorial content and
buying advice have helped to attract greater online brand advertising dollars as the
overall market for Internet advertising improves.

Licensing, Fees and Users
Revenues

Licensing, fees and users revenues
were $27.5 million and $24.3 million and represented 11% and 10% of total revenues for
2003 and 2002, respectively. The increase in our licensing, fees and users revenues of
$3.2 million, or 13%, was primarily due to increased sales of our Channel products and to
an increase in subscription services to various products on several of our sites.

Publishing Revenues

Publishing revenues were $49.2
million and $53.6 million and represented 20% and 23% of total revenues in 2003 and 2002,
respectively. The 8% decrease in publishing revenues in 2003 was primarily due to lower
custom publishing revenues resulting from a decrease in our custom publishing arrangements
with Gateway, Inc., as well as a decrease in advertising revenues from our Computer
Shopper publication.

# Operating Expenses

Cost of Revenues, Sales
and Marketing, General and Administrative

We incurred expenses in aggregate
related to cost of revenues, sales and marketing and general and administrative costs of
$243.4 million and $267.4 million for the years ended December 31, 2003 and 2002,
respectively. The decrease of $24.0 million, or 9%, in 2003 compared to 2002 primarily
related to a decrease in our workforce; our average headcount decreased approximately 7%
from 2002 to 2003.

During 2003 and 2002, we took actions
to simplify our organizational structure by realigning our business around key business
categories and incurred costs consisting primarily of severance, lease abandonment
charges and contract termination costs which we refer to as realignment
expenses. Realignment expenses included in operating expenses in 2003 and 2002 were
$9.8 million and $12.4 million, respectively.

Depreciation and
Amortization

Depreciation expense was $17.3
million and $25.7 million in 2003 and 2002, respectively. The decrease in depreciation
expense in 2003 is primarily due to a decrease in the carrying value of depreciable fixed
assets as an impairment of certain fixed assets was recorded in the latter half of 2002.
Intangible assets amortization expense was $6.3 million and $34.7 million for the years
ended December 31, 2003 and 2002, respectively. The decrease in amortization expense in
2003 is due to the impairment of intangible assets recorded in the third quarter of 2002,
as well as the change in estimated lives of certain intangible assets from three years to
ten years during the third quarter of 2002.

Asset Impairment

We performed our annual evaluation of
goodwill and intangible assets for impairment as of August 31, 2003. We determined that the
carrying value of goodwill and other intangible assets for all of our reporting units did
not exceed their implied fair values.

Given the declines in the equity
markets and in our stock price during the third quarter of 2002, the results of our annual
impairment test performed as of August 31, 2002 indicated the carrying value of goodwill
and other intangible assets for the U.S. Media reporting unit exceeded their implied fair
values, and an impairment charge of $238.8 million for goodwill and $40.5 million for
intangible assets of that reporting unit was recorded in the third quarter of 2002.
Additionally, certain other assets, including fixed assets, totaling $11.2 million were
deemed to be impaired and were written-off.

# Operating Loss

We recorded an operating loss of
$20.8 million and $381.3 million for the years ended December 31, 2003 and 2002,
respectively. The decrease in operating loss of $360.5 million related to an asset
impairment of $290.5 million in 2002 and a decrease in depreciation and amortization of
$36.8 million in 2003 as compared to 2002, as well as a $24.0 million decrease in cost of
revenues, sales and marketing, and general and administrative costs due primarily to
workforce reductions and the other measures described above.

# Operating Income (Loss)
before Depreciation, Amortization and Asset Impairment

As shown in the table in the Overview
section above, we had an operating income before depreciation, amortization and asset
impairment of $2.8 million for the year ended December 31, 2003. For the same period in
2002, we incurred an operating loss before depreciation, amortization and asset impairment
of $30.4 million. Operating income (loss) before depreciation, amortization and asset
impairment improved by $33.2 million in 2003 as compared to 2002. The improvement related
to an increase in revenues of $9.3 million, or 4%, combined with a decrease in operating
expenses, excluding depreciation, amortization and asset impairment of $24.0 million, or
9%.

# Nonoperating Income and
Expense

Realized Gain and Loss on
Sale or Impairment of Investments

During 2003, there were no gains or
losses on the sale or impairment of investments. We had a gain on sales of investments of
$2.9 million for the year ended December 31, 2002. We had a loss on the sale of
investments of $123,000 for the year ended December 31, 2002. We had a loss on impairment
of public and private investments of $15.5 million for the year ended December 31, 2002.

Interest Income and
Expense

Interest income is derived from our
cash and cash equivalents and investments in marketable debt securities. Interest income
was $2.2 million and $4.9 million for 2003 and 2002, respectively. Interest income
decreased due primarily to lower balances of marketable debt securities held in 2003 as
compared to 2002, and in part due to lower interest rates in 2003.

Interest expense is primarily
incurred on our 5% Convertible Subordinated Notes. Interest expense was $6.9 million and
$10.3 million for 2003 and 2002, respectively. The decrease in interest expense in 2003
was due to the repurchase of $59.2 million of our 5% Convertible Subordinated Notes during
the second half of 2002.

Other Income/Loss

In 2002, we repurchased $59.2 million
principal amount of our 5% Senior Convertible Notes for $36.7 million. In connection with
these repurchases, we recorded a net gain of $20.7 million.

# Income Taxes

We recorded an income tax benefit of
$20.3 million for the year ended December 30, 2002. No such tax benefit was realized in
2003. Management believes that sufficient uncertainty exists regarding the future
realization of deferred tax assets and, accordingly, a full valuation allowance has been
provided against the gross deferred tax assets.

Effective tax rates for the years
ended December 31, 2003 and 2002 were 2.57% and (5.33%), respectively. The income tax
expense recorded in 2003 was lower than the statutory rate primarily as a result of the
full valuation allowance taken against net operating loss carryforwards. The income tax
benefit recorded in 2002 was lower than the statutory rates due to $314.0 million of
impairment of goodwill and nondeductible amortization of goodwill and other intangible
assets, for which no tax benefit was recognized.

At December 31, 2003, CNET had net
operating losses of $327.4 million, consisting of U.S. net operating losses of $218.3
million and foreign net operating losses of $109.1 million. These losses will be carried
forward for utilization in future years. Approximately $65.0 million of the U.S. losses
are related to federal net operating losses from the ZDNet acquisition, which took place
in 2000. These losses are subject to limitations on their utilization due to the change in
ownership and will begin to expire in 2011. They are reflective of adjustments resulting
from U.S. federal audits of ZDNet investments. A full valuation allowance has been
provided for these items.

Operating losses generated in 2003
were primarily related to amortization of intangible assets and losses from operations.
Cumulative foreign net operating losses include adjustments to prior year losses for items
currently under examination. A full valuation allowance has been provided for these items.

# Net Loss

We recorded a net loss of $26.3
million or $0.19 per basic and diluted share for the year ended December 31, 2003 compared
to a net loss of $360.6 million or $2.60 per basic and diluted share for the year ended
December 31, 2002. The decrease in the current year net loss as compared to the prior year
was due primarily to an increase in revenues and a decrease in operating costs of $351.2
million. The decrease in operating costs was primarily due to an asset impairment of
$290.5 million in 2002 and lower depreciation and amortization expenses of $36.8 million
in 2003 as compared to 2002. Additionally, $24.0 million of the decrease was due to a
reduction in cost of revenues, sales and marketing and general and administrative expenses
primarily due to workforce reductions. The decrease in 2003 also resulted from no net loss
on investments in the current year as compared to a net loss on the sale or impairment of
investments of $15.6 million in 2002. The increased costs in the prior year were offset by
a tax benefit of $20.3 million.

# Segment Revenues and
Operating Expenses

For the year ended December 31, 2003
as compared to prior year, revenues have decreased for the U.S. Media segment, while they
have increased for the International Media and Channel Services segments. The decrease in
revenues for U.S. Media is primarily related to a decrease in custom publishing partially
offset by an increase in marketing services revenue. The increase in revenues for the
International Media segment is partially due to acquisitions, as well as growth in
Internet advertising revenue and exchange rate differences. The increase in revenues for
Channel Services is due to an increase in licensing.

For the year ended December 31, 2003,
all three business segments have decreased operating costs as a percent of related
revenues as compared to the prior year primarily as an effect of headcount reductions and
other cost savings measures.

2002 vs. 2001

# Revenues

Total Revenues

Total revenues were $237.0 million
and $285.8 million for the years ended December 31, 2002 and 2001, respectively. The
decrease in revenues of $48.8 million, or 17%, for 2002 compared to 2001 was primarily
attributable to a decrease in marketing spending on our Internet sites. The downturn in
the economy, which began in 2001, resulted in an overall softness in advertising. In
particular, the slowdown in the technology industry resulted in a decrease in technology
marketing, our primary source of revenues. The technology market weakness continued
through December 31, 2002 and continued to put downward pressure on revenues. Revenues for
the year ended December 31, 2001 included six months of revenues for TechRepublic, which
was acquired in July 2001.

A portion of our revenues was
received in the form of securities of our customers amounting to approximately $4.7
million for the year ended December 31, 2001. No such revenues were received in 2002. In
addition, for the year ended December 31, 2002, approximately $11.6 million of our
revenues were derived from barter transactions compared to $18.4 million for the year
ended December 31, 2001, whereby we delivered advertisements on our Internet sites in
exchange for marketing services 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.

Marketing Services
Revenues

Marketing services revenues were $159.0 million
and $217.9 million and represented 67% and 76% of total revenues in 2002 and 2001,
respectively. The decrease in marketing services revenues of $58.9 million, or 27%, in
2002 compared to 2001 was primarily due to a decrease in marketing spending. The downturn
in the economy, which began in 2001, resulted in an overall softness in advertising, in
general, which had a significant negative impact on Internet advertising. In particular,
the slowdown in the technology industry resulted in a decrease in technology marketing,
our primary source of revenues.

Licensing, Fees and Users
Revenues

Licensing, fees and users revenues
were $24.3 million and $23.3 million and represented 10% and 8% of total revenues for 2002
and 2001, respectively. The increase in our licensing, fees and users revenues of $1.0
million was primarily a result of the acquisition of TechRepublic in July 2002. Licensing,
fees and users revenues included a full year of subscriptions from TechRepublic in 2002
whereas 2001 only included six months of TechRepublic subscription revenues.

Publishing Revenues

Publishing revenues were $53.6
million and $44.6 million and represented 23% and 16% of total revenues for the year ended
December 31, 2002 and 2001, respectively. The 20% increase in publishing revenues for 2002
over 2001 was due to an increase in our custom publishing revenues primarily resulting
from our custom printing arrangements with Gateway Inc.

# Operating Expenses

Cost of Revenues, Sales
and Marketing, General and Administrative

We incurred expenses in aggregate
related to cost of revenues, sales and marketing and general and administrative costs of
$267.4 million and $374.9 million for the years ended December 31, 2002 and 2001,
respectively. The decrease of $107.5 million related to a decrease in realignment costs in
2002 of $30.6 million as compared to the prior year and a decrease in our workforce from
2001 to 2002, as well as other reductions in non-personnel related costs. Realignment
charges included in operating expenses in 2002 and 2001 were $12.4 million and $43.0
million, respectively. Lease abandonment charges included in realignment expenses were
$4.4 million in 2002 and $21.3 million in 2001.

Depreciation and
Amortization

Total depreciation expense was $25.7
million and $24.4 million for 2002 and 2001, respectively. The increase in depreciation
expenses of $1.3 million from 2001 to 2002 related primarily to capital additions of $19.0
million and an increase in fixed assets from acquisitions partially offset by the disposal
of fixed assets.

Intangible asset amortization expense
was $34.7 million for the year ended December 31, 2002. Goodwill and intangible asset
amortization expense was $678.6 million for the year ended December 31, 2001. Effective
January 1, 2002, we adopted the provisions of SFAS 142. Under SFAS 142, goodwill is no
longer amortized. If the non-amortization provisions of SFAS 142 had been effective in
2001, net loss and basic and diluted net loss per share for the year ended December 31,
2001 would have been $1.4 billion and $(9.94), respectively.

Asset Impairment

As part of the transition provisions
of SFAS 142, we reviewed for impairment all previously recognized intangible assets that
have been determined to have indefinite useful lives. We completed our transition testing
as of June 30, 2002. In no instance did the carrying amount of a reporting unit exceed its
fair value as of January 1, 2002, and therefore, we determined that there was no
impairment resulting from these transition tests. We performed our annual evaluation of
goodwill and intangible assets for impairment as of August 31, 2002. The results of this
annual impairment test indicated the carrying value of goodwill and other intangible
assets for the U.S. Media reporting unit exceeded their implied fair values. An impairment
charge of $238.8 million for goodwill and $40.5 million for intangible assets of that
reporting unit was recorded in the third quarter of 2002. Also included in asset
impairment and disposals was a loss on disposal of fixed assets of $11.2 million.

In the third quarter of 2001 (prior
to the adoption of SFAS 142), due to the significant decline in CNETs stock price
once trading reopened after the events of September 11th, the overall continued
decline in market values of businesses in the media industry, and the continued further
decline in the overall markets, we evaluated the recoverability of our enterprise-wide
goodwill under the provisions of SFAS 121. This recoverability analysis indicated that
there had been impairment to our enterprise-wide goodwill. Therefore, a charge of $1.1
billion was taken during the third quarter of 2001 to adjust the carrying value of these
assets to their fair value.

# Operating Loss

We recorded an operating loss of
$381.3 million and $1.9 billion for the years ended December 31, 2002 and 2001,
respectively. The decrease in operating loss of $1.5 billion related to a decrease in
asset impairment charges in 2002 as compared to 2001 of $784.5 million, and a decrease in
amortization of intangible assets including goodwill of $642.6 million, as well as a
reduction in operating costs of $107.6 million.

# Operating Loss before
Depreciation, Amortization and Asset Impairment

As shown in the table in the Overview
section above, we incurred an operating loss before depreciation, amortization and asset
impairment of $30.4 million and $89.1 million for the years ended December 31, 2002 and
2001, respectively. Operating loss before depreciation, amortization and asset impairment
improved by $58.7 million in 2002 as compared to 2001. The change related to a decrease in
operating expenses, excluding depreciation, amortization and asset impairment, of $107.6
million, offset by a decrease in revenues of $48.9 million.

# Nonoperating Income and
Expense

Realized Gain and Loss on
Sales and Impairment of Investments

We had a gain on sales of investments
of $2.9 million and $9.5 million for the years ended December 31, 2002 and 2001,
respectively. We had losses on the sale of investments of $123,000 for the year ended
December 31, 2002 and $8.6 million for the year ended December 31, 2001. The decrease in
realized gain and loss on sales of investments in 2002 compared to 2001 resulted primarily
from a decrease in the amount of securities sold in 2002 versus 2001. Approximately $2.3
million of the gain realized in 2002 was from the sale of our share in a joint venture.

We had a realized loss on impairment
of public investments of $154,000 and $26.9 million for the years ended December 31, 2002
and 2001, respectively. We had a realized loss on impairment of private investments of
$15.4 million for the year ended December 31, 2002 and of $148.4 million for the year
December 31, 2001.

Interest Income and
Expense

Interest income is derived from our
cash and cash equivalents and investments in marketable debt securities. Interest income
was $4.9 million and $11.9 million for 2002 and 2001, respectively. Interest income
decreased due to lower balances of marketable debt securities held in 2002 as compared to
2001.

Interest expense is primarily
incurred on our 5% Convertible Subordinated Notes. Interest expense was $10.3 million and
$15.6 million for 2002 and 2001, respectively. The decrease in interest expense in 2002
related to the early repayment of our Trust Automatic Common Exchange Securities (TRACES)
obligations during 2001, as well as the repurchase of $59.2 million of our 5% Convertible
Subordinated Notes during the second half of 2002.

Other Income/Loss

In 2002, we repurchased $59.2 million
principal amount of our 5% Senior Convertible Notes for $36.7 million. In connection with
these repurchases, we recorded a net gain of $20.7 million.

In 2000, we issued an indexed debt
instrument in a public offering of TRACES by NBCi through an Automatic Common Exchange
Security Trust. In conjunction with the accelerated repayment of our TRACES obligations
that occurred in the third quarter of 2001, we recorded a loss of $10.6 million consisting
of $9.0 million of early repayment interest penalty and a write-off of $1.6 million of
capitalized debt issue costs.

# Income Taxes

For the years ended December 31, 2002
and 2001, we had an income tax benefit of $20.3 million and $69.0 million, respectively.
Management believes that sufficient uncertainty exists regarding the future realization of
deferred tax assets and, accordingly, a valuation allowance has been provided against the
gross deferred tax assets to properly reflect only recoverable taxes as required by SFAS
109.

Effective tax rates for the years
ended December 31, 2002 and 2001 were (5.33%) and (3.35%), respectively. The income tax
benefit recorded in 2002 and 2001 was lower than the statutory rates due to $314.0 million
and $1.8 billion, respectively, in impairment of goodwill and nondeductible amortization
of goodwill and other intangible assets, for which no tax benefit was recognized. The tax
benefit in 2001 was also reduced due to losses on privately held investments for which
there was sufficient uncertainty as to whether we would receive a tax benefit in the
future.

At December 31, 2002, CNET had net
operating losses of $165.3 million. A total of $24.6 million of these losses generated in
2002 were carried back to previous tax years. Of the remaining losses, approximately
$107.0 million are related to federal net operating losses from the ZDNet acquisition,
which took place in 2000. These losses are subject to limitations on their utilization due
to the change in ownership and will begin to expire in 2011. Operating losses generated in
2002 were primarily related to amortization of intangible assets and losses from
operations. Cumulative foreign net operating losses are approximately $45.9 million.

