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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-Q



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(Mark One)

|x | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|- | ---------------------------------------------------------------------------------------

For the Quarterly Period Ended June 30, 2006

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



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CNET Networks, Inc.

(Exact name of registrant as specified in its charter)



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|                                                               |  |                                        
|-------------------------------------------------------------- |  | ---------------------------------------
|Delaware                                                       |  | 13-3696170                             
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification Number)

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)



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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 whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer  x    Accelerated filer ̈Non-accelerated filer ̈

Indicate by check mark whether the registrant
is shell company (as defined in Rule 12b-2 of the Exchange Act).    YES ̈NO  x

As of January 25, 2007
there were 149,804,679 shares of the registrants common stock outstanding.



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EXPLANATORY NOTE

On August 10, 2006, we filed a Form NT 10-Q indicating that we would not be able to file our Form 10-Q for the quarterly period ended June 30, 2006 pending completion of an independent investigation into our
stock option accounting conducted under the direction of a special committee of the Board of Directors (Special Committee) established in May 2006. We announced the findings of the Special Committees review of our option granting
practices on October 11, 2006, and management concluded its review in January 2007. Based on these reviews, we have restated our financial statements for the years ended December 31, 1996 through December 31, 2005 and the interim
periods therein to record additional stock compensation expense.

On January 29, 2007, we filed an amended Annual Report on Form 10-K/A for the fiscal year
ended December 31, 2005 (the Form 10-K/A). The Form 10-K/A includes restated statements of operations and balance sheets for all quarters of 2005. The condensed consolidated financial statements as of and for the three and six
months ended June 30, 2005 included in this Quarterly Report on Form 10-Q reflect the restated financial statements included in the Form 10-K/A. For additional information on the restatement and other adjustments and reclassifications, see Note 2 to
the financial statements included in Part II, Item 8 of the Form 10-K/A.



2



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PART I.

ITEM 1. FINANCIAL INFORMATION

CNET NETWORKS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

(in thousands, except per share data)