Approximately $31.7 million of
recoverable taxes were refunded to CNET in the second quarter of 2002. This refund in part
related to the utilization of net operating losses that were recorded as current deferred
tax assets as of December 31, 2001. Additionally, an income tax benefit of $20.3 million
was recorded in 2002 primarily due to the realization of deferred tax assets in 2002,
which were considered not to be recoverable at December 31, 2001.

# Net Loss

We recorded a net loss of $360.6
million or $2.60 per diluted share for the year ended December 31, 2002, compared to a net
loss of $2.0 billion or $14.52 per diluted share for the year ended December 31, 2001. The
decrease in the current year periods net loss as compared to the same period of the
prior year resulted primarily from the cessation of amortization of goodwill upon the
adoption of SFAS 142 in 2002, the greater realized loss on the impairment of assets,
goodwill and of our privately held investments in prior year, and the realized loss on the
impairment of our marketable equity investments in the prior year.

# Segment Revenues and
Operating Expenses

For the year ended December 31, 2002
as compared to the prior year, revenues decreased for the U.S. Media and International
Media segments while they remained relatively flat for Channel Services. The decreases in
revenues for U.S. Media and International Media were primarily related to the downturn in
the technology market resulting in reductions in technology companies advertising
and marketing spending, the primary source of our revenues, partially offset by an
increase in our publishing revenues.

For the year ended December 31, 2002,
all three business segments had decreased operating costs as compared to the prior year
primarily as an effect of headcount reductions and other cost saving measures.

Liquidity and Capital
Resources

When evaluating our overall cash
position for the purpose of assessing our liquidity, we consider our cash and equivalents,
short-term and long-term investments in marketable debt securities and restricted cash.

|                                      | December 31, | December 31, | December 31,
|------------------------------------- | ------------ | ------------ | ------------
|
|Cash and cash equivalents             |              |              | $           
|Short-term marketable debt securities |              |              |             
|Long-term marketable debt securities  |              |              |             
|Restricted cash                       |              |              |             
|                                      |              |              |             
|Total cash and investments            |              |              | $           
|                                      |              |              |             

The critical components
 of our cash flows include:

| | o | Net income (loss), as adjusted fornoncash operating expenses
| | - | ------------------------------------------------------------

| | o | Working capital requirements
| | - | ----------------------------

| | o | Cash used for investments and acquisitions
| | - | ------------------------------------------

| | o | Capital expenditures
| | - | --------------------

| | o | Debt obligations or debt retirement
| | - | -----------------------------------

| | o | Proceeds from stock options and employee stock purchase plans.
| | - | --------------------------------------------------------------

Operating

We used approximately $6.3 million,
$36.9 million and $27.9 million of cash for operating activities for the years ended
December 31, 2003, 2002 and 2001, respectively. The use of cash for operating activities
for 2003 included a net loss of $26.3 million and a use of cash for working capital of
$6.9 million. This was offset by noncash operating expenses of approximately $26.9
million, which was primarily depreciation, amortization and allowance for doubtful
accounts. The use of cash for operating activities in 2002 included our net loss of $360.6
million and a use of cash for working capital of $40.9 million. This was offset by noncash
operating expenses of approximately $364.6 million, which was primarily depreciation,
amortization and asset impairment. The decrease in the use of cash from operating
activities from 2002 to 2003 was primarily due to a lower use of cash for working capital.
The use of cash in 2001 included a net loss of $2.0 billion offset by noncash charges
consisting of an asset impairment charge of $1.1 billion and depreciation and amortization
of $704.9 million and losses on sales and impairment of investments of $174.2 million and
cash provided by working capital of $37.5 million. We anticipate we will continue to
require cash for working capital purposes as our business expands.

Investing

Investing activities included a use
of cash for acquisitions of $2.9 million and $8.8 million for the years ended December 31,
2003 and 2002, respectively. In 2003, we made five small acquisitions for an aggregate
purchase price of $3.1 million. A total of $2.9 million was paid in cash with the
remainder outstanding under a note payable that is to be paid within two years of the
acquisition. We made several small strategic acquisitions during 2002. The aggregate cash
purchase price for these 2002 acquisitions was $8.8 million. We regularly evaluate
investment opportunities, and it is likely that we will make additional investments or
acquisitions.

Investing activities also included
capital expenditures of $11.7 million and $19.0 million in 2003 and 2002, respectively.
Capital expenditures decreased from 2002 as we completed our technology platform project
in the second quarter of 2003. We anticipate capital expenditures to be between $12.0
million and $13.0 million in 2004. Net cash used in investing activities in 2001 was $37.0
million and included capital expenditures of approximately $48.3 million. Additionally in
2001, we used approximately $20.8 million for acquisitions and investments in privately
held companies and had proceeds of $29.1 million from the sale of marketable equity
securities.

Financing

Financing activities included
proceeds from the exercise of stock options and participation in our employee stock
purchase plan of $10.1 million and $4.0 million for the years ended December 31, 2003 and
2002, respectively. Proceeds from stock option exercises are difficult to predict as they
are dependent upon various factors, such as the trading price of our stock and exercise
prices of employee options. During 2002, financing activities included a use of cash of
approximately $37.2 million related to the retirement of debt. Cash flows provided by
financing activities in 2001 of $9.5 million were primarily related to the exercise of
options.

As of December 31, 2003, we had
obligations outstanding under notes payable totaling $118.1 million. Notes payable
included $113.7 million of 5% Convertible Subordinated Notes, due March 2006. Although we
have not presently identified alternate or additional sources of long-term capital, if our
cash needs were to change, or if we are unable to generate sufficient cash flow from
operations to repay our 5% Convertible Subordinated Notes by 2006 when they are due, we
will need to raise additional capital through debt or equity offerings in the public or
private markets. Our ability to raise such additional capital will depend on market
conditions at that time.

As of December 31, 2003, our
aggregate cash balances totaled $136.3 million, consisting of $117.1 million cash and
equivalents, short-term and long-term investments in marketable debt securities as well as
$19.2 million of restricted cash. We believe that these funds will be sufficient to meet
our anticipated cash needs to cover operations and for working capital fluctuations and
for capital expenditures for the next 12 months. However, any significant acquisitions
completed in the future may require cash and may affect our liquidity and funding needs.

Obligations

CNETs obligations with respect
to the 5% Convertible Subordinated Notes due 2006 can be found in the indenture for such
notes filed as Exhibit 10.40 to CNETs Annual Report on 10-K for the year ended
December 31, 1998.

The following summarizes our
contractual obligations at December 31, 2003, and the effect such obligations are expected
to have on our liquidity and cash flow in future periods:

|(in thousands)                  | TOTAL | LESS THANl YEAR | 1-3 YEARS | AFTER 3  YEARS
|------------------------------- | ----- | --------------- | --------- | --------------
|Long-term debt                  |       |                 | $         | 118.1         
|Non-cancellable operating lease |       |                
|obligations                     |       |                 |           | 199.0         
|Capital lease obligations       |       |                 |           | 0.2           
|                                |       |                 |           |               
|                                |       |                 | $         | 317.3         
|                                |       |                 |           |               

The caption non-cancelable operating
lease obligations in the above table not only includes our rent obligations on all of our
occupied properties, but also includes our liability under our abandoned leases of $5.1
million. The operating lease obligations presented above have not been reduced by the
expected cash inflows from sublease income related to these vacated properties of $3.5
million.

The following item is a contingency,
which may affect our liquidity in future periods. In conjunction with the ZDNet
acquisition in 2000, we assumed a guarantee of the obligations of Ziff Davis Media Inc.,
an unaffiliated company, under a New York City office lease for a total of 399,773 square
feet. In connection with that guarantee, we also have a letter of credit for $15.2 million
outstanding as a security deposit. As there is no present obligation to make any payments
in connection with this guarantee, we have not recorded any liability for this guarantee
in our financial statements. This lease expires in 2019. The annual average cost per
square foot is approximately thirty dollars over the remaining term of the lease. Through
a sublease from Ziff Davis Media Inc., CNET currently occupies 49,140 square feet of the
office space covered under this lease. Ziff Davis Media Inc. currently occupies 144,682
square feet of this space. There are three additional subleases, The Bank of New York,
FOJP Risk Management and Softbank, who collectively occupy a total of 205,951 square feet.
During 2002, Softbank subleased its 30,885 square feet to The Beanstalk Group. In 2003,
Ziff-Davis Media Inc. subleased 61,494 square feet of space formerly occupied by
Ziff-Davis Medias operations to FOJP Risk Management. As of December 31, 2003, the
total minimum lease payments remaining until the end of the lease term were $178.5
million, excluding the amounts attributable to CNETs sublease. If the financial
condition of any of the sublessees or the primary lessee were to deteriorate and thereby
result in an inability to make their lease payments, CNET would be required to make their
lease payments under the guarantee.

CRITICAL ACCOUNTING
POLICIES AND ESTIMATES

Our discussion and analysis of our
financial condition and results of operations are based on our consolidated financial
statements. The preparation of these financial statements in conformity with accounting
principles generally accepted in the United States of America requires management to make
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. On an
ongoing basis, we evaluate these estimates, including those related to collectibility of
receivables, investments, goodwill and intangible assets and contingencies. We base our
estimates on historical experience and on various other assumptions we believe to be
reasonable under the circumstances, which form the basis for making judgments about the
carrying values of assets and liabilities that are not readily apparent from other
sources. Actual results could differ from those estimates under different assumptions or
conditions.

We believe the following critical
accounting policies affect our more significant judgments and estimates used in the
preparation of our consolidated financial statements.

# Revenue recognition

We recognize revenues once the
following criteria are met:

| | o | Persuasive evidence of an arrangement exists
| | - | --------------------------------------------

| | o | Delivery of our obligation to our customer has occurred
| | - | -------------------------------------------------------

| | o | The price to be charged to the buyer is fixed or determinable
| | - | -------------------------------------------------------------

| | o | Collectibility of the fees to be charged is reasonably assured
| | - | --------------------------------------------------------------

We have several revenue streams. For
each revenue stream, evidence of the arrangement, delivery and pricing may be different.
For all revenue streams, we determine that collectibility is reasonably assured through a
standardized credit review to determine each customers credit worthiness.

Marketing Services

We recognize revenues from the sale
of impression-based advertisements on our online network in the period in which the
advertisements are delivered. The arrangements are evidenced either by insertion order or
contract that stipulate the types of advertising to be delivered and pricing. Our
customers are billed based on a discounted list price with no amounts subject to refund.
When recognizing revenues, the discounts granted are applied to each type of advertisement
purchased based on the relative fair value of each element.

We refer to the fees charged to
merchants based on the number of users who click on an advertisement or text link to visit
websites of our merchant partners as activity-based advertising. For
activity-based advertising, the arrangement is evidenced by a contract that stipulates the
fee per activity. The fee becomes fixed and determinable upon delivery of a user clicking
on an advertisement. These revenues are recognized in the period in which the activity
occurs and are therefore not subject to refund.

In certain arrangements, we sell
multiple deliverables to customers as part of a multiple-element arrangement. For these
arrangements, we allocate revenue to each deliverable based on the relative fair value of
each deliverable. Revenue is recognized in these arrangements as we deliver on our
obligation.

We trade advertising on our Internet
sites in exchange for marketing services of other companies, referred to as barter
revenue. These revenues are recognized in the period in which the advertisements are
delivered based on the fair market value of the services delivered. We determine the fair
market value of the service delivered based upon amounts charged for similar services in
non-barter deals within the previous six-month period.

Licensing, Fees and Users

Revenues for subscriptions to our
Internet sites, print publications, product database and procurement services are
recognized on a straight-line basis over the term of the subscription. Upon execution of a
contract, billing and commencement of the services, we record deferred revenue for the fee
charged. This deferred revenue is recognized on a straight-line basis over the period of
the arrangement. The amounts under contract are not refundable after the customer has used
the service.

Publishing

Advertising revenues from our print
and custom print publications are recognized in the month that the related publications
are sent to subscribers or become available at newsstands. Newsstand revenue from our
print publications is recognized when the publications are delivered to the newsstand at
which time a reserve is recorded against the value of the publications delivered based on
the number of magazines that we expect to be returned. To ensure these reserves are
adequate, we review the sell-through history of the publications on a monthly basis.

# Collectibility of
receivables

We maintain allowances for doubtful
accounts for estimated losses resulting from the inability of our customers to make
required payments. We base our allowances on periodic assessment of our customers
liquidity and financial condition through credit rating agencies reports, financial
statement reviews and historical collection trends. If the financial condition of our
customers were to deteriorate and thereby result in an inability to make payments,
additional allowances would be required.

# Goodwill and intangibles
impairment

Effective January 1, 2002 under SFAS
142, Goodwill and Other Intangible Assets. goodwill and intangible assets with
indefinite useful lives are to be tested for impairment at least annually. Intangible
assets with definite useful lives will continue to be amortized over their respective
estimated useful lives. Although the provisions of SFAS 142 were not effective in their
entirety until January 1, 2002, the goodwill acquired in business combinations which
occurred after September 30, 2001 fell under the condition of SFAS 142 requiring no
amortization of goodwill arising from transactions completed after June 30, 2001.
Therefore, goodwill arising from any such transactions has not been amortized.

Goodwill and intangible assets of a
reporting unit are reviewed for impairment if events or changes in circumstances indicate
that the carrying amount of its goodwill or intangible assets may not be recoverable.
Impairment of reporting unit goodwill is evaluated based on a comparison of the reporting
units carrying value to the implied fair value of the reporting unit. Conditions
that indicate that impairment of goodwill should be evaluated include a sustained decrease
in our market value or an adverse change in business climate. On an ongoing basis, we will
review goodwill for impairment on at least an annual basis with a valuation date of August
31 having been established as the date on which this annual review will take place.

# Contingencies

We evaluate whether a liability must
be recorded for contingencies based on whether a liability is probable and estimable. Our
most significant contingencies are related to our ongoing mySimon litigation and our lease
guarantee for office space in New York City (as described in Item 3  Legal
Proceedings and Note 10 of Item 8  Financial Statements in our
Annual Report on Form 10-K, respectively). If the financial condition of any of the
sublessees or the primary lessee were to deteriorate and thereby result in an inability to
make their lease payments, we would be required to make additional lease payments under
the guarantee. As of December 31, 2003, the total lease payments remaining until the end
of the lease term were $178.5 million, excluding the amounts attributable to our sublease.
In regards to the ongoing mySimon litigation, it is not possible to predict the amount of
damages attributable to corrective advertising that could be awarded in a re-trial;
however such amounts, if settled adversely to us, could be material to our results of
operations and financial condition.

RECENT ACCOUNTING
PROUNOUNCEMENTS

In November 2002, the FASB issued a
Consensus, which clarified certain issues within EITF 00-21, Revenue Arrangements
with Multiple Deliverables. The Consensus addresses how to allocate the revenue in
an arrangement involving multiple deliverables into separate units of accounting
consistent with the identified separate earnings processes of each deliverable for revenue
recognition purposes. The Issue also addresses how each element in a multiple-element
sales arrangement should be measured and allocated to the separate units of accounting in
the arrangement. The Consensus is effective prospectively for arrangements entered into in
fiscal periods beginning after June 15, 2003. The implementation of this Consensus has not
had a material effect on our operating results or financial position.

In December 2003, the FASB issued
FASB Interpretation (FIN) 46 (revised December 2003), Consolidation of Variable
Interest Entities, which addresses how a business enterprise should evaluate whether
it has a controlling interest in an entity through means other than voting rights and,
accordingly, should consolidate the entity. FIN 46R replaces FASB Interpretation No. 46,
Consolidation of Variable Interest Entities, which was issued in January 2003.
FIN 46R will be required to be applied to variable interests in variable interest entities
(VIEs) created after December 31, 2003. For variable interests in VIEs created before
January 1, 2004, the Interpretation will be applied beginning on January 1, 2004. For any
VIEs that must be consolidated under FIN 46R that were created before January 1, 2004, the
assets liabilities and non-controlling interests of the VIE initially would be measured at
their carrying amounts with any difference between the net amount added to the balance
sheet and any previously recognized interest being recognized as the cumulative effect of
an accounting change. If determining the carrying amounts is not practicable, fair value
at the date FIN 46R first applies may be used to measure the assets, liabilities and
non-controlling interest of the VIE. We are currently analyzing the impact of applying FIN
46R, however, we believe that the application of FIN 46R will not have a material impact
on our consolidated financial statements.

# CAUTIONARY STATEMENT
REGARDING FACTORS THAT MAY AFFECT OUR BUSINESS, FINANCIAL CONDITION AND FUTURE RESULTS

Our disclosure and analysis in this
report contains forward-looking statements. Forward-looking statements are any
statements about our future that are not statements of historical fact. Examples of
forward-looking statements include projections of earnings, revenues or other financial
items, statements of the plans and objectives of management for future operations,
statements concerning proposed new products or services, statements regarding future
economic conditions or performance, and any statement of assumptions underlying any of the
foregoing. In some cases, you can identify these statements by the use of words such as
may, will, expects, should,
believes, predicts, plans, anticipates,
estimates, potential, continue or the negative of
these terms, or any other words of similar meaning.

These statements are only
predictions. Any or all of our forward-looking statements in this report and in any of our
other public statements may turn out to be wrong. They can be affected by inaccurate
assumptions we might make or by known or unknown risks and uncertainties, some of which
are outlined below under Risk Factors. Many risk factors mentioned in
the discussion in this report will be important in determining future results.
Consequently, no forward-looking statement can be guaranteed. Actual events or results may
differ materially from the outcomes we predict.