|                                                        |  |                             |         |   |                           |   |         |      |  |   |         |   |  |   |         |  
|------------------------------------------------------- |  | --------------------------- | ------- | - | ------------------------- | - | ------- | ---- |  | - | ------- | - |  | - | ------- | -
|                                                        |  | Three Months Ended June 30, |         |   | Six Months Ended June 30, |  
|                                                        |  | 2006                        |         |   | 2005                      |   |         | 2006 |  |   | 2005    |  
|Revenues:                                               |  | $                           | 92,377  |   |                           | $ | 80,693  |      |  | $ | 176,027 |   |  | $ | 152,098 |  
|                                                        |  |                             |         |  
|Operating expenses:                                     |  |                             |         |   |                           |   |         |      |  |   |         |   |  |   |         |  
|Cost of revenues                                        |  |                             | 40,552  |   |                           |   | 37,608  |      |  |   | 81,971  |   |  |   | 74,561  |  
|Sales and marketing                                     |  |                             | 24,689  |   |                           |   | 19,636  |      |  |   | 47,652  |   |  |   | 38,241  |  
|General and administrative                              |  |                             | 12,933  |   |                           |   | 12,138  |      |  |   | 26,962  |   |  |   | 22,949  |  
|Stock option investigation                              |  |                             | 1,401   |   |                           |   |        |      |  |   | 1,401   |   |  |   |        |  
|Depreciation                                            |  |                             | 5,265   |   |                           |   | 4,285   |      |  |   | 10,087  |   |  |   | 8,289   |  
|Amortization of intangible assets                       |  |                             | 2,710   |   |                           |   | 2,344   |      |  |   | 5,449   |   |  |   | 4,453   |  
|                                                        |  |                             |         |   |                           |   |         |      |  |   |         |   |  |   |         |  
|Total operating expenses                                |  |                             | 87,550  |   |                           |   | 76,011  |      |  |   | 173,522 |   |  |   | 148,493 |  
|Operating income                                        |  |                             | 4,827   |   |                           |   | 4,682   |      |  |   | 2,505   |   |  |   | 3,605   |  
|                                                        |  |                             |         |  
|Non-operating income (expense):                         |  |                             |         |   |                           |   |         |      |  |   |         |   |  |   |         |  
|Realized gains (losses) on investments, net             |  |                             |        |   |                           |   | (198    | )    |  |   | 500     |   |  |   | 370     |  
|Interest income                                         |  |                             | 1,280   |   |                           |   | 521     |      |  |   | 2,432   |   |  |   | 884     |  
|Interest expense                                        |  |                             | (659    | ) |                           |   | (1,010  | )    |  |   | (1,318  | ) |  |   | (1,790  | )
|Other, net                                              |  |                             | (83     | ) |                           |   | (21     | )    |  |   | 57      |   |  |   | (82     | )
|                                                        |  |                             |         |   |                           |   |         |      |  |   |         |   |  |   |         |  
|Total non-operating income (expense)                    |  |                             | 538     |   |                           |   | (708    | )    |  |   | 1,671   |   |  |   | (618    | )
|                                                        |  |                             |         |   |                           |   |         |      |  |   |         |   |  |   |         |  
|Income from continuing operations before income taxes   |  |                             | 5,365   |   |                           |   | 3,974   |      |  |   | 4,176   |   |  |   | 2,987   |  
|                                                        |  |                             |         |  
|Income tax expense (benefit)                            |  |                             | 205     |   |                           |   | (989    | )    |  |   | 281     |   |  |   | (982    | )
|                                                        |  |                             |         |   |                           |   |         |      |  |   |         |   |  |   |         |  
|Income from continuing operations                       |  |                             | 5,160   |   |                           |   | 4,963   |      |  |   | 3,895   |   |  |   | 3,969   |  
|                                                        |  |                             |         |   |                           |   |         |      |  |   |         |   |  |   |         |  
|Income (loss) from discontinued operations              |  |                             |        |   |                           |   | 368     |      |  |   | (37     | ) |  |   | 548     |  
|                                                        |  |                             |         |   |                           |   |         |      |  |   |         |   |  |   |         |  
|Net income                                              |  | $                           | 5,160   |   |                           | $ | 5,331   |      |  | $ | 3,858   |   |  | $ | 4,517   |  
|                                                        |  |                             |         |   |                           |   |         |      |  |   |         |   |  |   |         |  
|Basic net income per share                              |  | $                           | 0.04    |   |                           | $ | 0.04    |      |  | $ | 0.04    |   |  | $ | 0.03    |  
|                                                        |  |                             |         |   |                           |   |         |      |  |   |         |   |  |   |         |  
|Diluted net income per share                            |  | $                           | 0.04    |   |                           | $ | 0.04    |      |  | $ | 0.03    |   |  | $ | 0.03    |  
|                                                        |  |                             |         |   |                           |   |         |      |  |   |         |   |  |   |         |  
|Shares used in calculating basic net income per share   |  |                             | 149,549 |   |                           |   | 144,862 |      |  |   | 148,857 |   |  |   | 144,288 |  
|Shares used in calculating diluted net income per share |  |                             | 152,775 |   |                           |   | 151,171 |      |  |   | 152,927 |   |  |   | 150,734 |  

See accompanying Notes to Condensed Consolidated Financial Statements.



3



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CNET NETWORKS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(in thousands, except per share data)



|                                                                                                                                                |  |               |            |   |                   |   |            |  
|----------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- | ---------- | - | ----------------- | - | ---------- | -
|                                                                                                                                                |  | June 30, 2006 |            |   | December 31, 2005 |  
|ASSETS                                                                                                                                          |  |               |            |   |                   |   |            |  
|Current Assets:                                                                                                                                 |  |               |            |   |                   |   |            |  
|Cash and cash equivalents                                                                                                                       |  | $             | 79,040     |   |                   | $ | 55,895     |  
|Investments in marketable debt securities                                                                                                       |  |               | 42,736     |   |                   |   | 41,591     |  
|Accounts receivable, net                                                                                                                        |  |               | 67,535     |   |                   |   | 85,312     |  
|Other current assets                                                                                                                            |  |               | 14,738     |   |                   |   | 14,337     |  
|                                                                                                                                                |  |               |            |   |                   |   |            |  
|Total current assets                                                                                                                            |  |               | 204,049    |   |                   |   | 197,135    |  
|                                                                                                                                                |  |              
|Restricted cash                                                                                                                                 |  |               | 2,248      |   |                   |   | 2,248      |  
|Investments in marketable debt securities                                                                                                       |  |               | 19,258     |   |                   |   | 12,432     |  
|Property and equipment, net                                                                                                                     |  |               | 66,485     |   |                   |   | 57,765     |  
|Other assets                                                                                                                                    |  |               | 15,162     |   |                   |   | 18,948     |  
|Intangible assets, net                                                                                                                          |  |               | 35,798     |   |                   |   | 37,380     |  
|Goodwill                                                                                                                                        |  |               | 132,131    |   |                   |   | 129,658    |  
|                                                                                                                                                |  |               |            |   |                   |   |            |  
|Total assets                                                                                                                                    |  | $             | 475,131    |   |                   | $ | 455,566    |  
|                                                                                                                                                |  |               |            |   |                   |   |            |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                            |  |               |            |   |                   |   |            |  
|Current liabilities:                                                                                                                            |  |               |            |   |                   |   |            |  
|Accounts payable                                                                                                                                |  | $             | 9,246      |   |                   | $ | 8,330      |  
|Accrued liabilities                                                                                                                             |  |               | 48,310     |   |                   |   | 52,140     |  
|Current portion of long-term debt                                                                                                               |  |               | 130,982    |   |                   |   | 2,652      |  
|                                                                                                                                                |  |               |            |   |                   |   |            |  
|Total current liabilities                                                                                                                       |  |               | 188,538    |   |                   |   | 63,122     |  
|                                                                                                                                                |  |              
|Non-current liabilities:                                                                                                                        |  |               |            |   |                   |   |            |  
|Long-term debt                                                                                                                                  |  |               | 12,364     |   |                   |   | 139,114    |  
|Other liabilities                                                                                                                               |  |               | 778        |   |                   |   | 794        |  
|                                                                                                                                                |  |               |            |   |                   |   |            |  
|Total liabilities                                                                                                                               |  |               | 201,680    |   |                   |   | 203,030    |  
|                                                                                                                                                |  |              
|Stockholders equity:                                                                                                                           |  |               |            |   |                   |   |            |  
|Common stock; $0.0001 par value; 400,000 shares authorized; 149,749 and 148,685 outstanding at June 30, 2006 at December 31, 2005,
respectively |  |               | 15         |   |                   |   | 15         |  
|Additional paid-in-capital                                                                                                                      |  |               | 2,870,710  |   |                   |   | 2,857,175  |  
|Deferred stock compensation                                                                                                                     |  |               |           |   |                   |   | (2,871     | )
|Accumulated other comprehensive loss                                                                                                            |  |               | (12,743    | ) |                   |   | (13,394    | )
|Treasury stock, at cost; 1,510 shares                                                                                                           |  |               | (30,453    | ) |                   |   | (30,453    | )
|Accumulated deficit                                                                                                                             |  |               | (2,554,078 | ) |                   |   | (2,557,936 | )
|                                                                                                                                                |  |               |            |   |                   |   |            |  
|Total stockholders equity                                                                                                                      |  |               | 273,451    |   |                   |   | 252,536    |  
|                                                                                                                                                |  |               |            |   |                   |   |            |  
|Total liabilities and stockholders equity                                                                                                      |  | $             | 475,131    |   |                   | $ | 455,566    |  
|                                                                                                                                                |  |               |            |   |                   |   |            |  

See accompanying Notes to Condensed Consolidated Financial Statements.