These forward-looking statements are
made only as of the date of this report, and we undertake no obligation to publicly update
any forward-looking statements, whether as a result of new information, future events or
otherwise. You are advised, however, to consult any further disclosures we make on related
subjects in our 10-Q and 8-K reports to the SEC. Also note that we provide the following
cautionary discussion of risks, uncertainties and possibly inaccurate assumptions relevant
to our businesses. These are factors that we think could cause our actual results to
differ materially from expected and historical results. Other factors besides those listed
here could also adversely affect us. This discussion is provided as permitted by the
Private Securities Litigation Reform Act of 1995.

RISK FACTORS

Our business is subject to a number
of risks that may affect our financial condition or our results of operations. These risks
are described below.

THERE CAN BE NO ASSURANCES THAT
OUR REVENUES WILL GROW IN 2004 OR THAT THEY WILL NOT DECREASE.

There can be no assurance that our revenues
will grow in 2004 or that they will not decrease. Some of the factors that might impede
our revenue growth in the future include:

| | o | weakness in corporate and consumer spending
for technology, resulting in a decrease in technology marketing,
which is the primary source of our revenues
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | our failure to attract new marketing customers, especially in the area of consumer
electronics or areas outside of technology, due to competition from other media outlets,
dissatisfaction with our services, reduced advertising budgets or the failure of customers
to embrace the Internet as an advertising vehicle
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | the loss of marketing customers or a reduction in spending by marketing customers due to
dissatisfaction with our services or decreases in our customers advertising budgets
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | loss of advertising and other marketing opportunities to competitors, especially as other
media companies increase their offerings of information and shopping services in the
fields of personal technology, games and entertainment, and business technology
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | inability  to attract  advertisers  for our newer  websites,  such as those  focused on music and consumer electronics
| | - | ----------------------------------------------------------------------------------------------------------------------

| | o | a loss of revenues from our publishing operations, especially from our custom publishing
service in which we produce a customized publication for a single advertiser
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | a decline in general economic conditions
| | - | ----------------------------------------

| | o | disruption  of our  operations  due to technical  difficulties,  system  downtime,  Internet  brownouts or
         denial of service or other similar attacks
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | disruption to our operations,  employees,  partners,  customers and facilities  caused by international or
         domestic terrorist attacks or armed conflict
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------

Any failure to grow our revenues in
2004 as anticipated could materially adversely affect our business, operating results and
financial condition.

WE HAVE GENERATED SIGNIFICANT
LOSSES SINCE INCEPTION AND CANNOT ASSURE YOU THAT WE WILL REPORT POSITIVE NET INCOME IN
THE FUTURE. IF OUR REVENUES DO NOT INCREASE, WE MAY NOT BE ABLE TO ADJUST SPENDING IN A
TIMELY MANNER TO ACHIEVE POSITIVE NET INCOME.

We have generated an operating loss
in seven of the past eight years and have generated a net loss in six of the past eight
years. For the year ended December 31, 2003, we recognized a net loss of $26.3 million and
have an accumulated deficit of $2.5 billion at December 31, 2003.

One of the factors contributing to
our losses in the past two years was our inability to decrease expenses in a sufficiently
timely manner to offset revenue shortfalls. Also contributing to our losses were costs
associated with expense reduction measures, such as severance, abandoned real estate
expenses, asset impairment and contract termination costs. If we experience future
shortfalls in our revenues, we may again be unable to adjust spending in a timely manner
to avoid an increase in operating losses and net losses and we may incur costs associated
with reducing our expenses, such as severance. Any significant shortfall in revenues in
relation to planned expenditures could materially reduce our operating results and could
adversely affect our financial condition.

COMPETITION IS INTENSE. OUR
FAILURE TO COMPETE SUCCESSFULLY COULD ADVERSELY AFFECT OUR PROSPECTS AND FINANCIAL
RESULTS.

The market for Internet content and
services is intensely competitive and rapidly evolving. It is not difficult to enter this
market and current and new competitors or companies from traditional media can launch new
Internet sites rapidly.

We compete for advertisers, users and
business partners with numerous companies offering information and content in our primary
areas of focus, personal technology, games and entertainment, and business technology.
These companies generally fall into the following categories:

| | o | Traditional offline media, such as television, radio and print, each of which has numerous
content providers offering content in our areas of focus;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------

| | o | Internet sites, including large general purpose portals, some of whom have sought to
expand their content offerings in our areas of expertise such as personal technology and
games, as well as niche sites focused on the same vertical markets that we are;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | Online comparison shopping services, including those operated by the large general purpose
portals and those dedicated to comparison shopping, many of whom have sought to expand the
reviews and information offering on their sites;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | Online retail and auction companies offering goods and services similar to those that can
be obtained through our sites; and
| | - | ----------------------------------------------------------------------------------------------------------------------------

| | o | Search engines, which attract users looking for goods and services similar to those
offered on our site, as well as marketing expenditures by companies trying to reach those
users.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

We cannot assure you that we will
compete successfully with current or future competitors. Moreover, increased competition
could result in price reductions, reduced margins or loss of market share, any of which
could have a material adverse effect on our future revenue and profits. If we do not
compete successfully for new users and advertisers, our financial results may be
materially and adversely affected.

IF WE ENGAGE IN FURTHER WORKFORCE
REDUCTIONS, WE WILL INCUR SEVERANCE AND SIMILAR COSTS THAT COULD CAUSE OUR OPERATING
RESULTS TO BE LOWER THAN FORECAST IN THE QUARTER IN WHICH THOSE ACTIVITIES OCCUR.

In 2002 and 2003, we undertook to
simplify and streamline our businesses through workforce reductions and business closures
that resulted in integration, realignment and severance costs of approximately $9.8
million. If we reduce our workforce or business operations further or take other steps to
simplify our business and reduce our operating costs, we could experience additional
restructuring and severance costs in amounts that could be material. These costs could
cause our operating results for the quarter in which the actions occur to be lower than
our forecasted results.

OUR CONTENT AND SERVICES MAY NOT
ACHIEVE CONTINUED ACCEPTANCE, WHICH COULD ADVERSELY AFFECT OUR PROFITABILITY.

Our future success depends upon our ability
to deliver original and compelling content and services that attract and retain users. The
successful development and production of content and services is subject to numerous
uncertainties, including the ability to:

| | o | anticipate and successfully respond to rapidly changing consumer tastes and preferences
| | - | ---------------------------------------------------------------------------------------

| | o | fund new program development
| | - | ----------------------------

| | o | attract and retain qualified editors, producers, writers, and technical personnel
| | - | ---------------------------------------------------------------------------------

| | o | successfully anticipate and respond to the increased acceptance of methods other than personal computers to access the Internet
| | - | -------------------------------------------------------------------------------------------------------------------------------

We have announced that in 2004, we
will expand our content offerings into the area of music, an area in which we have limited
past experience. We may expand into other new content areas in 2004 where we have limited
or no experience. We cannot assure you that our content and services will be attractive to
a sufficient number of users to generate revenues consistent with our estimates or
sufficient to sustain operations. In addition, we cannot assure you that we will develop
any new content or services in a timely or cost-effective manner. If we are unable to
develop content and services that allow us to attract, retain and expand a loyal user base
that is attractive to advertisers and sellers of technology products, we will be unable to
generate revenue.

OUR PAID SERVICES MAY NOT CONTINUE
TO ACHIEVE ACCEPTANCE IN THE MARKETPLACE, WHICH COULD ADVERSELY AFFECT OUR PROSPECTS AND
FINANCIAL RESULTS.

We have started to charge users to
access certain content and services that have previously been free. GameSpot Complete is
one recent example where we charge subscribers a fee to access portions of the GameSpot
Internet site. Another example is Upload Paid Services, in which developers of software
must pay a fee to list their products on our Download.com site. We cannot offer any
assurances that users will continue to pay for content services that have previously been
free. In addition, we may not be able to grow our revenues from users successfully if we
cannot create new products and services that our users will be willing to pay us a fee to
receive. Our inability to maintain or grow our paid offerings may adversely affect our
financial condition.

WE DEPEND ON ARRANGEMENTS WITH
THIRD PARTIES FOR INTERNET TRAFFIC TO OUR SITES AND OUR FAILURE TO DEVELOP AND MAINTAIN
RELATIONSHIPS WITH THIRD PARTIES COULD ADVERSELY AFFECT OUR FINANCIAL CONDITION.

We rely on the cooperation of owners
and operators of other Internet sites with whom we have syndication and other arrangements
to generate traffic for our Internet sites. Our ability to maintain these relationships
will continue to be critical to the success of our Internet operations. If we are unable
to develop and maintain satisfactory relationships with such third parties on acceptable
commercial terms, or if our competitors are better able to capitalize on these
relationships, our financial condition and operating results could be materially and
adversely affected.

# MOST OF OUR REVENUE IS
DERIVED FROM SHORT-TERM CONTRACTS.

Our revenues are derived in large
part from the sale of advertising and other fees, such as activity-based fees, from
sellers of personal and business technology products on the Internet. We expect that we
will continue to derive a significant portion of our revenue from these services. Most of
our advertising contracts are subject to termination by the customer at any time on
thirty-days prior written notice.

A SIGNIFICANT PERCENTAGE OF OUR
REVENUE IS DERIVED FROM ACTIVITY-BASED FEES GENERATED FROM OUR COMMERCE INTERNET SITES. IF WE ARE
UNABLE TO ATTRACT QUALIFIED USERS FOR WHICH MERCHANTS ARE WILLING TO PAY US ACTIVITY-BASED FEES, OUR
FINANCIAL CONDITION MAY BE ADVERSELY AFFECTED.

We earn fees when users visit the
sites of our merchant partners to view products that are listed on our commerce Internet
sites. There are currently many other businesses that offer similar services. It is very
easy for new businesses to begin operations in this space. In addition, users may prefer
to contact merchants directly rather than return to our commerce Internet sites to make
future purchases. If we are unable to continue to attract users to our shopping services
or to maintain the fees we charge merchants for sending users to their sites, then our
financial condition may be adversely affected. Most of our agreements with merchants under
which activity-based fees are earned are terminable by either party on ten to thirty days notice.

WE DEPEND ON, AND RECEIVE, A
SIGNIFICANT PERCENTAGE OF OUR REVENUE FROM A RELATIVELY SMALL NUMBER OF LARGE ADVERTISERS.

A relatively small number of
advertisers contribute a significant percentage of our revenue. Our top one hundred
advertisers contributed approximately 78% of our U.S. revenue in 2003. These advertising
clients may not continue to use our services to the same extent, or at all, in the future.
A significant reduction in advertising by one or more of our largest advertisers could
have a material adverse effect on our financial performance and condition.

OUR ADVERTISING AND OTHER
OPERATING REVENUES MAY BE SUBJECT TO FLUCTUATIONS, WHICH COULD HAVE A MATERIAL ADVERSE
EFFECT ON OUR REVENUES AND OPERATING RESULTS.

We believe that marketing spending on
the Internet, as in traditional media, fluctuates significantly with economic cycles and
during any calendar year, with spending being weighted towards the end of the year to
reflect trends in the retail industry. Marketing expenditures account for a majority of
our revenues. Fluctuations in marketing expenditures generally, or with respect to
Internet-based marketing specifically, could therefore have a material adverse effect on
our business, financial condition or operating results.

# INABILITY TO ATTRACT AND
RETAIN KEY PERSONNEL COULD ADVERSELY AFFECT OUR ABILITY TO OPERATE.

Our success depends to a large extent
on the continued services of our senior management team. Our success is also dependent on
our ability to identify, attract, retain and motivate other highly skilled officers, key
employees and personnel in a very competitive job environment. We do not have employment
agreements with any of our executive officers and do not maintain key person
life insurance policies on any of our officers or other employees.

WE COULD BE SUBJECT TO A PATENT
INFRINGEMENT CLAIM THAT COULD RESULT IN COSTLY LITIGATION, THE PAYMENT OF DAMAGES OR THE
NEED TO REVISE THE WAY WE CONDUCT OUR BUSINESS.

We have on occasion in the past been
approached by holders of patents alleging that our services infringe on these patents.
Many companies that offer services similar to ours have been approached and, in some
cases, sued by other patent holders alleging patent infringement. We could be required to
enter into costly royalty arrangements with the holders of these patents or to revise our
services to ensure non-infringement or to avoid litigation. If we are unsuccessful in
avoiding litigation, we would incur significant expenses and could be subject to damages
award, including damages for past infringement and royalties for future usage of the
patented method or technology. Any royalty payment, litigation expenses or damages award
could have a material adverse effect on our financial condition or results of operations.

WE MAY HAVE DIFFICULTIES WITH OUR
ACQUISITIONS AND INVESTMENTS, WHICH COULD ADVERSELY AFFECT OUR GROWTH AND FINANCIAL
CONDITION.

From time to time, we may consider
new business opportunities and ventures, including acquisitions, in a broad range of
areas. Any decision by us to pursue a significant business expansion or new business
opportunity would be accompanied by risks, including, among others:

| | o | the investment of a substantial amount of capital, which could have a material adverse
effect on our financial condition and our ability to implement our existing business
strategy
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | the issuance of additional equity interests, which would be dilutive to current stockholders
| | - | --------------------------------------------------------------------------------------------

| | o | the additional, substantial burdens on our management personnel and financial and operational systems
| | - | -----------------------------------------------------------------------------------------------------

| | o | the difficulty of assimilating the operations, technology and personnel of the combined companies
| | - | -------------------------------------------------------------------------------------------------

| | o | the potential disruption of our ongoing business
| | - | ------------------------------------------------

| | o | the possible inability to retain key technical and managerial personnel
| | - | -----------------------------------------------------------------------

| | o | additional expenses associated with amortization of purchased intangible assets
| | - | -------------------------------------------------------------------------------

| | o | additional operating losses and expenses associated with the activities and expansion of acquired
| | - | -------------------------------------------------------------------------------------------------

| | o | the possible impairment of relationships with existing employees and advertising customers
| | - | ------------------------------------------------------------------------------------------

| | o | the potential undisclosed liabilities associated with acquired businesses
| | - | -------------------------------------------------------------------------

We cannot assure you that we will be
successful in overcoming these risks or any other problems encountered in connection with
any transaction intended to expand our business or that this type of transaction will be
profitable.

THERE ARE A NUMBER OF RISKS
ASSOCIATED WITH INTERNATIONAL OPERATIONS THAT COULD ADVERSELY AFFECT OUR BUSINESS.

We have wholly-owned operations in
Australia, France, Germany, Japan, Singapore, Switzerland and the United Kingdom. In
addition, we have an international presence through joint ventures in China and Korea. We
also have license arrangements in various other countries throughout the world.

There are certain risks inherent in
doing business in international markets, such as the following:

| | o | weak economic conditions in foreign markets, especially in the technology sector
| | - | --------------------------------------------------------------------------------

| | o | uncertainty of product acceptance by different cultures
| | - | -------------------------------------------------------

| | o | unforeseen changes in regulatory requirements
| | - | ---------------------------------------------

| | o | difficulties in staffing and managing multinational operations
| | - | --------------------------------------------------------------

| | o | currency exchange-rate fluctuations
| | - | -----------------------------------

| | o | difficulties in finding appropriate foreign licensees or joint venture partners
| | - | -------------------------------------------------------------------------------

| | o | potential adverse tax consequences
| | - | ----------------------------------

There is a risk that such factors
will have an adverse effect on our ability to successfully operate internationally and on
our profits and liquidity.

# CHANGES IN REGULATIONS
COULD ADVERSELY AFFECT THE WAY THAT WE OPERATE.

It is possible  that new laws and  regulations  in the U.S. and elsewhere  will be adopted  covering  issues  affecting our
business, including:

| | o | privacy
| | - | -------

| | o | copyrights, trademarks and domain names
| | - | ---------------------------------------

| | o | obscene or indecent communications
| | - | ----------------------------------

| | o | pricing, characteristics and quality of Internet products and services
| | - | ----------------------------------------------------------------------

| | o | the ability of children to access our services
| | - | ----------------------------------------------

| | o | taxation of Internet usage and transactions
| | - | -------------------------------------------

Increased government regulation, or the application of existing laws to online
activities, could:

| | o | decrease the growth of the Internet
| | - | -----------------------------------

| | o | reduce our revenues
| | - | -------------------

| | o | increase our operating expenses
| | - | -------------------------------

| | o | expose us to significant liabilities
| | - | ------------------------------------

Any of these occurrences could have a
material adverse effect on our profits and liquidity.

We cannot be sure what effect any
future material noncompliance by us with these laws and regulations or any material
changes in these laws and regulations could have on our business.

# WE MAY BE SUBJECT TO
SYSTEM DISRUPTIONS, WHICH COULD ADVERSELY AFFECT OUR REVENUES.

Our ability to attract and maintain
relationships with users, advertisers, merchants and strategic partners will depend on the
satisfactory performance, reliability and availability of our Internet sites and network
infrastructure. Our Internet advertising revenues relate directly to the number of
advertisements and other marketing opportunities delivered to our users. System
interruptions or delays that result in the unavailability of Internet sites or slower
response times for users would reduce the number of advertisements and sales leads
delivered to such users and reduce the attractiveness of our Internet sites to users,
strategic partners and advertisers or reduce the number of impressions delivered and
thereby reduce revenue. On two occasions in 2002, we were obligated to suspend operation
of significant portions of our sites as a result of moving our data centers. In 2003, we
suffered service disruptions on several occasions due to equipment failure. We will
continue to suffer future interruptions from time to time whether due to natural
disasters, telecommunications failures, power failures, other system failures,
maintenance, viruses, hacking or other events. System interruptions or slower response
times could have a material adverse effect on our revenues and financial condition.

OUR NETWORKS MAY BE VULNERABLE TO
UNAUTHORIZED PERSONS ACCESSING OUR SYSTEMS, WHICH COULD DISRUPT OUR OPERATIONS AND RESULT
IN THE THEFT OF OUR PROPRIETARY INFORMATION.

A party who is able to circumvent our
security measures could misappropriate proprietary information or cause interruptions or
malfunctions in our Internet operations. We may be required to expend significant capital
and resources to protect against the threat of security breaches or to alleviate problems
caused by breaches in security. For example, so-called spiders have and can be
used in efforts to copy our databases, including our database of technology products and
prices.

Concerns over the security of
Internet transactions and the privacy of users may also inhibit the growth of the
Internet, particularly as a means of conducting commercial transactions. Our activities
and the activities of third party contractors involve the storage and transmission of
proprietary information, such as computer software or credit card numbers. Accordingly,
security breaches could expose us to a risk of loss or litigation and possible liability.
We cannot assure you that contractual provisions attempting to limit our liability in
these areas will be successful or enforceable, or that other parties will accept such
contractual provisions as part of our agreements.

OUR BUSINESS INVOLVES RISKS OF
LIABILITY CLAIMS FOR INTERNET AND PRINT CONTENT OR TECHNOLOGY, WHICH COULD RESULT IN
SIGNIFICANT COSTS.

As a publisher and a distributor of
content through the Internet and print publications, we may face potential liability for:

| | o | defamation
| | - | ----------

| | o | negligence
| | - | ----------

| | o | copyright, patent or trademark infringement
| | - | -------------------------------------------

| | o | other claims based on the nature and content of the materials published or distributed
| | - | --------------------------------------------------------------------------------------

These types of claims have been
brought, sometimes successfully, against online services and publishers of print
publications. In addition, we could be exposed to liability in connection with material
indexed or offered on our Internet sites or for information collected from and about our
users. For example, our Download.com directory includes listings for file-sharing software
that may be subject to challenge under copyright laws. Although we do not believe that our
listing of any such software should expose us to liability, it is possible that such a
claim may be successfully brought.

There has been a recent increase in
the granting and attempted enforcement of business process patents that cover practices
that may be widely employed in the Internet industry. If we are found to violate any such
patent, and we are unable to enter into a license agreement on reasonable terms, our
ability to offer services could be materially and adversely affected. We cannot assure you
that third parties or users will not bring claims against us relating to proprietary
rights or use of personal information. We do not have insurance for patent infringement.

Our insurance may not cover potential
claims of defamation, negligence and similar claims, and it may or may not apply to a
particular claim or be adequate to reimburse us 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 our financial condition.

# OUR FINANCIAL CONDITION
MAY BE IMPACTED BY CERTAIN CONTINGENCIES.

As further described in Item 3 
Legal Proceedings, we are a party to a trademark infringement suit filed
against mySimon, Inc., a subsidiary of CNET. There is a possibility that we may be liable
for damages as a result of this lawsuit; however, the extent of potential damages is
unknown. While we believe that our losses will be covered by insurance, our results of
operations and financial condition may be materially and adversely impacted by a loss or
an adverse settlement. In addition, in conjunction with the ZDNet acquisition, we assumed
a guarantee of the obligations of Ziff Davis Media Inc. under a New York City office lease
for a total of 399,773 square feet. In connection with that guarantee, we also have a
letter of credit for $15.2 million outstanding as a security deposit. This lease expires
in 2019. The average cost per square foot is approximately thirty dollars over the
remaining term of the lease. We currently occupy 49,140 square feet of the office space
covered under this lease. Ziff Davis Media Inc. currently occupies 144,682 square feet of
this space. There are three additional subleases, The Bank of New York, FOJP Risk
Management and Softbank, who collectively occupy a total of 205,951 square feet. During
2002, Softbank subleased its 30,885 square feet to The Beanstalk Group. In 2003,
Ziff-Davis Media Inc. subleased 61,494 square feet of space formerly occupied by Ziff
Davis Medias operations to FOJP Risk Management. As of December 31, 2003, the total
minimum lease payments remaining until the end of the lease term were $178.5 million,
excluding the amounts attributable to CNETs sublease. If the financial condition of
any of the sublessees or the primary lessee were to deteriorate and thereby result in an
inability to make their lease payments, CNET would be required to make additional lease
payments under the guarantee, which would adversely impact our results of operations and
financial condition.

# OUR DEBT OBLIGATIONS
EXPOSE US TO RISKS THAT COULD ADVERSELY AFFECT OUR FINANCIAL CONDITION.

At December 31, 2003 we had
approximately $113.7 million outstanding of 5% Convertible Subordinated Notes due 2006. We
may incur substantial additional debt in the future. The level of our indebtedness, among
other things, could:

| | o | make it difficult for us to make payments on our debt as described below
| | - | ------------------------------------------------------------------------

| | o | make it difficult for us to obtain any necessary financing in the future for
working capital, capital expenditures,debt service, acquisitions or general corporate purposes
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | limit our flexibility in planning for or reacting to changes in our business
| | - | ----------------------------------------------------------------------------

| | o | reduce funds available for use in our operations
| | - | ------------------------------------------------

| | o | impair our ability to incur additional debt because of financial and other restrictive covenants
| | - | ------------------------------------------------------------------------------------------------

| | o | make us more vulnerable in the event of a downturn in our business or an increase in interest rates
| | - | ---------------------------------------------------------------------------------------------------

If we experience a decline in
revenues due to any of the factors described in this Risk Factors section or otherwise, we
could have difficulty paying interest and principal amounts due on our indebtedness. If we
are unable to generate sufficient cash flow or otherwise obtain funds necessary to make
required payments, or if we fail to comply with the various requirements of our
indebtedness, we would be in default, which would permit the holders of our indebtedness
to accelerate the maturity of the indebtedness and could cause defaults under our other
indebtedness. Any default under our indebtedness could have a material adverse effect on
our financial condition. If we do not achieve and sustain positive net income, we could
have difficulty repaying or refinancing our outstanding debt.

# THE PRICE OF OUR COMMON
STOCK IS SUBJECT TO WIDE FLUCTUATION.

The trading price of our common stock
is subject to wide fluctuations, which are a result of a number of events and factors,
including:

| | o | quarterly variations in operating results
| | - | -----------------------------------------

| | o | announcements of innovations requiring significant expenditures
| | - | ---------------------------------------------------------------

| | o | new products, strategic developments or business
combinations by us or our competitors
| | - | --------------------------------------------------------------------------------------

| | o | changes in our financial estimates or that of securities analysts
| | - | -----------------------------------------------------------------

| | o | changes in recommendations of securities analysts
| | - | -------------------------------------------------

| | o | the operating and securities price performance of other companies that investors may deem comparable to us
| | - | ----------------------------------------------------------------------------------------------------------

| | o | news reports, including those relating to trends in the Internet
| | - | ----------------------------------------------------------------

| | o | other events or factors
| | - | -----------------------

In addition, the stock market in
general, and the market prices for Internet-related companies in particular, have
experienced extreme volatility that often has been unrelated to the operating performance
of these companies. These broad market and industry fluctuations may adversely affect the
trading price of our common stock. These fluctuations may make it more difficult to use
stock as currency to make acquisitions that might otherwise be advantageous, or to use
stock options as a means to attract and retain employees.

Any shortfall in revenue or earnings
compared to our or analysts or investors expectations could cause, and has in
the past caused an immediate and significant decline in the trading price of our common
stock. In addition, we may not learn of such shortfalls or delays until late in the fiscal
quarter, which could result in an even more immediate and greater decline in the trading
price of our common stock.

WE HAVE A SUBSTANTIAL NUMBER OF
SHARES OF COMMON STOCK THAT MAY BE SOLD, WHICH COULD AFFECT THE TRADING PRICE OF OUR
COMMON STOCK.

We have a substantial number of
shares of common stock subject to stock options, and our notes may be converted into
shares of our common stock. In addition, as of December 31, 2003, we have over 257 million
shares of authorized but unissued shares of our common stock that are available for future
sale. As of December 31, 2003, we also had 4,801,136 options available to grant under our
employee stock option plans. We cannot predict the effect, if any, that future sales of
shares of our common stock, or the availability of shares of our common stock for future
sale, will have on the market price of our common stock. Sales of substantial amounts of
our common stock, including shares issued in connection with acquisitions, upon the
exercise of stock options or warrants or the conversion of debt securities, or the
perception that such sales could occur, may adversely affect prevailing market prices for
our common stock.

PROVISIONS OF OUR CERTIFICATE OF
INCORPORATION, BYLAWS AND DELAWARE LAW COULD DETER TAKEOVER ATTEMPTS.

Some provisions in our certificate of
incorporation and bylaws could delay, prevent or make more difficult a merger, tender
offer, proxy contest or change of control. Our stockholders might view any transaction of
this type as being in their best interest since the transaction could result in a higher
stock price than the current market price for our common stock. Among other things, our
certificate of incorporation and bylaws:

| | o | authorize our board of directors to issue preferred stock with the terms of each series to
be fixed by our board of directors
| | - | -----------------------------------------------------------------------------------------------------------------------------

| | o | divide our board of directors into three classes so that only approximately one-third of
the total number of directors is elected each year
| | - | -------------------------------------------------------------------------------------------------------------------------------------------

| | o | permit directors to be removed only for cause
| | - | ---------------------------------------------

| | o | specify advance notice requirements for stockholder proposals and director nominations
| | - | --------------------------------------------------------------------------------------

In addition, with some exceptions,
the Delaware General Corporation Law restricts or delays mergers and other business
combinations between us and any stockholder that acquires 15% or more of our voting stock.

OWNERSHIP OF OUR COMMON STOCK IS
CONCENTRATED IN A SMALL GROUP OF STOCKHOLDERS WHOSE INTERESTS MAY DIFFER FROM THOSE OF
OTHER STOCKHOLDERS.

As of December 31, 2003, 43.3 percent
of our outstanding common stock is held by eight stockholders. Shelby W. Bonnie, our
chairman and chief executive officer, holds 8.8 percent of our outstanding common
stock.The concentration of ownership of our common stock may delay, prevent or
deter a change in control, could deprive other stockholders of an opportunity to receive a
premium for their common stock as part of a sale of CNET or its assets and may adversely
affect the market price of our common stock. Also, these stockholders can exert
significant control over actions requiring the approval of a majority of the voting stock,
including amendments to our charter. Commercial and other transactions between us, on the
one hand, and the directors, officers and major stockholders of CNET and their affiliates,
on the other, create potential for, or could result in, conflicting interests.

# CHANGES TO ACCOUNTING
RULES REGARDING GOODWILL COULD MAKE OUR REPORTED RESULTS LESS PREDICTABLE.

In July 2001, the Financial
Accounting Standards Board changed accounting rules regarding the accounting for goodwill.
Changes to these rules may have a significant impact on our reported financial results.
The new FASB standards relating to accounting for goodwill could make our
acquisition-related charges less predictable in any given reporting period. Statement of
Accounting Standards No. 142, Goodwill and Other Intangible Assets,
establishes a new standard for accounting for goodwill acquired in a business combination.
It continues to require recognition of goodwill as an asset but does not permit
amortization of goodwill as was required by Accounting Principles Board Opinion No. 17,
Intangible Assets. Under the new statement, goodwill is separately tested for
impairment using a fair-value-based approach annually and when an event occurs indicating
the potential for impairment. The change from an amortization approach to an impairment
approach will apply to previously recorded goodwill, as well as goodwill arising from
acquisitions completed after the application of the new standard. Upon adoption of SFAS
142, our goodwill amortization charges ceased.

We performed our annual goodwill and
intangible asset impairment test as of August 31, 2003. The fair value of our reporting
units was determined using a combination of the income and the market valuation
approaches. We determined that the carrying value of goodwill and other intangible assets
for all of our reporting units did not exceed their implied fair values. In the
application of these valuation approaches, we were required to make estimates of future
operating trends and judgments on discount rates and other variables. Actual future
results and other assumed variables could differ from these estimates, including as a
result of changes in the economy, the business in which we operate, and/or our own
relative performance. It is possible that we will incur less frequent, but larger,
impairment charges related to the goodwill already recorded as well as any goodwill
arising out of future acquisitions. Accordingly, our future earnings may be subject to
significant volatility, particularly on a period-to-period basis.

POTENTIAL CHANGES TO ACCOUNTING
RULES REGARDING STOCK-BASED COMPENSATION COULD ADVERSELY IMPACT OUR REPORTED RESULTS.

In December 2002, the FASB issued
SFAS 148, Accounting for Stock-Based Compensation, which is an amendment of
SFAS 123, Accounting for Stock-Based Compensation. SFAS 148 amends SFAS 123 to
provide alternative methods of transition for a voluntary change to the fair value based
method of accounting for stock-based employee compensation. This pronouncement, as well
as the FASBs commitment to bring about convergence of accounting standards with the
International Accounting Standards Board (which is currently proposing new standards on
stock-based compensation) could indicate a movement by the FASB to make current voluntary
reporting mandatory. Since we currently report stock-based compensation using the
intrinsic-value method, should the FASB require companies to expense stock-based
compensation based on fair-value measurements rather than allow voluntary reporting, this
potential change could increase our future losses or reduce our future earnings.

# Item 7A. Quantitative
and Qualitative Disclosures About Market Risk

We are exposed to the impact of
interest rate changes and changes in the market values of our investments.

# Interest Rate Risk

Our exposure to market rate risk for
changes in interest rates relates primarily to our investment portfolio. We have not used
derivative financial instruments in our investment portfolio. We invest our excess cash in
debt instruments of the United States Government and its agencies, and in high-quality
corporate issuers that, by policy, limit the amount of credit exposure to any one issuer.
We protect and preserve our invested funds by limiting default, market and reinvestment
risk. Investments in both fixed rate and floating rate interest earning instruments carry
a degree of interest rate risk. Fixed rate securities may have their fair market value
adversely impacted due to a rise in interest rates, while floating rate securities may
produce less income than expected if interest rates fall. Due in part to these factors,
our future investment income may fall short of expectations due to changes in interest
rates, or we may suffer losses in principal if forced to sell securities that have
declined in market value due to changes in interest rates.

# Investment Risk

We invest in equity instruments of
privately held, information technology companies for business and strategic purposes.
These investments are included in other long-term assets and are accounted for under the
cost method, as we do not have the ability to exert significant influence over the
investee or their operations. For these non-quoted investments, our policy is to regularly
review the assumptions underlying the operating performance and cash flow forecasts in
assessing the carrying values. We identify and record impairment losses on investments
when events and circumstances indicate that such assets might be impaired.

# Foreign Currency Risk

The revenues and expenses associated
with our overseas operations are exposed to foreign currency risk. Changes in value of the
U.S. dollar against the currencies in which those operations are conducted causes increases
or decreases in the financing of those operations, and results in an increase or
decrease in our recorded revenues and expenses and may impact our operating income.
We monitor our foreign currency exposures regularly to assess our risk and to determine if
we should hedge our currency positions.

---

# Item 8. Financial
Statements and Supplementary Data

# Independent
Auditors Report

The Board of Directors
and StockholdersCNET Networks, Inc.

We have audited the accompanying
consolidated balance sheets of CNET Networks, Inc. and subsidiaries as of December 31,
2003 and 2002 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,
2003. These consolidated financial statements are the responsibility of the Companys
management. Our responsibility is to express an opinion on these consolidated financial
statements based on our audits.

We conducted our audits in accordance
with auditing standards generally accepted in the United States of America. 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 consolidated
financial statement presentation. We believe that our audits provide a 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 Networks, Inc. and subsidiaries as of December 31,
2003 and 2002, and the results of their operations and their cash flows for each of the
years in the three-year period ended December 31, 2003, in conformity with accounting
principles generally accepted in the United States of America.

As discussed in note 1 to the
consolidated financial statements, the Company adopted the provisions of Statement of Financial
Accounting Standards (SFAS) No. 142, Goodwill
and Other Intangible Assets on January 1, 2002.

/s/ KPMG LLP

San Francisco, CaliforniaJanuary 26, 2004

---

# CNET NETWORKS, INC. CONSOLIDATED
STATEMENTS OF OPERATIONS (in thousands, except
share and per share data)

|                                             | Year Ended December 31,
|-------------------------------------------- | -----------------------
|
|Revenues:                                    |                        
|Internet                                     |                        
|Publishing                                   |                        
|                                             |                        
|Total revenues                               |                        
|Operating expenses:                          |                        
|Cost of revenues                             |                        
|Sales and marketing                          |                        
|General and administrative                   |                        
|Depreciation                                 |                        
|Amortization of intangible assets            |                        
|Asset impairment                             |                        
|                                             |                        
|Total operating expenses                     |                        
|                                             |                        
|                                             |                        
|Operating loss                               |                        
|Non-operating income (expense):              |                        
|Realized gains on sale of investments        |                        
|Realized losses on sale or impairment of     |                        
|investments                                  |                        
|Interest income                              |                        
|Interest expense                             |                        
|Other                                        |                        
|                                             |                        
|                                             |                        
|Total non-operating income (expense)         |                        
|                                             |                        
|Loss before income taxes                     |                        
|Income tax expense (benefit)                 |                        
|                                             |                        
|                                             |                        
|Net loss                                     |                        
|                                             |                        
|                                             |                        
|Basic and diluted net loss per share         |                        
|                                             |                        
|Shares used in calculating basic and diluted |                        
|net loss per share                           |                        
|                                             |                        

See accompanying notes to the
consolidated financial statements.