4



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CNET NETWORKS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(in thousands)



|                                                                                  |  |                          |         |   |      |   |         |  
|--------------------------------------------------------------------------------- |  | ------------------------ | ------- | - | ---- | - | ------- | -
|                                                                                  |  | Six Months EndedJune 30, |        
|                                                                                  |  | 2006                     |         |   | 2005 |  
|Cash flows from operating activities:                                             |  |                          |         |   |      |   |         |  
|Net Income                                                                        |  | $                        | 3,858   |   |      | $ | 4,517   |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                          |         |   |      |   |         |  
|Depreciation and amortization                                                     |  |                          | 15,536  |   |      |   | 12,830  |  
|Stock compensation expense                                                        |  |                          | 9,389   |   |      |   | 3,239   |  
|Asset disposals                                                                   |  |                          | 72      |   |      |   | 31      |  
|Noncash interest                                                                  |  |                          | (325    | ) |      |   | 244     |  
|Allowance for doubtful accounts                                                   |  |                          | 1,740   |   |      |   | 1,017   |  
|Gain on sale of business                                                          |  |                          | (778    | ) |      |   |        |  
|Gain on sale of marketable securities and privately held investments              |  |                          | (500    | ) |      |   | (568    | )
|Loss on impairment of privately held investments                                  |  |                          |        |   |      |   | 198     |  
|Changes in operating assets and liabilities, net of acquisitions:                 |  |                          |         |   |      |   |         |  
|Accounts receivable                                                               |  |                          | 15,806  |   |      |   | 3,226   |  
|Other assets                                                                      |  |                          | 2,215   |   |      |   | (332    | )
|Accounts payable                                                                  |  |                          | 862     |   |      |   | 2,801   |  
|Accrued liabilities                                                               |  |                          | (3,806  | ) |      |   | (5,322  | )
|Other long-term liabilities                                                       |  |                          | (19     | ) |      |   | (113    | )
|                                                                                  |  |                          |         |   |      |   |         |  
|Net cash provided by operating activities                                         |  |                          | 44,050  |   |      |   | 21,768  |  
|                                                                                  |  |                          |         |   |      |   |         |  
|Cash flows from investing activities:                                             |  |                          |         |   |      |   |         |  
|Purchase of marketable debt securities                                            |  |                          | (31,090 | ) |      |   | (4,275  | )
|Proceeds from sale of marketable debt securities                                  |  |                          | 23,812  |   |      |   | 16,984  |  
|Proceeds from sales of investments in privately held companies                    |  |                          | 2,531   |   |      |   | 568     |  
|Investments in privately held companies                                           |  |                          |        |   |      |   | (1,672  | )
|Cash paid for acquisitions, net of cash acquired                                  |  |                          | (6,259  | ) |      |   | (15,940 | )
|Purchases of property and equipment                                               |  |                          | (17,431 | ) |      |   | (10,935 | )
|                                                                                  |  |                          |         |   |      |   |         |  
|Net cash used in investing activities                                             |  |                          | (28,437 | ) |      |   | (15,270 | )
|                                                                                  |  |                          |         |   |      |   |         |  
|Cash flows from financing activities:                                             |  |                          |         |   |      |   |         |  
|Proceeds from exercise of stock options                                           |  |                          | 7,018   |   |      |   | 8,086   |  
|Proceeds from borrowings                                                          |  |                          |        |   |      |   | 10,000  |  
|Principal payments on borrowings                                                  |  |                          | (47     | ) |      |   | (10,885 | )
|                                                                                  |  |                          |         |   |      |   |         |  
|Net cash provided by financing activities                                         |  |                          | 6,971   |   |      |   | 7,201   |  
|                                                                                  |  |                          |         |   |      |   |         |  
|Net increase in cash and cash equivalents                                         |  |                          | 22,584  |   |      |   | 13,699  |  
|Effect of exchange rate changes on cash and cash equivalents                      |  |                          | 561     |   |      |   | (1,061  | )
|Cash and cash equivalents at the beginning of the period                          |  |                          | 55,895  |   |      |   | 29,560  |  
|                                                                                  |  |                          |         |   |      |   |         |  
|Cash and cash equivalents at the end of the period                                |  | $                        | 79,040  |   |      | $ | 42,198  |  
|                                                                                  |  |                          |         |   |      |   |         |  
|Supplemental disclosure of cash flow information:                                 |  |                          |         |   |      |   |         |  
|Interest paid                                                                     |  | $                        | 934     |   |      | $ | 1,112   |  
|Taxes paid                                                                        |  | $                        | 658     |   |      | $ | 876     |  

See accompanying Notes to Condensed Consolidated Financial Statements.