# CNET NETWORKS, INC. CONSOLIDATED BALANCE
SHEETS (in thousands, except
share and per share data)

|                                                    | December 31,
|--------------------------------------------------- | ------------
|
|ASSETS                                              |             
|Current Assets:                                     |             
|Cash and cash equivalents                           |             
|Investments in marketable debt securities           |             
|Accounts receivable, net                            |             
|Other current assets                                |             
|                                                    |             
|Total current assets                                |             
|                                                    |             
|Restricted cash                                     |             
|Investments in marketable debt securities           |             
|Property and equipment, net                         |             
|Other assets                                        |             
|Intangible assets, net                              |             
|Goodwill                                            |             
|                                                    |             
|Total assets                                        |             
|                                                    |             
|LIABILITIES AND STOCKHOLDERS' EQUITY                |             
|Current liabilities:                                |             
|Accounts payable                                    |             
|Accrued liabilities                                 |             
|Current portion of long-term debt                   |             
|                                                    |             
|Total current liabilities                           |             
|Non-current liabilities:                            |             
|Long-term debt                                      |             
|Other liabilities                                   |             
|                                                    |             
|Total liabilities                                   |             
|Stockholders' equity:                               |             
|Common stock; $0.0001 par value; 400,000,000 shares |             
|authorized; 142,100,372 outstanding at              |             
|December 31, 2003 and 139,251,879 outstanding       |             
|at December 31, 2002                                |             
|Notes receivable from stockholders                  |             
|Additional paid-in-capital                          |             
|Accumulated other comprehensive loss                |             
|Treasury stock, at cost                             |             
|Accumulated deficit                                 |             
|                                                    |             
|Total stockholders' equity                          |             
|                                                    |             
|Total liabilities and stockholders' equity          |             
|                                                    |             

See accompanying notes to the
consolidated financial statements.

# CNET NETWORKS, INC. CONSOLIDATED
STATEMENTS OF CASH FLOWS (in thousands)

|                                                         | Year Ended December 31,
|-------------------------------------------------------- | -----------------------
|
|Cash flows from operating activities:                    |                        
|Net Loss                                                 |                        
|Adjustments to reconcile net loss to net cash used in    |                        
|operating activities:                                    |                        
|Depreciation and amortization                            |                        
|Asset impairment and disposals                           |                        
|Deferred taxes                                           |                        
|Noncash interest                                         |                        
|Loss (gain) on debt retirement                           |                        
|Noncash stock compensation                               |                        
|Allowance for doubtful accounts                          |                        
|Services exchanged for cost method investments           |                        
|(Gain) loss on sale and impairment of marketable         |                        
|securities and privately held investments                |                        
|Loss on fixed assets due to lease abandonment            |                        
|Changes in operating assets and liabilities, net of      |                        
|acquisitions:                                            |                        
|Accounts receivable                                      |                        
|Other assets                                             |                        
|Accounts payable                                         |                        
|Accrued liabilities                                      |                        
|Other liabilities                                        |                        
|Tax benefit from exercises of stock options              |                        
|Foreign currency translation gain (loss)                 |                        
|                                                         |                        
|Net cash used in operating activities                    |                        
|                                                         |                        
|Cash flows from investing activities:                    |                        
|Purchase of marketable debt securities                   |                        
|Proceeds from sale of marketable debt securities         |                        
|Proceeds from sale of marketable equity investments      |                        
|Proceeds from sale of (investments in)                   |                        
|privately held companies                                 |                        
|Proceeds from asset sales                                |                        
|Net cash paid for acquisitions                           |                        
|Capital expenditures                                     |                        
|                                                         |                        
|Net cash provided by investing activities                |                        
|                                                         |                        
|Cash flows from financing activities:                    |                        
|Payments received on stockholders' notes                 |                        
|Net proceeds from employee stock purchase plan           |                        
|Net proceeds from exercise of options and warrants       |                        
|Principal payments on borrowings and debt retirement     |                        
|                                                         |                        
|Net cash provided by (used in) financing activities      |                        
|                                                         |                        
|Net increase (decrease) in cash and cash equivalents     |                        
|Cash and cash equivalents at the beginning of the period |                        
|                                                         |                        
|Cash and cash equivalents at the end of the period       |                        
|                                                         |                        

# CNET NETWORKS, INC.CONSOLIDATED
STATEMENTS OF CASH FLOWS (Continued) 
(in thousands)

|                                                  |  |  |  
|------------------------------------------------- |  |  | -
|
|Supplemental disclosure of cash flow information: |  | 
|Interest paid                                     |  |  | $
|Taxes refunded                                    |  |  | $
|Supplemental disclosure of noncash transactions:  |  | 
|Issuance of common stock to discharge             |  | 
|a liability                                       |  |  | $
|Issuance of common stock for acquisitions         |  |  | $
|Capital lease obligations incurred to             |  | 
|acquire equipment                                 |  |  | $

See accompanying notes to the
consolidated financial statements.

# CNET NETWORKS, INC.CONSOLIDATED
STATEMENTS OF STOCKHOLDERS EQUITY(in thousands, except
share data)

|                                              | Years Ended December 31,
|--------------------------------------------- | ------------------------
|
|Common stock and additional paid-in capital   |                         
|Balance, beginning of year                    |                         
|Common stock issued                           |                         
|                                              |                         
|Balance, end of year                          |                         
|                                              |                         
|Notes receivable from stockholders            |                         
|Balance, beginning of year                    |                         
|Repayment or discharge of stockholders' notes |                         
|                                              |                         
|Balance, end of year                          |                         
|                                              |                         
|Deferred stock compensation                   |                         
|Balance, beginning of year                    |                         
|Deferred compensation from acquisition        |                         
|Deferred compensation amortization            |                         
|                                              |                         
|Balance, end of year                          |                         
|                                              |                         
|Accumulated other comprehensive income        |                         
|Balance, beginning of year                    |                         
|Net unrealized gains (losses) on investments  |                         
|Foreign currency translation adjustment       |                         
|                                              |                         
|Balance, end of year                          |                         
|                                              |                         
|Other comprehensive income (loss)             |                         
|Net loss                                      |                         
|Other comprehensive income:                   |                         
|Net unrealized gains (losses) on investments  |                         
|Foreign currency translation gain (loss)      |                         
|                                              |                         
|Comprehensive loss                            |                         
|                                              |                         
|Treasury stock                                |                         
|Balance, beginning of year                    |                         
|Repurchase of common stock                    |                         
|                                              |                         
|Balance, end of year                          |                         
|                                              |                         
|Accumulated deficit                           |                         
|Balance, beginning of year                    |                         
|Net loss                                      |                         
|                                              |                         
|Balance, end of year                          |                         
|                                              |                         
|Number of shares                              |                         
|Common stock                                  |                         
|Balance, beginning of year                    |                         
|Common stock issued                           |                         
|                                              |                         
|Balance, end of year                          |                         
|                                              |                         
|Treasury stock                                |                         
|Balance, beginning of year                    |                         
|Common stock issued                           |                         
|                                              |                         
|Balance, end of year                          |                         
|                                              |                         

See accompanying notes to the
consolidated financial statements.

# CNET NETWORKS, INC. NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2003

# (1) DESCRIPTION OF
BUSINESS AND SIGNFICANT ACCOUNTING POLICIES

DESCRIPTION OF BUSINESS

CNET Networks, Inc. (CNET) is a
leading global media company informing and connecting buyers, users and sellers of
personal technology, games and entertainment, and business technology products. CNET was
incorporated in the state of Delaware in December 1992.

PRINCIPLES OF
CONSOLIDATION

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

FOREIGN CURRENCY
TRANSLATION

For operations in countries where the
functional currency is other than the U.S. dollar, revenue and expense accounts are
translated at the average rates during the period, and balance sheet items are translated
at end-of-period rates. Translation gains and losses are recorded in accumulated other
comprehensive income as a component of stockholders equity. Net gains and losses
resulting from foreign exchange transactions are included in the consolidated statements
of operations.

USE OF ESTIMATES

CNET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 accounting principles generally accepted in
the United States of America. Actual results could differ from those estimates.

RECLASSIFICATION

Certain amounts in the financial
statements and notes thereto have been reclassified to conform to current year
classification.

FAIR VALUE OF FINANCIAL
INSTRUMENTS

The carrying value of CNETs
cash and cash equivalents, marketable debt securities, accounts receivable and accounts
payable approximate their respective fair values. The carrying value of CNETs 5%
Convertible Subordinated Notes is deemed to be their fair value since it is impracticable
to estimate a fair value as there is no comparable debt available on the market.

CASH AND CASH EQUIVALENTS

CNET invests its excess cash in debt
instruments of the U.S. Government and its agencies and in high-quality corporate issuers.
All highly liquid instruments with maturities of three months or less at the date of
purchase are considered cash equivalents.

RESTRICTED CASH

The restricted cash balance primarily
relates to certain deposits in escrow held as collateral for letters of credit relating to
security deposits on leased properties.

SHORT AND LONG-TERM DEBT
INVESTMENTS

Investments in marketable debt
securities with maturities greater than three months at the date of purchase and current
maturities less than twelve months from the balance sheet date are considered current
assets. Those with maturities greater than twelve months from the balance sheet date are
considered non-current assets.

CNETs marketable debt
securities are classified as available-for-sale as of the balance sheet date and are
reported at fair value, with unrealized gains and losses, net of tax, recorded in
stockholders equity. Realized gains or losses and permanent declines in value, if
any, on available-for-sale securities are reported in other income or expense as incurred.

CONCENTRATION OF CREDIT
RISK

Financial instruments potentially
subjecting CNET to concentrations of credit risk consist primarily of cash, cash
equivalents, investments and trade accounts receivable. CNET invests excess cash in low
risk, liquid instruments. CNETs investments in marketable debt securities are
generally investment grade securities. CNETs investments in privately held companies
are concentrated in the information technology sector and as such are subject to
fluctuations in fair value based on technology market factors. The majority of CNETs
accounts receivable are derived from domestic sales to companies in the information
technology sector. CNET closely monitors its outstanding receivable balances on an ongoing
basis.

For the years ended December 31, 2003
and 2001, there were no revenues from one single customer that exceeded 10% of total
revenues. Revenues from one U.S. Media customer, Gateway Inc., approximated 12% of total
revenues for the year ended December 31, 2002. Of these revenues from this customer in
2002, approximately 69% were generated from custom publishing contracts.

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. The principal
estimated useful lives are: buildings, 40 years; furniture and equipment, 3 to 7 years,
website development costs, 5 years; and computer equipment and software, 3 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.

INCOME TAXES

Income tax expense has been recorded
based on an estimated effective tax rate for the year ended December 31, 2003. The
estimated effective tax rate has taken into account any change in the valuation allowance
for deferred tax assets where the realization of various deferred tax assets is subject to
uncertainty. Management believes that sufficient uncertainty exists regarding the future
realization of deferred tax assets and, accordingly, a full valuation allowance has been
provided against gross deferred tax assets. During 2003, CNET was refunded approximately
$8.6 million of recoverable taxes. In 2002, CNET was refunded approximately $31.7 million
of recoverable taxes.

IMPAIRMENT OF LONG-LIVED
ASSETS

CNET reviews its long-lived assets if
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 the estimated undiscounted (and without interest
charges) future 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 asset exceeds the fair value of the asset. Assets to be
disposed of are reported at the lower of the carrying amount or fair value less costs to
sell.

GOODWILL AND INTANGIBLE
ASSETS

In July 2001, the Financial
Accounting Standards Board (FASB) issued SFAS 142, Goodwill and Other Intangible
Assets. Prior to the adoption of SFAS 142 by CNET on January 1, 2002, the impairment
of enterprise-wide goodwill was evaluated based on a comparison of CNETs net book
value to the estimated undiscounted (and without interest charges) future cash flows for
CNET. Conditions that indicated that impairment of goodwill should be evaluated included a
significant decrease in CNETs market value or a current period cash flow loss
combined with a history of cash flow losses.

Effective January 1, 2002 under SFAS
142, goodwill and intangible assets with indefinite useful lives are no longer amortized,
but instead are to be tested for impairment at least annually. Intangible assets with
definite useful lives will continue to be amortized over their respective estimated useful
lives. Although the provisions of SFAS 142 were not effective in their entirety until
January 1, 2002, the goodwill acquired in business combinations which occurred after June
30, 2001 fell under the condition of SFAS 142 requiring no amortization of goodwill
arising from transactions completed after June 30, 2001. Therefore, goodwill from any such
transactions was not amortized.

Had the provisions of SFAS 142 been
effective in 2001, CNETs adjusted net loss and net loss per share would have been as
follows:

|(in thousands, except per share data) | Year Ended December 31,
|------------------------------------- | -----------------------
|
|                                      |                        
|Reported net loss                     |                        
|Goodwill amortization                 |                        
|                                      |                        
|Adjusted net loss                     |                        
|                                      |                        
|Basic and diluted net loss per share: |                        
|As reported                           |                        
|                                      |                        
|As adjusted                           |                        
|                                      |                        

Goodwill and intangible assets of a
reporting unit are reviewed for impairment if events or changes in circumstances indicate
that the carrying amount of its goodwill or intangible assets may not be recoverable.
Impairment of reporting unit goodwill is evaluated based on a comparison of the reporting
units carrying value to the implied fair value of the reporting unit. Conditions
that indicate that impairment of goodwill should be evaluated include a sustained decrease
in our market value or an adverse change in business climate. CNET reviews goodwill for
impairment on at least an annual basis. CNET has established August 31 as the valuation
date on which this annual review takes place.

CNET performed its annual evaluation
of goodwill and intangible assets impairment as of August 31, 2003. CNET determined that
the carrying value of goodwill and other intangible assets for all its reporting units did
not exceed their implied fair values.

REVENUE RECOGNITION AND
COLLECTIBILITY OF RELATED RECEIVABLE

CNET recognizes revenues once the
following criteria are met:

| | o | Persuasive evidence of an arrangement exists
| | - | --------------------------------------------

| | o | Delivery of our obligation to our customer has occurred
| | - | -------------------------------------------------------

| | o | The price to be charged to the buyer is fixed or determinable
| | - | -------------------------------------------------------------

| | o | Collectibility of the fees to be charged is reasonably assured
| | - | --------------------------------------------------------------

CNET has several revenue streams. For
each revenue stream, evidence of the arrangement, delivery and pricing may be different.
For all revenue streams, CNET determines that collectibility is reasonably assured through
a standardized credit review to determine each customers credit worthiness.

Marketing Services

CNET recognizes revenues from the
sale of impression-based advertisements on its online network in the period in which the
advertisements are delivered. The arrangements are evidenced either by insertion order or
contract that stipulate the types of advertising to be delivered and pricing. CNETs
customers are billed based on a discounted list price with no amounts subject to refund.
When recognizing revenues, the discounts granted are applied to each type of advertisement
purchased based on the relative fair value of each element.

CNET refers to the fees charged to
merchants based on the number of users who click on an advertisement or text link to visit
websites of CNETs merchant partners as activity-based advertising. For
activity-based advertising, the arrangement is evidenced by a contract that stipulates the
fee per activity. The fee becomes fixed and determinable upon our user clicking on an
advertisement. These revenues are recognized in the period in which the activity occurs,
and are not subject to refund.

In certain arrangements, CNET sells
multiple deliverables to customers as part of a multiple-element arrangement. For these
arrangements, CNET allocates revenue to each deliverable based on the relative fair value
of each deliverable. Revenue is recognized in these arrangements as CNET delivers on its
obligation.

CNET trades advertising on its
Internet sites in exchange for marketing services of other companies, referred to as
barter revenue. These revenues are recognized in the period in which the
advertisements are delivered based on the fair market value of the services delivered.
CNET determines the fair market value of the service delivered based upon amounts charged
for similar services in non-barter deals within the previous six-month period. Barter
revenues were approximately $11.8 million, $11.6 million and $18.4 million for the years
ended December 31, 2003, 2002 and 2001, respectively.

In 2001, a portion of CNETs
revenues was received in the form of securities of its customers. Revenues in the form of
securities of CNETs customers amounted to $4.7 million for the year ended December
31, 2001. There were no such revenues in 2003 and 2002.

Licensing, Fees and Users

Revenues for subscriptions to
CNETs Internet sites, print publications, product database and procurement services
are recognized on a straight-line basis over the term of the subscription. Upon execution
of a contract, billing and commencement of the services, CNET records deferred revenue for
the fee charged. This deferred revenue is recognized on a straight-line basis over the
period of the arrangement. The amounts under contract are not refundable after the
customer has used the service.

Publishing

Advertising revenues from CNETs
print and custom print publications are recognized in the month that the related
publications are sent to subscribers or become available at newsstands. Newsstand revenue
from print publications is recognized when the publications are delivered to the newsstand
at which time a reserve is recorded against the value of the publications delivered based
on the number of magazines that CNET expects to be returned. To ensure these reserves are
adequate, CNET reviews the sell-through history of the publications on a monthly basis.

Collectibility of
Receivables

CNET maintains allowances for
doubtful accounts for estimated losses resulting from the inability of its customers to
make required payments. CNET bases its allowances on periodic assessment of its
customers liquidity and financial condition through credit rating agencies reports,
financial statement reviews and historical collection trends.

STOCK-BASED COMPENSATION

CNET accounts for its stock-based
employee 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. The compensation expense is recorded over the vesting
period of the grant.

CNET applies APB Opinion No. 25 in
accounting for its stock-based compensation plans and, accordingly, no compensation cost
has been recognized for the plans in the financial statements because options are granted
at the current market price. Had CNET determined compensation cost based on the fair value
at the grant date for its stock options under SFAS 123, CNETs net loss and net loss
per share would have been increased to the pro forma amounts indicated below:

|(in thousands, except per share data) | Year Ended December 31,
|------------------------------------- | -----------------------
|
|                                      |                        
|Net loss:                             |                        
|As reported                           |                        
|Fair value based method               |                        
|compensation expense                  |                        
|                                      |                        
|Proforma                              |                        
|                                      |                        
|Basic and diluted net loss per share: |                        
|As reported                           |                        
|                                      |                        
|Proforma                              |                        
|                                      |                        

The effect of applying SFAS 123 in
this pro forma disclosure is not indicative of the effects on reported results for future
periods. SFAS No. 123 does not apply to awards prior to 1995. The weighted-average fair
value of options granted in 2003, 2002 and 2001 was $3.96, $2.71 and $5.72, respectively.
The fair value of each option grant is estimated on the date of grant using the Black
Scholes option-pricing model with the following weighted-average assumptions used for
grants in 2003, 2002 and 2001:

|                               | Year Ended December 31,
|------------------------------ | -----------------------
|
|                               |                        
|Dividend yield                 |                        
|Expected volatility            |                        
|Risk-free interest rate range  |                        
|Expected life range (in years) |                        

Beginning with the third quarter of
fiscal 2003, CNET decreased the estimate of the expected life of new options granted to
employees from five years to three years. CNET based its expected life assumption on
historical experience as well as the terms and vesting periods of the options granted. The
reduction in the estimated expected life was a result of an analysis of CNETs
historical experience.

ADVERTISING EXPENSE

The cost of advertising is expensed
as incurred. Such costs are included in selling and marketing expense and totaled
approximately $16.0 million, $17.6 million and $37.6 million during the years ended
December 31, 2003, 2002 and 2001, respectively.

BENEFIT PLANS

In 1996, CNET 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
CNETs U.S. based employees, who may contribute up to 25% of their annual
compensation, subject to a limitation of $12,000 in 2003. Employees vest immediately in
their contributions and earnings thereon. The plan allows for company matching
contributions which amount to 50% of the employees contribution, up to 4%, with a
maximum annual match for 2003 of $1,500. Employees vest in CNETs contributions at
50% after one year of service and 100% after two years of service. For the years ended
December 31, 2003, 2002 and 2001, CNET made matching contributions of $ 1.0 million, $1.2
million and $1.4 million, respectively.

NET INCOME (LOSS) PER
SHARE

Basic net income (loss) per share is
computed using the weighted average number of outstanding shares of common stock and
diluted net income (loss) per share is computed using the weighted average number of
outstanding shares of common stock and common stock equivalents during the period, to the
extent that such common stock equivalents are not anti-dilutive. Common stock equivalents
that are anti-dilutive are excluded from the computation of diluted net income (loss) per
share.

WEB SITE DEVELOPMENT COSTS

The Emerging Issues Task Force (EITF)
Issue No. 00-2, Accounting for Web Site Development Costs requires that costs
incurred during the development of web site applications and infrastructure involving
developing software to operate the web site, including graphics that effect the look
and feel of the web page and all costs relating to software used to operate a web
site should be accounted for under Statement of Position (SOP) 98-1, Accounting for
the Costs of Computer Software Developed or Obtained for Internal Use. However, if a
plan exists or is being developed to market the software externally, the costs relating to
the software should be accounted for pursuant to FASB Statement No. 86, Accounting
for the Costs of Computer Software to Be Sold, Leased, or Otherwise Marketed. In
2001, CNET commenced the development of a standard delivery platform for its Internet
network. CNET believes this created a better product for users and a better marketing
platform for advertisers and resulted in internal cost and delivery efficiencies. Costs of
approximately $18.4 million to date have been capitalized pursuant to SOP 98-1, including
$3.5 million in 2003.

RECENT ACCOUNTING
PRONOUNCEMENTS

In November 2002, the FASB issued a
Consensus, which clarified certain issues within EITF 00-21, Revenue Arrangements
with Multiple Deliverables. The Consensus addresses how to allocate the revenue in
an arrangement involving multiple deliverables into separate units of accounting
consistent with the identified separate earnings processes of each deliverable for revenue
recognition purposes. The Issue also addresses how each element in a multiple-element
sales arrangement should be measured and allocated to the separate units of accounting in
the arrangement. The Consensus is effective prospectively for arrangements entered into in
fiscal periods beginning after June 15, 2003. The implementation of this Consensus has not
had a material effect on our operating results or financial position.

In December 2003, the FASB issued
FASB Interpretation (FIN) 46 (revised December 2003), Consolidation of Variable
Interest Entities, which addresses how a business enterprise should evaluate whether
it has a controlling interest in an entity through means other than voting rights and,
accordingly, should consolidate the entity. FIN 46R replaces FASB Interpretation No. 46,
Consolidation of Variable Interest Entities, which was issued in January 2003.
FIN 46R is required to be applied to variable interests in variable interest entities
(VIEs) created after December 31, 2003. For variable interests in VIEs created before
January 1, 2004, the Interpretation will be applied beginning on January 1, 2004. For any
VIEs that must be consolidated under FIN 46R that were created before January 1, 2004, the
assets liabilities and non-controlling interests of the VIE initially would be measured at
their carrying amounts with any difference between the net amount added to the balance
sheet and any previously recognized interest being recognized as the cumulative effect of
an accounting change. If determining the carrying amounts is not practicable, fair value
at the date FIN 46R first applies may be used to measure the assets, liabilities and
non-controlling interest of the VIE. We are currently analyzing the impact of applying FIN
46R, however, we believe that the application of FIN 46R will not have a material impact
on our consolidated financial statements.

# (2) BALANCE SHEET
COMPONENTS

|(in thousands)                           | December 31,
|---------------------------------------- | ------------
|
|Cash and cash equivalents:               |             
|Commercial paper                         |             
|Money market mutual funds                |             
|Cash                                     |             
|                                         |             
|Cash and cash equivalents                |             
|                                         |             
|Accounts receivable:                     |             
|Accounts receivable                      |             
|Allowance for doubtful accounts          |             
|                                         |             
|Accounts receivable, net                 |             
|                                         |             
|Property and equipment:                  |             
|Land                                     |             
|Buildings                                |             
|Computer equipment                       |             
|Production equipment                     |             
|Office equipment, furniture and fixtures |             
|Software                                 |             
|Leasehold improvements                   |             
|Assets in progress                       |             
|                                         |             
|                                         |             
|                                         |             
|Less accumulated depreciation and        |             
|amortization                             |             
|                                         |             
|Property and equipment, net              |             
|                                         |             
|Accrued liabilities:                     |             
|Compensation and related benefits        |             
|Lease abandonment                        |             
|Marketing and advertising                |             
|Deferred revenue                         |             
|Tax-related liabilities                  |             
|Other                                    |             
|                                         |             
|Accrued liabilities                      |             
|                                         |             

# (3)
ACQUISITIONS

2003 Acquisitions

On April 1, 2003, CNET acquired
intellectual property and certain other assets of European Technology Forum, Ltd., located
in the UK, an organizer of conferences and events aimed at the technology industry. On
April 25, 2003, CNET acquired intellectual property and certain other assets of eRankings,
Inc., a provider of news, reviews and in-depth information related to PC and video gaming.
On May 6, 2003, CNET acquired intellectual property and certain other assets of
GameFAQs.com, Inc, which provides an online community for users to post gaming strategy,
hints, codes, tips and messages related to PC and video gaming. On December 1, 2003, CNET
acquired Haosi Zhide Event and Exhibition Company, Ltd., located in China, which engages
in planning and organizing events and exhibitions and provides conference services. On
December 2, 2003, CNET acquired the intellectual property of MP3.com. The aggregate
purchase price for all five unrelated acquisitions was $3.1 million. A total of $2.9
million was paid in cash with the remainder outstanding under a note payable that is to be
paid within two years of the acquisition. The transactions have been accounted for using
the purchase method of accounting.

The total purchase price has been
allocated to the tangible and intangible assets based on estimates of their respective
fair values. The aggregate purchase price of $3.1 million has been allocated, on a
preliminary basis, to tangible assets of approximately $435,000. intangible assets of
approximately $842,000 that are being amortized over a three-year period, and goodwill of
approximately $2.4 million. In addition, $544,000 of liabilities were assumed. The
weighted average life of the intangibles acquired from these transactions is three years.

2002 Acquisitions

CNET made several small acquisitions
during 2002. In the second quarter of 2002, CNET acquired intellectual property and other
assets of Upgradebase.com, Inc., a provider of content specifications for memory and
memory upgrades, as well as other computer products and peripherals, Vendorbase.com, Inc.,
a provider of information covering remarketed IT products, and Smartshop.com, Inc., a
provider of online comparison shopping infrastructure. In the third quarter of 2002, CNET
acquired intellectual property and certain other assets of NewMediary, which operates an
IT white paper directory; WAAG Technologies, a Japanese IT consulting company, and
Silicon.com located in the UK, which operates Internet sites providing industry news,
analysis and employment recruitment services targeted toward European IT professionals.
Additionally, in October 2002, CNET exchanged its original minority ownership interest in
a Korean company that is the licensee and operator of CNETs ZDNet brand and online
content in Korea for a 63.0% interest in the newly restructured company, CNET Networks
Korea Co, Ltd. These acquisitions have been reflected in the balance sheet at December 31,
2002. The statement of operations of CNET for the year ended December 31, 2002 includes
the results of operations of these businesses since the dates of their respective
acquisitions.

These acquisitions were accounted for
by the purchase method of accounting. The aggregate purchase price of $9.8 million for
these transactions, consisting of $8.8 million in cash and $1.0 million in notes payable,
has been allocated to tangible and intangible assets based on estimates of their
respective fair values. The aggregate purchase price was allocated as $8.6 million to
goodwill, $1.3 million to intangible assets, $2.7 million to other assets, and $2.8
million to assumed liabilities. In accordance with the provisions of SFAS 142, goodwill
arising from these transactions has not been amortized. The weighted average life of the
intangibles acquired from these transactions is three years.

2001 Acquisitions

On July 1, 2001, CNET acquired
TechRepublic, Inc. (TechRepublic) from Gartner, Inc. The total purchase price was $21.6
million. CNET paid approximately $10.8 million in cash and issued 773,341 shares common
stock valued at approximately $7.8 million in exchange for all outstanding shares of
TechRepublic stock. Acquisition costs were approximately $3.0 million. The number of
shares of common stock exchanged was based on the average closing price of CNET stock for
ten consecutive trading days ending on the second trading day immediately prior to the
closing.

The transaction was accounted for
using the purchase method of accounting. The total purchase price of $21.6 million was
allocated as follows: intangible assets of approximately $7.0 million, goodwill of $13.9
million, other assets of $7.6 million primarily consisting of accounts receivable of $2.0
million and fixed assets of $4.7 million, and liabilities of $6.9 million.

Although the provisions of SFAS 142
were not effective in their entirety until January 1, 2002, the goodwill acquired in this
purchase fell under the condition of SFAS 142 requiring no amortization of goodwill
arising from a transaction completed after June 30, 2001. Therefore, goodwill arising from
this transaction has not been amortized.

# (4)
MARKETABLE DEBT SECURITIES

The following is a summary of
available-for-sale marketable debt investments:

|(in thousands)         | Year Ended December 31, 2003
|---------------------- | ----------------------------
|
|Short term investments |                             
|Corporate obligations  |                             
|Government agencies    |                             
|                       |                             
|                       |                             
|                       |                             
|Long term investments  |                             
|Corporate obligations  |                             
|Government agencies    |                             
|                       |                             
|                       |                             
|                       |                             
|                       |                             
|                       |                             
|
|
|Short term investments |                             
|Corporate obligations  |                             
|Government agencies    |                             
|                       |                             
|                       |                             
|                       |                             
|Long term investments  |                             
|Corporate obligations  |                             
|Government agencies    |                             
|                       |                             
|                       |                             
|                       |                             
|                       |                             
|                       |                             

The contractual maturities of
CNETs short term investments at December 31, 2003 were one year or less while
CNETs long term investments had contractual maturities between one and three years.
Expected maturities may differ from contractual maturities because issuers of the
securities have the right to prepay or call obligations without prepayment penalties.

# (5)
GOODWILL AND INTANGIBLE ASSETS

# Acquired Intangible
Assets

The following table sets forth the
amount of intangible assets that are subject to amortization, including the related
accumulated amortization:

|(in thousands)               | December 31, 2003 | December 31, 2002
|---------------------------- | ----------------- | -----------------
|
|Amortized intangible assets: |                   |                  
|Tradename/trademarks         |                   |                  
|Registered Users             |                   |                  
|Subscriptions                |                   |                  
|Content                      |                   |                  
|Noncompetition agreements    |                   |                  
|Developed technology         |                   |                  
|                             |                   |                  
|Total                        |                   |                  
|                             |                   |                  

Intangibles that are subject to
amortization are amortized on a straight-line basis over three to five years, except for
certain trademarks that are amortized over ten years. Estimated future amortization
expense related to other intangible assets at December 31, 2003 is as follows:

|(in thousands) | 
|-------------- | 
|               | 
|2004           | 
|2005           | 
|2006           | 
|2007           | 
|2008           | 
|Thereafter     | 
|               | 
|               | 
|               | 

# Goodwill

The following table sets forth the
changes in goodwill by reporting unit for the years ended December 31, 2003 and 2002:

|(in thousands)                   | Total | U.S.Media | ComputerShopper | ChannelServices | Asia | Europe
|-------------------------------- | ----- | --------- | --------------- | --------------- | ---- | ------
|Balance as of  December 31, 2001 |       |           | $               | 279,353         |      | $     
|Reclassifications                |       |           |                 | 7,078           |      |       
|Acquisitions and other           |       |           |                 | 11,485          |      |       
|Goodwill impairment              |       |           |                 | (238,766        | )    |       
|                                 |       |           |                 |                 |      |       
|Balance as of December 31, 2002  |       |           |                 | 59,150          |      |       
|Acquisitions                     |       |           |                 | 2,405           |      |       
|                                 |       |           |                 |                 |      |       
|Balance as of December 31, 2003  |       |           | $               | 61,555          |      | $     
|                                 |       |           |                 |                 |      |       

Given the declines in the equity markets and in
CNETs stock price during the third quarter of 2002, the results of CNETs
annual impairment test performed as of August 31, 2002 indicated the carrying value of
goodwill and other intangible assets for the U.S. Media reporting unit exceeded their
implied fair values, and an impairment charge of $238.8 million for goodwill and $40.5
million for intangible assets of that reporting unit was recorded in the third quarter of
2002. Additionally, certain other assets, including fixed assets, totaling $11.2 million
were deemed to be impaired and were written-off.

# (6) DEBT

Below is a summary of CNETs
debt:

|(in thousands)                    | December 31,
|--------------------------------- | ------------
|
|5% Convertible Subordinated Notes |             
|Other obligations                 |             
|                                  |             
|                                  |             
|                                  |             
|Less current maturities           |             
|                                  |             
|                                  |             
|                                  |             

As a result of the ZDNet acquisition
on October 17, 2000, CNET assumed $614,000 of notes payable. These notes remained
outstanding after a tender offer by Ziff-Davis of its 81⁄2% Senior Subordinated Notes
due 2008 with interest payable semiannually on May 1 and November 1.

As a result of the acquisition on
July 27, 1999 of CNET Channel Services, S.A. (formerly known as GDT), CNET assumed a Swiss
France 5% mortgage loan for the building owned by CNET Channel Services, S.A. with a
principal balance of $700,000 as of December 31, 2000. The term of the loan is 36 years.
On April 24, 2000, CNET Channel Services, S.A., acquired more property that CNET funded
with additional Swiss Franc 5% mortgage loans of $2.4 million over a 20-year term. At
December 31, 2003, CNETs obligation under these loans was $3.8 million.

On March 8, 1999, CNET completed a
private placement with gross proceeds of $172.9 million of 5% Convertible Subordinated
Notes, due 2006 (the Notes). The Notes are convertible into CNETs common stock after
June 7, 1999 at a conversion price of $37.41 per share, subject to certain conditions, at
the option of the note holder. CNETs obligations with respect to the 5% Convertible
Subordinated Notes can be found in the indenture for such notes filed as Exhibit 10.40 to
CNETs Annual Report on 10-K for the year ended December 31, 1998. During 2002, CNET
paid $36.7 million to repurchase $59.2 million principal amount of the 5% Convertible
Subordinated Notes, resulting in a gain of $21.6 million, net of the write-off of related
capitalized debt issuance costs of $0.9 million. At December 31, 2003, a total of $113.7
million of the Notes remained outstanding.

The aggregate annual principal
payments for the notes and loans payable outstanding as of December 31, 2003 are
summarized as follows:

|(in thousands) | 
|-------------- | 
|               | 
|2004           | 
|2005           | 
|2006           | 
|2007           | 
|2008           | 
|Thereafter     | 
|               | 
|               | 
|               | 

# (7) INCOME TAXES

The expense (benefit) from income
taxes is as follows:

|(in thousands)    | Year Ended December 31,
|----------------- | -----------------------
|
|Current:          |                        
|Federal           |                        
|State and foreign |                        
|                  |                        
|Total current     |                        
|                  |                        
|Deferred:         |                        
|Federal           |                        
|State and foreign |                        
|                  |                        
|Total deferred    |                        
|                  |                        
|                  |                        
|                  |                        

CNETs reconciliation of the
expected statutory federal income tax rate of 35% to the actual tax rate is presented in
the following schedule:

|                            | Year Ended December 31,
|--------------------------- | -----------------------
|
|Income tax expense          |                        
|at statutory rate           |                        
|Non deductible goodwill     |                        
|amortization and impairment |                        
|Permanent differences       |                        
|State and foreign tax       |                        
|Other                       |                        
|Valuation allowance         |                        
|                            |                        
|Effective tax rate          |                        
|                            |                        

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

|(in thousands)                       | Year Ended December 31,
|------------------------------------ | -----------------------
|
|Net operating loss carryforwards     |                        
|Properties and intangibles           |                        
|Reserves and accruals (current)      |                        
|(Unrealized gain) deferred loss from |                        
|privately held investments           |                        
|State taxes                          |                        
|Other                                |                        
|                                     |                        
|                                     |                        
|Less valuation allowance             |                        
|                                     |                        
|                                     |                        
|                                     |                        

The net change in the valuation
allowance for the years ended December 31, 2003, 2002 and 2001 was an increase of $22.9
million, $20.2 million and $129.9 million, respectively. In assessing the realizability of
deferred tax assets, management considers whether it is more likely than not that some
portion or all of the deferred tax assets will not be realized. The ultimate realization
of deferred tax assets is dependent upon the generation of future taxable income during
the periods in which those temporary differences become deductible. Management considers
the scheduled reversal of deferred tax liabilities, projected future taxable income, and
tax planning strategies in making this assessment.