5



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CNET NETWORKS, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2006

(1) BASIS OF FINANCIAL STATEMENTS

BUSINESS AND BASIS OF
PRESENTATION

CNET Networks, Inc. (CNET Networks) is a worldwide media company and creator of content environments for the interactive
age. CNET Networks operates websites, each with its own distinct brand, in four content categories: technology, games and entertainment, business and community. The technology category is anchored by brands such as CNET, CNET Download.com,
and CNET News.com. The games and entertainment category primarily consists of the GameSpot, MP3.com and TV.com brands. Industry leading brands such as ZDNet, TechRepublic, BNET, CNET News.com and Release 1.0 are components of the business
category. Community is anchored by the Webshots brand. Many of CNET Networks international sites operate under the same brands as our U.S. sites, with additional brands represented, such as ZOL, PCHome and Silicon. CNET Networks
was incorporated in the state of Delaware in December 1992.

In the opinion of management, the accompanying unaudited condensed consolidated financial
statements reflect all adjustments, consisting only of normal recurring adjustments, except as otherwise indicated, considered necessary for a fair presentation of the financial condition, results of operations and cash flows for the periods
presented. These condensed financial statements should be read in conjunction with the audited consolidated financial statements included in CNET Networks most recent Annual Report on Form 10-K/A, as filed with the Securities and Exchange
Commission, which contains additional financial and operating information and information concerning the significant accounting policies followed by CNET Networks.

The condensed consolidated results of operations for the three and six months ended June 30, 2006 are not necessarily indicative of the results to be expected for the year ending December 31, 2006 or any other future period.

SIGNIFICANT ACCOUNTING POLICIES

There have
been no significant changes in CNET Networks significant accounting policies during the six months ended June 30, 2006 as compared to what was previously disclosed in CNET Networks Amended Annual Report on Form 10-K/A for the year
ended December 31, 2005, except as noted below.

CONCENTRATION OF CREDIT RISK

Financial instruments potentially subjecting CNET Networks to concentrations of credit risk consist primarily of cash, cash equivalents, marketable debt securities and
trade accounts receivable. CNET Networks invests excess cash in low risk, liquid instruments. The majority of CNET Networks accounts receivable is derived from sales to advertising agencies, located in the United States. CNET Networks closely
monitors its outstanding receivable balances on an ongoing basis.

There were no customers with revenues exceeding 10% of total revenues for the three
months ended June 30, 2006 and three and six months ended June 30, 2005, respectively. Revenues from one customer, Google Inc., approximated 10% of total revenues for the six months ended June 30, 2006. Approximately 5% of CNET
Networks accounts receivable balance at June 30, 2006 is due from Google, Inc.

STOCK-BASED COMPENSATION

On January 1, 2006, CNET Networks adopted SFAS 123(R) which requires the measurement and recognition of compensation expense for all share-based awards made to
employees and directors, including employee stock options and employee stock purchases, based on estimated fair values. SFAS 123(R) supersedes CNET Networks previous accounting for share-based awards under APB 25 for periods beginning in 2006.
In March 2005, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 107 (SAB 107) relating to SFAS



6



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123(R). CNET Networks has applied the provisions of SAB 107 in its adoption of SFAS 123(R). CNET Networks adopted SFAS 123(R) using the modified
prospective transition method, which requires the application of the accounting standard as of the beginning of CNET Networks current year. CNET Networks financial statements as of and for the three months ended March 31, 2006
reflect the impact of SFAS 123(R). In accordance with the modified prospective transition method, CNET Networks financial statements for prior periods do not include the impact of SFAS 123(R).

Stock compensation expense recognized during the period is based on the value of share-based awards that are expected to vest during the period. Stock compensation
expense recognized in CNET Networks statement of operations for 2006 includes compensation expense related to share-based awards granted prior to January 1, 2006 that vested during the current period based on the grant date fair value
estimated in accordance with the pro forma provisions of SFAS 123. Stock compensation expense during the current period also includes compensation expense for the share-based awards granted subsequent to January 1, 2006 based on the grant
date fair value estimated in accordance with the provisions of SFAS 123(R). As stock compensation expense recognized in the statement of operations is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures.
SFAS 123(R) requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.In the CNET Networks pro forma information required under SFAS 123
for periods prior to 2006, forfeitures were estimated and factored into the expected term of the options.