Income tax expense has been recorded
based on an estimated effective tax rate for the year ended December 31, 2003. The
estimated effective tax rate has taken into account any change in the valuation allowance
for deferred tax assets where the realization of various deferred tax assets is subject to
uncertainty. Management believes that sufficient uncertainty exists regarding the future
realization of deferred tax assets and, accordingly, a full valuation allowance has been
provided.

Approximately $8.6 million of
recoverable taxes were refunded to CNET in 2003. At December 31, 2003, CNET had net
operating losses of $327.4 million consisting of U.S. net operating losses of $218.3
million and of cumulative foreign net operating losses of $109.1 million. These losses
will be carried forward to offset taxable income generated in future years. Approximately
$65.0 million of these losses are related to federal net operating losses from the ZDNet
acquisition, which took place in 2000. These losses are subject to limitations on their
utilization due to the change in ownership and will begin to expire in 2011. Operating
losses generated in 2003 were primarily related to amortization of intangible assets and
losses from operations.

# (8) STOCKHOLDERS
EQUITY

ISSUANCE OF COMMON STOCK

CNET issued common stock pursuant to
acquisitions of 773,341 shares in 2001. No such shares were issued in 2003 and 2002.

STOCK OPTION PLANS

|Plan Name                                                        | Number ofShares Authorized | Number of SharesOutstanding
|---------------------------------------------------------------- | -------------------------- | ---------------------------
|Board Adopted Plans                                              |                            |                            
|                                                                 |                            |                            
|CNET Stock Option Plan (1994), subsequently amended and restated |                            |                            
|CNET 1997 Stock Option Plan                                      |                            |                            
|CNET 2000 Stock Incentive Plan                                   |                            |                            
|2001 CNET Network, Inc. Stock Incentive Plan                     |                            |                            

Each of the 1994, 1997 and 2000 Plans
was approved by the stockholders of CNET. In connection with acquisitions, CNET assumed
the mySimon 1998 Amended and Restated Stock Plan, the Apollo Solutions, Inc. 2000 Stock
Option Plan, the Ziff-Davis 1998 Incentive Compensation Plan, and the TechRepublic, Inc.
1999 Stock Option Plan. At December 31, 2003, 2,077,299 options were outstanding under
these assumed plans. Stock options for the 1994, 1997, 2000 and 2001 Plans are granted
with an exercise price equal to the fair market value at the date of grant. All stock
options have terms of between 10 and 12 years and generally vest and become fully
exercisable four years from the date of grant.

A summary of the status of
CNETs stock option plans as of December 31, 2003, 2002 and 2001, and changes during
each of the years then ended is as follows:

|                             | Number ofShares | Weighted AverageExercise Price
|---------------------------- | --------------- | ------------------------------
|Balance at December 31, 2000 |                 |                               
|Granted                      |                 |                               
|Exercised                    |                 |                               
|Canceled                     |                 |                               
|                             |                 |                               
|Balance at December 31, 2001 |                 |                               
|Granted                      |                 |                               
|Exercised                    |                 |                               
|Canceled                     |                 |                               
|                             |                 |                               
|Balance at December 31, 2002 |                 |                               
|Granted                      |                 |                               
|Exercised                    |                 |                               
|Canceled                     |                 |                               
|                             |                 |                               
|Balance at December 31, 2003 |                 |                               
|                             |                 |                               

As of December 31, 2003, 2002 and
2001, the number of options exercisable was 10,116,338, 9,208,599 and 13,499,284,
respectively, and the weighted average exercise price of those options was $9.71, $10.89,
and $18.06, respectively. As of December 31, 2003, there were 4,801,136 additional shares
available for grant under the plans.

The following table summarizes
 information about stock options outstanding as of December 31, 2003:

|  | Options Outstanding | Options Exercisable
|- | ------------------- | -------------------
|
|$ | 0                   | .60                
|  | 1                   | .07                
|  | 1                   | .75                
|  | 2                   | .79                
|  | 4                   | .19                
|  | 6                   | .40                
|  | 9                   | .63                
|  | 14                  | .63                
|  | 22                  | .00                
|  | 33                  | .72                
|  | 50                  | .69                
|  |                     |                    
|$ | 0                   | .60                
|  |                     |                    

At the annual meeting of stockholders
on June 12, 2002, CNETs stockholders approved the amendment of CNETs stock
option plans to permit the exchange of options having a strike price in excess of $12.00
for a lesser number of new options to be granted at least six months and one day from
cancellation of the surrendered options. The offer to participate in the exchange expired
on July 26, 2002. All surrendered options were cancelled as of July 27, 2002. A total of
8,690,250 options were surrendered. On January 28, 2003, 3,218,547 options were regranted
at an exercise price of $2.535. The regranted options retained the same vesting schedule
as the options they replaced, subject to a six-month standstill period that expired on
July 28, 2003.

EMPLOYEE STOCK PURCHASE
PLAN

In July 1996, CNET adopted an
Employee Stock Purchase Plan that covers substantially all domestic employees, whereby
participants may elect to purchase CNETs stock. The purchase price varies each
quarter and is 85% of the lower of the closing price at the beginning of the quarter and
the closing price at the end of the quarter for the first and third quarters of the year
or the lower of the closing price at the beginning of the prior quarter and the closing
price at the end of the current quarter for the second and fourth quarters of the year.
Employee contributions consist of a percentage of their compensation. The maximum
percentage of compensation that an employee may contribute to purchase CNET stock is 15%.

# (9)
NET LOSS PER SHARE

The following table sets forth the
computation of net loss per share:

|(in thousands, except share and per share data) | Year Ended December 31,
|----------------------------------------------- | -----------------------
|
|Basic and Diluted Earnings Per Share            |                        
|Loss available to common stockholders           |                        
|                                                |                        
|Weighted average shares - basic and diluted     |                        
|                                                |                        
|Basic and diluted loss per common share         |                        
|                                                |                        

Diluted net loss per share for the
year ended December 31, 2003 does not include the effect of 4,132,833 common shares
related to options at an average exercise price of $5.45 or 1,380 shares of unvested
restricted stock with an average exercise price of $1.18 per share or 3,040,242 common
shares related to the 5% Convertible Subordinated Notes offering with an average
conversion price of $37.41 per share because their effect is anti-dilutive.

Diluted net loss per share for the
year ended December 31, 2002 does not include the effect of 946,283 common shares related
to options with an average exercise price of $3.36 per share or 8,280 shares of unvested
restricted stock with an average exercise price of $1.22 per share because their effect is
anti-dilutive. In addition, diluted net loss per share for the year ended December 31,
2002 does not include the effect of 3,040,242 common shares related to the 5% Convertible
Subordinated Notes offering with an average conversion price of $37.41 per share because
their effect is anti-dilutive.

Diluted net loss per share for the
year ended December 31, 2001 does not include the effect of 2,405,972 common shares
related to options with an average exercise price of $6.97 per share or 189,336 shares of
unvested restricted stock with an average exercise price of $1.22 per share because their
effect is anti-dilutive. In addition, diluted net loss per share for the year ended
December 31, 2001 does not include the effect of 4,622,624 common shares related to the 5%
Convertible Subordinated Notes offering with an average conversion price of $37.41 per
share because their effect is anti-dilutive.

# (10) COMMITMENTS AND
CONTINGENCIES

# Leases

CNET has several non-cancelable
operating leases primarily for general office facilities and equipment that expire over
the next 16 years. Future minimum lease payments at December 31, 2003 under these leases
are as follows:

|(in thousands) | 
|-------------- | 
|               | 
|2004           | 
|2005           | 
|2006           | 
|2007           | 
|2008           | 
|Thereafter     | 
|               | 
|               | 
|               | 

Minimum payments have not been reduced
by minimum sublease rentals of $3.7 million due through August 2005 under noncancelable
subleases. Sublease income from operating leases was $2.6 million for the year ended
December 31, 2003, of which $1.8 million related to subleases for abandoned properties,
and therefore was taken to the lease abandonment accrual. Rental expense from operating
leases totaled $18.1 million, $19.8 million, and $15.6
million for the years ended December 31, 2003, 2002 and 2001, respectively. Effective
August 1, 2002, the lease for CNETs headquarters in San Francisco was amended
whereby the rent on the lease was reduced by an aggregate amount of $45.1 million over the
remaining term of the lease in exchange for an $8.0 million payment and the posting of a
$2.0 million letter of credit for three years. The $8.0 million payment was recorded as
prepaid rent and is being recognized into lease expense over the remaining lease term.

CNET had $743,000, $981,000 and
$623,000 of computer equipment under capital leases at December 31, 2003, 2002 and 2001,
respectively. Total accumulated amortization on these assets was $543,000, $447,000 and
$94,000 at December 31, 2003, 2002 and 2001, respectively. Depreciation expense applicable
to these capitalized leases was $248,000, $377,000 and $94,000 for the years ended
December 31, 2003, 2002 and 2001. At December 31, 2003, the remaining portion of the
future payments under these leases of $171,000 is included in accrued liabilities.

# Guarantee

In conjunction with the ZDNet
acquisition in 2000, CNET assumed a guarantee of the obligations of Ziff Davis Media Inc.,
an unaffiliated company, under a New York City office lease for a total of 399,773 square
feet. In connection with that guarantee, we also have a letter of credit for $15.2 million
outstanding as a security deposit. This letter of credit is collateralized by a deposit in
escrow, which is included in restricted cash. As there is no present obligation to make
any payments in connection with this guarantee, CNET has not recorded any liability for
this guarantee in its financial statements. This lease expires in 2019. The annual average
cost per square foot is approximately thirty dollars over the remaining term of the lease.
Through a sublease from Ziff Davis Media Inc., CNET currently occupies 49,140 square feet
of the office space covered under this lease. Ziff Davis Media Inc. currently occupies
144,682 square feet of this space. There are three additional subleases, The Bank of New
York, FOJP Risk Management and Softbank, who collectively occupy a total of 205,951 square
feet. During 2002, Softbank subleased its 30,885 square feet to The Beanstalk Group. In
2003, Ziff-Davis Media Inc. subleased 61,494 square feet of space formerly occupied by
Ziff Davis Medias operations to FOJP Risk Management. As of December 31, 2003, the
total lease payments remaining until the end of the lease term were $178.5 million,
excluding the amounts attributable to CNETs sublease. If the financial condition of
any of the sublessees or the primary lessee were to deteriorate and thereby result in an
inability to make their lease payments, CNET would be required to make their lease
payments under the guarantee.

# Lease Abandonment

In 2001, CNET performed an evaluation
of its domestic and international real estate requirements. This evaluation resulted in
the consolidation or abandonment of several leased facilities. In connection with these
abandoned leases, CNET established an accrual for lease abandonment. The balance in this
accrual was $9.8 million at December 31, 2002. During the year ended December 31, 2003,
cash expenditure reductions to this accrual were $9.2 million, and an additional $4.5
million was added to the accrual due to modifications of certain assumptions regarding the
timing of subleasing the facilities and higher than anticipated costs to terminate two of
the leases. At December 31, 2003, a balance of $5.1 million remained in this accrual. The
total undiscounted liability under these leases, assuming that the spaces cannot be
sublet, is approximately $6.6 million.

# Legal

In August 1999, Simon Property Group
(SPG) filed a trademark infringement suit in federal district court in Indianapolis
against mySimon, Inc. (mySimon), a subsidiary of CNET acquired on February 29, 2000. SPG
alleged that the mySimon trademark infringed SPGs Simon trademark. On
August 31, 2000, following a trial on the subject, the jury found in favor of SPG and
awarded damages against mySimon in the amount of $11.5 million in compensatory damages,
$5.3 million for corrective advertising, and $10.0 million in punitive damages. On
September 25, 2000, the court entered an order establishing an escrow for royalties
pending final resolution of the litigation where mySimon pays into escrow 2% of its gross
cash receipts each month.

On December 7, 2001, mySimon filed a
motion for a dismissal of the case or, alternatively a new trial based on newly discovered
evidence it believes SPG should have produced prior to the August 2000 trial. On March 26,
2003, the court granted mySimons motion for a new trial on all issues, thereby
eliminating the original jury verdict. The court also granted mySimons motion that
sanctions be imposed against SPG and reserved a decision about what the appropriate
sanctions should be until later proceedings. No date for a new trial has been set. It is
not possible to predict the amount of damages, if any, that could be awarded in a
re-trial; however, such amounts could be material to our results of operations and
financial condition.

Two shareholder class action lawsuits
were filed in the United States District Court for the Southern District of New York on
August 16, 2001 and September 26, 2001, against Ziff-Davis, Eric Hippeau and Timothy
OBrien, and investment banks that were the underwriters of the public offering of
ZDNet series of Ziff-Davis stock (the ZDNet Offering). One of the complaints also names
CNET as a defendant, as successor in liability to Ziff-Davis. The complaints are similar
and allege violations of the Securities Act of 1933, and one of the complaints also
alleges violations of the Securities Exchange Act of 1934. The complaints allege the
receipt of excessive and undisclosed commissions by the underwriters in connection with
the allocation of shares of common stock to certain investors in the ZDNet Offering and
agreements by those investors to make additional purchases of stock in the aftermarket at
pre-determined prices. Plaintiffs allege that the prospectus for the ZDNet Offering was
false and misleading and in violation of the securities laws because it did not disclose
the arrangements. The action seeks damages in an unspecified amount. The action is being
coordinated with over 300 nearly identical actions filed against other companies and their
underwriters. On February 19, 2003, the Court granted CNETs motion to dismiss the
Section 10(b) claim with leave to replead, and denied the motion to dismiss the Section 11
claim.

The majority of the issuers,
including CNET, and their insurers have entered into a Memorandum of Understanding with
the plaintiffs to dismiss the issuers from the litigation in exchange for a
back-stop guarantee from the issuers and their insurers pursuant to which they
will pay the plaintiffs any shortfall between $1 billion and the amounts recovered in the
ongoing litigation against the underwriters. The parties are currently negotiating
definitive settlement documents, which are subject to the approval of the court. Based on
its insurance coverage and the number of issuers participating in the settlement, if the
settlement is finalized CNET does not believe that it will face any material liability as
a result of the litigation. If the settlement does not occur, CNET intends to seek
indemnification from the underwriters, and it is not possible to predict whether the
litigation will have a material adverse effect on CNETs financial condition or
results of operations.

There are no other legal proceedings
to which we are a party, other than ordinary routine litigation incidental to our business
that is not expected to be material to our business or financial condition.

# (11) SEGMENTS

CNETs primary areas of
measurement and decision-making include three principal business segments. Based upon the
criteria established by SFAS 131, Disclosures about Segments of an Enterprise and
Related Information, CNET has determined that its business segments are U.S. Media,
International Media and Channel Services. U.S. Media consists of an online network focused
on three content categories: personal technology, games and
entertainment, business technology. International Media includes the
delivery of online technology information and several technology print publications in non
U.S. markets. Channel Services includes a product database licensing business and an
online technology marketplace for resellers, distributors and manufacturers. As we
continue to see a convergence of customer relationships between U.S. Media and the Channel
Service product offerings, we will evaluate combining the reporting of the results of
Channel Services within U.S. Media in 2004.

Summarized information by segment as
excerpted from the internal management reports is as follows:

|(in thousands)         | Year Ended December 31, 2003
|---------------------- | ----------------------------
|
|Revenues               |                             
|Operating expenses     |                             
|                       |                             
|Operating income(loss) |                             
|                       |                             
|                       |                             
|
|
|Revenues               |                             
|Operating expenses     |                             
|                       |                             
|Operating loss         |                             
|                       |                             
|                       |                             
|                       |                             
|                       |                             
|
|
|Revenues               |                             
|Operating expenses     |                             
|                       |                             
|Operating loss         |                             
|                       |                             

Since operating income (loss) before
depreciation, amortization and asset impairment is the measure of operating performance
that management uses for making decisions and allocating resources, certain operating
costs are not allocated across segments. These unallocated operating costs, included in
Other in the tables above, represent all costs related to the realignment of
CNETs business and all depreciation and amortization expenses, as well as asset
impairment and disposal charges. For the year ended December 30, 2003, Other
includes $9.8 million of realignment expenses and depreciation and amortization expenses
of $23.6 million. The $9.8 million of realignment expenses consisted of $2.8 million of
lease abandonment expense, $890,000 of costs associated with the termination of
CNETs on-air radio operations, and $6.1 million of severance (relating to 135
employees). This $9.8 million of expense was included in the statement of operations as
$3.9 million in cost of revenue, $925,000 in sales and marketing and $5.0 million in
general and administrative expenses. For the year ended December 31, 2002,
Other includes $290.5 million of asset impairment, $12.4 million of
realignment expenses and depreciation and amortization expenses of $60.4 million. The
$12.4 million of realignment expenses consisted of $4.4 in lease abandonment charges, $8.0
million in severance (relating to 220 employees) and other realignment related expenses.
This $12.4 million of expense was included in the statement of operations as $778,000 in
cost of revenue, $339,000 in sales and marketing and $11.3 million in general and
administrative expenses. For the year ended December 31, 2001, Other includes
$43.0 million of realignment expenses, depreciation and amortization expenses of $703.0
million and $1.1 billion in asset impairment charges. The $43.0 million of integration
expenses consisted of $21.3 million in lease abandonment charges, which were included in
general and administrative expenses and $21.7 million of severance (relating to 457
employees) and other realignment related expenses. This $21.7 million of expenses was
included in the statement of operations as $8.7 million in cost of revenue, $2.0 million
in sales and marketing and $11.0 million in general and administrative expenses.

Assets are not allocated to segments
for internal reporting purposes. Segment operating income (loss) before realignment
expenses and depreciation and amortization should not be considered a substitute for
operating income, cash flows or other measures of financial performance prepared in
accordance with accounting principles generally accepted in the United States of America.

The following table presents revenues
for groups of similar services:

|                             | Year Ended December 31, 2003
|---------------------------- | ----------------------------
|
|Revenues:                    |                             
|Marketing services (1)       |                             
|Licensing, fees and user (2) |                             
|                             |                             
|Internet                     |                             
|Publishing (3)               |                             
|                             |                             
|                             |                             
|                             |                             

| | (1) | Marketing Services: sales of advertisements on our Internet network through
                    impression-based advertising (fees earned from the number of times an
                    advertisement is viewed by users of our websites) or activity-based advertising
                    (fees earned when our users click on an advertisement or text link to visit the
                    websites of our merchant partners, or download a software application or a
                    whitepaper)
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | Licensing, Fees and Users: licensing our product database and online content,
                    subscriptions to our online services, and other paid services
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (3) | Publishing: sales of advertisements in our print publications, subscriptions and
                    newsstand sales of publications, and custom publishing services.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------

# (12) GEOGRAPHIC INFORMATION

CNET has wholly-owned operations in
Australia, France, Germany, Japan, Singapore, Switzerland and the United Kingdom. In
addition, CNET has joint ventures in China and Korea, wherein CNET is a majority owner.
Those joint ventures are consolidated and operate advertising, publishing and events
businesses with aggregate assets of approximately $8.1 million. Any losses incurred by
these companies will be funded by CNET.

Revenue is attributed to individual
countries according to the international online property or print publication that
generated the revenue. International revenues accounted for 21%, 17% and 14% of net
revenues during the years ended December 31, 2003, 2002 and 2001, respectively. No single
foreign country accounted for more than 10% of net revenues for the year ended December
31, 2003.

The following table sets forth net revenues
and long-lived assets information for geographic areas:

|(in thousands)    | U.S. | International | Total
|----------------- | ---- | ------------- | -----
|2003              |      |               |      
|Net revenues      |      |               | $    
|Long-lived assets |      |               |      
|2002              |      |               |      
|Net revenues      |      |               | $    
|Long-lived assets |      |               |      
|2001              |      |               |      
|Net revenues      |      |               | $    
|Long-lived assets |      |               |      

Long-lived assets consist of property
and equipment, intangible assets and goodwill.

# (13) RELATED PARTY
TRANSACTIONS

In January 2003, CNET paid Clear
Channel Communications $250,000 as a final payment for the exclusive right to provide
programming and sell advertising on one of Clear Channels San Francisco radio
stations. Also in January 2003, CNET and Clear Channel agreed to the early termination of
that agreement in exchange for CNET paying Clear Channel $600,000, which represented a
reduction from CNETs remaining obligations under the agreement. The termination of the
agreement followed CNETs decision to discontinue its broadcast radio operations.
Randall Mays, a Director and Chief Financial Officer of Clear Channel, was a member of
CNETs Board of Directors and served as Chairman of the Audit Committee until his
resignation in June 2003. The agreement to license the San Francisco radio station from
Clear Channel was originally entered into when the station was owned by AM/FM, a company
that was eventually purchased by Clear Channel, and prior to Mr. Mays joining the CNET board.

An affiliate of SOFTBANK Corp. has
entered into a three-year agreement under which the SOFTBANK affiliate paid CNET $2.0
million in exchange for an exclusive license to the ZDNet brand and content in Japan. In
addition, CNET and SOFTBANK Media, an affiliate of SOFTBANK Corp., are joint owners of a
company that is the licensee and operator of CNETs ZDNet brand and online content in
Korea. SOFTBANK Media owns a 30.3 percent minority interest in the Korean entity, and CNET
owns a 63.7 percent interest. Eric Hippeau, Managing Partner of SOFTBANK Capital Partners,
a venture fund and affiliate of SOFTBANK, was a member of CNETs Board of Directors
and served on the Compensation Committee until his resignation in December 2003.

# (14) QUARTERLY FINANCIAL
DATA (unaudited)

|(in thousands, except per share data)           | Quarter Ended
|----------------------------------------------- | -------------
|
|2003                                            |              
|Revenues                                        |              
|Operating income(loss)(1)                       |              
|Income (loss) before income taxes               |              
|Net income (loss)                               |              
|Basic and diltued net income (loss) per share $ |              
|                                                |              
|2002                                            |              
|Revenues                                        |              
|Operating loss(2)(3)                            |              
|Income (loss) before income taxes(4)(5)         |              
|Net income (loss)(6)                            |              
|Basic and diltued net income (loss) per share $ |              

| | (1) | Quarterly realignment expense charges for the first and second quarters of 2003
                    were $5.4 million and $4.3 million, respectively.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | Quarterly realignment expense charges for the first, second and fourth quarters
                    of 2002 were $2.9 million, $7.7 million and $1.8 million, respectively.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (3) | In the third quarter of 2002, CNET performed its annual goodwill and intangible
                    asset impairment test as of August 31, 2002. The results of this annual
                    impairment test indicated the carrying value of goodwill and other intangible
                    assets for the U.S. Media reporting unit exceeded their implied fair values, and
                    an impairment charge of $238.8 million for goodwill and of $40.5 million for
                    intangible assets of that reporting unit was recorded in the third quarter of
                    2002. Additionally, a loss on disposal of fixed assets of $1.8 million and $9.4
                    million was recorded in the third and fourth quarters of 2002, respectively.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (4) | In the first, second and third quarters of 2002, CNET incurred an impairment
                    loss of $7.6 million, $500,000, and $7.3 million on certain privately held
                    investment for which an other-than-temporary loss was deemed to have occurred.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (5) | In the third quarter of 2002, CNET paid $3.6 million to repurchase $6.8 million
                    principal amount of the 5% Convertible Subordinated Notes, resulting in a gain
                    of $3.1 million, net of a write-off of related capitalized debt issuance costs
                    of $0.1 million. In the fourth quarter of 2002, CNET paid $33.1 million to
                    repurchase $52.4 million principal amount of the 5% Convertible Subordinated
                    Notes, resulting in a gain of $18.5 million, net of a write-off of deferred debt
                    issuance costs of $0.8 million.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (6) | In the first and second quarters of 2002, CNET recorded a tax benefit of $9.0
                    million and $11.3 million, respectively, primarily due to the realization of
                    deferred tax assets in 2002, which were considered to not be recoverable
                    previously.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

# SCHEDULE II CNET NETWORKS, INC. 
VALUATION AND QUALIFYING ACCOUNTS YEARS ENDED DECEMBER 31, 2003, 2002, AND 2001 (in thousands)

|                  | Balance atBeginningof Period | Acquisitions | Charged toCosts andExpenses | Charged toOtherAccounts | DeductionsDescribe (1) | Balance atEndof Period
|----------------- | ---------------------------- | ------------ | --------------------------- | ----------------------- | ---------------------- | ----------------------
|                  |                              |              |                             |                         |                        |                       
|2003              |                              |              |                             |                         |                        |                       
|Allowance for     |                              |             
|doubtful accounts |                              |              | $                           | 17,156                  |                        | $                     
|                  |                              |              |                             |                         |                        |                       
|2002              |                              |              |                             |                         |                       
|Allowance for     |                              |             
|doubtful accounts |                              |              | $                           | 20,691                  |                        | $                     
|                  |                              |              |                             |                         |                        |                       
|2001              |                              |              |                             |                         |                       
|Allowance for     |                              |             
|doubtful accounts |                              |              | $                           | 16,970                  |                        | $                     

(1)  Accounts written off.

---

Independent
Auditors Report on Schedule

The Board of Directors
and StockholdersCNET Networks, Inc.

Under date of January 26, 2004, we
reported on the consolidated balance sheets of CNET Networks, Inc. and subsidiaries as of
December 31, 2003 and 2002, 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, 2003, as contained in the annual report on Form 10-K for the year 2003.
In connection with our audits of the aforementioned consolidated financial statements, we
also audited the related consolidated financial statement schedule in the annual report on
Form 10-K. This consolidated financial statement schedule is the responsibility of
CNETs management. Our responsibility is to express an opinion on this consolidated
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.

As discussed in note 1 to the
consolidated financial statements, the Company adopted the provisions of Statement of Financial
Accounting Standards (SFAS) No. 142, Goodwill
and Other Intangible Assets on January 1, 2002.

/s/ KPMG LLP

San Francisco, California
January 26, 2004

---

Item 9. Changes in and
Disagreements with Accountants on Accounting and Financial Disclosure

Not applicable.

# Item 9A. Controls and
Procedures

(a)    
          Evaluation of disclosure controls and procedures. Our chief executive officer
          and our chief financial officer, after evaluating the effectiveness of our
          disclosure controls and procedures, as defined in Rules 13a-14(c)
          and 15d-14(c) promulgated under the Securities Exchange Act of 1934, as of a
          date (the Evaluation Date) within 90 days before the filing date of this
          quarterly report, have concluded that as of the Evaluation Date our disclosure
          controls and procedures were adequate and designed to ensure that material
          information relating to us and our consolidated subsidiaries would be made known
          to them by others within those entities.

(b)    
          Changes in internal controls. There were no significant changes in our internal
          controls or, to our knowledge, in other factors that could significantly affect
          our disclosure controls and procedures subsequent to the Evaluation Date.

# PART III

# Item 10. Directors and
Executive Officers of the Registrant

Incorporated by reference from the
Proxy Statement, which will be filed pursuant to Regulation 14A (the Proxy
Statement), under the caption Information regarding Executive Officers and
Directors Section 16(a) Beneficial Ownership Reporting Compliance.

# Item 11. Executive
Compensation

Incorporated by reference from the
Proxy Statement, under the caption Executive Compensation, 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 Proxy
Statement under the caption Stock Ownership of Principal Stockholders and
Management and Equity Compensation Plan Information.

# Item 13. Certain
Relationships and Related Transactions

Incorporated by reference from the
Proxy Statement under the caption Certain Relationships and Related
Transactions.

# Item 14. Principal
Accounting Fees and Services

Incorporated by reference from the
Proxy Statement under the caption Principal Accounting Fees and Services.

# Item 15. Exhibits,
Consolidated Financial Statement Schedules and Reports on Form 8-K

(a)The following documents are filed as part of this report:

| | (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 Statements of Operations for the years ended December 31, 2003, 2002 and 2001
| |  | ------------------------------------------------------------------------------------------

| |  | Consolidated Balance Sheets as of December 31, 2003 and 2002
| |  | ------------------------------------------------------------

| |  | Consolidated Statements of Cash Flow for the years ended December 31, 2003, 2002 and 2001
| |  | -----------------------------------------------------------------------------------------

| |  | Consolidated Statements of Stockholders Equity for the years ended December 31, 2003,
 2002 and 2001
| |  | -----------------------------------------------------------------------------------------------------

| |  | Notes to Consolidated Financial Statements
| |  | ------------------------------------------

| |  | Independent Auditors' Report
| |  | ----------------------------

| | (2) | Financial Statement Schedules. The following financial statement schedule is
               filed as part of this report:
| | --- | -------------------------------------------------------------------------------------------------------------------------

| |  | S-1 Schedule II Valuation and Qualifying Accounts
| |  | -------------------------------------------------

| |  | S-2 Independent Auditors' Report on Schedule
| |  | --------------------------------------------

(b) Reports on Form 8-K

The following reports on Form 8-K
were filed during the quarter ended December 31, 2003:

| | Current
Report on Form 8-K dated October 16, 2003, Item 9  Regulation FD
Disclosure, which reported CNETs financial results for the three and nine
months ended September 30, 2003.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Exhibits.

| | Exhibit Number | Description
| | -------------- | -----------

| | 3.1 | Certificate of Amendment of Certificate of Incorporation of CNET (Incorporated by
reference from a previously filed exhibit to CNETs Quarterly Report on Form 10-Q for
the quarter ended June 30, 1998)
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 3.2 | Amended and Restated Certificate of Incorporation of CNET (Incorporated by reference from
a previously filed exhibit to CNETs Registration Statement on Form SB-2,
registration no.333-4752-LA.)
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 3.4* | Amended and Restated Bylaws of CNET (Incorporated by reference from a previously filed
exhibit to CNETs Annual Report on Form 10-K for the year ended December 31, 1999)
| | ---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 4.1 | Specimen of Common Stock Certificate (Incorporated by reference from a previously filed
exhibit to CNETs Registration Statement on Form SB-2, registration no.333-4752-LA.)
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 4.2 | Indenture dated March 8, 1999 between CNET and The Bank of New York, as trustee
(Incorporated by reference from a previously filed exhibit to CNETs Annual Report on
Form 10-K for the year ended December 31, 1998)
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 4.3 | Form of 5% Convertible Subordinated Notes due 2006 (Incorporated by reference from a
previously filed exhibit to CNETs Annual Report on Form 10-K for the year ended
December 31, 1998)
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.1* | Form of IndemnificationAgreement with certain of the Registrants Officers and Directors
| | ----- | ----------------------------------------------------------------------------------------

| | 10.2* | Form of StockOption Agreement with the Registrants named executive officers
| | ----- | ----------------------------------------------------------------------------

| | 10.17 | Lease of
Ziff-Davis Inc.s headquarters at 28 East 28th Street, New York, New York
(incorporated by reference to
the exhibit in Ziff-Davis Inc.s Registration Statement of Form S-1, File No.
333-46493)
| | ----- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.18 | Agreement and Consent to Assignment, dated as of April 4, 2000, by and
among 63 Madison Associates, L.P., ZD Inc. and Ziff Davis Publishing Inc. (incorporated by reference to a previously
filed exhibit to the Ziff-Davis, Inc. Annual Report for the year ended December 31, 1999)
| | ----- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.19 | Assignment and Assumption of Lease, dated as of April 5, 2000, between ZD Inc. and Ziff Davis
             Publishing Inc. (incorporated by reference to a previously filed exhibit to the Ziff-Davis, Inc. Annual Report
for the year ended December 31, 1999)
| | ----- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.21 | 2001 CNET Networks, Inc. Stock Incentive Plan ( incorporated by reference to a previously filed
             exhibit to the Registration Statement on Form S-8, as filed on April 11, 2002
| | ----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 14.1* | Code of Ethics
| | ----- | --------------

| | 21.1* | List of Subsidiary Corporations
| | ----- | -------------------------------

| | 23.1* | Consent of KPMG LLP
| | ----- | -------------------

| | 31.1* | Certificate of Chief Executive Officer pursuant to Securities Exchange Act Rules 13a-15(e)
and 15d-15(e), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 dated
August 1, 2003
| | ----- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 31.2* | Certificate of Chief Financial Officer pursuant to Securities Exchange Act Rules 13a-15(e)
and 15d-15(e), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 dated
August 1, 2003
| | ----- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 32.1* | Certificate of Chief Executive Officer pursuant to section 18 U.S.C. Section 1350, dated August 1, 2003
| | ----- | -------------------------------------------------------------------------------------------------------

| | 32.2* | Certificate of Chief Financial Officer pursuant to section 18 U.S.C. Section 1350, dated August 1, 2003
| | ----- | -------------------------------------------------------------------------------------------------------

*..........Filed herewith.

# 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.

| |  | CNET Networks, Inc.By: /s/ Shelby W. Bonnie
Shelby W. BonnieChairman of
the Board and Chief Executive OfficerDate: February 27, 2004
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------

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/ Shelby W. Bonnie
Shelby W. BonnieChairman of
the Board and Chief Executive OfficerDate: February 27, 2004
| |  | -------------------------------------------------------------------------------------------------------------------------------

| |  | By: /s/ Douglas N. Woodrum
Douglas N. WoodrumExecutive Vice President and Chief Financial Officer
Date: February 27, 2004
| |  | ---------------------------------------------------------------------------------------------------------------------------------------

| |  | By: /s/ David P. Overmyer 
David P. Overmyer Senior Vice President, Finance and Administration (Principal Accounting Officer)
Date: February 27, 2004
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | By: /s/ John C. Bud Colligan
John C. Bud ColliganDirectorDate: February 27, 2004
| |  | --------------------------------------------------------------------------------------------------

| |  | By: /s/ Mitchell Kertzman 
Mitchell Kertzman DirectorDate: February 27, 2004
| |  | ------------------------------------------------------------------------------------------

| |  | By: /s/ Jarl Mohn
Jarl MohnDirectorDate: February 27, 2004
| |  | ------------------------------------------------------------------------

| |  | By: /s/ Betsey Nelson
Betsey NelsonDirectorDate: February 27, 2004
| |  | --------------------------------------------------------------------------------

| |  | By: /s/ Eric Robison
JEric RobisonDirectorDate: February 27, 2004
| |  | -------------------------------------------------------------------------------