CNET Networks determination of estimated
fair value of share-based awards utilizes the Black-Scholes option-pricing model. The Black-Scholes model is affected by CNET Networks stock price as well as assumptions regarding certain highly complex and subjective
variables. These variables include, but are not limited to, CNET Networks expected stock price volatility over the term of the awards and actual and projected employee stock option exercise behaviors.

SFAS 123(R) requires the calculation of the beginning balance of the pool of excess tax benefits (additional paid-in capital pool or APIC pool) available to
absorb tax deficiencies recognized subsequent to its adoption. SFAS 123(R) states that this beginning APIC pool shall include the net excess tax benefits that would have arisen had the company adopted the original Statement 123. FASB Staff
Position (FSP) 123(R)-3 provides a simplified method for determining this APIC pool, which CNET Networks may elect to adopt up to one year from its initial adoption of SFAS 123(R). CNET Networks has made the decision to elect the
simplified method for determining its APIC pool as provided in FSP No. 123(R)-3. CNET Networks will recognize tax attributes associated with changed in the APIC pool based on provisions in the tax law that identify the sequence in which those
amounts are utilized for tax purposes.

Prior to the adoption of Statement of Financial Accounting Standards No. 123 (revised 2004), Share-Based
Payment, (SFAS 123(R)), CNET Networks accounted for stock-based awards to employees and directors using the intrinsic value method in accordance with Accounting Principles Board Opinion No. 25, Accounting for Stock
Issued to Employees (APB 25). Under the intrinsic value method that was used to account for stock-based awards prior to January 1, 2006, which had been allowed under the original provisions of Statement 123, compensation
expense is recorded on the date of grant if the current market price of the underlying stock exceeded the exercise price. Any compensation expense is recorded on a straight-line basis over the vesting period of the grant.

(2) DISCONTINUED OPERATIONS

On February 2, 2006, CNET
Networks sold its Computer Shopper magazine business to SX2 Media Labs LLC. The Computer Shopper magazine business was part of the U.S. Media segment. In accordance with the provisions of SFAS 144, CNET Networks has accounted for this
disposal as a discontinued operation. The results of this business in all periods has been reclassified from continuing operations and shown as discontinued operations on the consolidated statement of operations. Upon completion of the
sale in the first quarter of 2006, CNET Networks recorded a gain of $0.8 million associated with the sale, which is also included in discontinued operations.



7



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Following is summarized financial information for Computer Shopper:



|                                                              |  |                             |     |                           |   |       |  |   |       |   |  |   |      
|------------------------------------------------------------- |  | --------------------------- | --- | ------------------------- | - | ----- |  | - | ----- | - |  | - | -----
|                                                              |  | Three Months Ended June 30, |     | Six Months Ended June 30,
|(in thousands)                                                |  | 2006                        |     | 2005                      |   | 2006  |  |   | 2005 
|Revenues                                                      |  | $                           |    |                           | $ | 4,139 |  | $ | 987   |   |  | $ | 7,627
|                                                              |  |                             |     |                           |   |       |  |   |       |   |  |   |      
|Net operating income (loss) from discontinued operations      |  | $                           |    |                           | $ | 368   |  | $ | (815  | ) |  | $ | 548  
|Gain on sale, net of income tax expense                       |  |                             |    |                           |   |      |  |   | 778   |   |  |   |     
|                                                              |  |                             |     |                           |   |       |  |   |       |   |  |   |      
|Income (loss) from discontinued operations, net of tax        |  | $                           |    |                           | $ | 368   |  | $ | (37   | ) |  | $ | 548  
|                                                              |  |                             |     |                           |   |       |  |   |       |   |  |   |      
|Basic and diluted income per share of discontinued operations |  | $                           | N/A |                           | $ | 0.00  |  | $ | (0.00 | ) |  | $ | 0.00 
|                                                              |  |                             |     |                           |   |       |  |   |       |   |  |   |      

(3) ACQUISITIONS

For the six months ended June 30, 2006, purchase consideration for all 2006 acquisitions was as follows:



|                         |  |   |      
|------------------------ |  | - | -----
|(in thousands)           |  |  
|Cash                     |  | $ | 5,378
|Deferred consideration   |  |   | 1,500
|Direct acquisition costs |  |   | 64   
|                         |  |   |      
|Net assets acquired      |  | $ | 6,942
|                         |  |   |      

During the second quarter of 2006, CNET Networks made three acquisitions. In April 2006, CNET Networks
purchased Western IT Networking Co., Ltd (West IT) and Instant Comma, Inc. (CHOW). West IT is an independent online resource dedicated to providing news, reviews, and information about IT products, and digital
products. CHOW is an online resource dedicated to providing content in the area of food and lifestyle. In May 2006, CNET Networks acquired UrbanBaby, Inc (UrbanBaby), which is an online resource that contains a guide for
expectant and new mothers.

These acquisitions serve to broaden CNET Networks content coverage, and expand its opportunity to reach new categories of
advertisers. Under the terms of the agreements, CNET Networks paid an aggregate purchase price totaling $6.9 million for these acquisitions. This consisted of $5.4 million paid in cash and a $1.5 million note payable, which is due in two years
bearing interest at a rate of 4.84% per year.



8



---

The purchase consideration of the acquisitions during the second quarter of 2006 has been allocated to the estimated fair
values of the assets acquired and liabilities assumed for these acquisitions at the dates of the acquisition as follows:



|                               |  |       |       |   |                     |        
|------------------------------ |  | ----- | ----- | - | ------------------- | -------
|(in thousands)                 |  | Total |       |   | WeightedAverageLife
|Cash acquired                  |  | $     | 23    |   |                     |        
|Tangible assets acquired       |  |       | 162   |   |                     |        
|Amortizable intangible assets: |  |       |       |   |                     | 6 years
|Tradenames                     |  |       | 2,056 |   |                     | 7 years
|Existing relationships         |  |       | 130   |   |                     | 5 years
|Developed technology           |  |       | 46    |   |                     | 3 years
|Content                        |  |       | 1,943 |   |                     | 4 years
|Noncompete                     |  |       | 39    |   |                     | 3 years
|Goodwill                       |  |       | 2,630 |   |                     |        
|                               |  |       |       |   |                     |        
|Total assets acquired          |  |       | 7,029 |   |                     |        
|                               |  |      
|Liabilities assumed            |  |       | (87   | ) |                     |        
|                               |  |       |       |   |                     |        
|Net assets acquired            |  | $     | 6,942 |   |                     |        
|                               |  |       |       |   |                     |        

(4) 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)                 |  | June 30, 2006        |        | December 31, 2005      
|                               |  | Gross CarryingAmount |        | AccumulatedAmortization |   |         | Net CarryingAmount |  | Net CarryingAmount
|Amortizable intangible assets: |  |                      |        |                         |   |         |                    |  |                    |        |  |   |       
|Tradename and trademarks       |  | $                    | 40,155 |                         | $ | (24,598 | )                  |  | $                  | 15,557 |  | $ | 16,150
|Existing relationships         |  |                      | 15,468 |                         |   | (4,072  | )                  |  |                    | 11,396 |  |   | 12,403
|Developed technology           |  |                      | 8,520  |                         |   | (4,216  | )                  |  |                    | 4,304  |  |   | 5,598 
|Content                        |  |                      | 5,302  |                         |   | (2,213  | )                  |  |                    | 3,089  |  |   | 1,820 
|Other                          |  |                      | 3,667  |                         |   | (2,215  | )                  |  |                    | 1,452  |  |   | 1,409 
|                               |  |                      |        |                         |   |         |                    |  |                    |        |  |   |       
|Total intangible assets, net   |  | $                    | 73,112 |                         | $ | (37,314 | )                  |  | $                  | 35,798 |  | $ | 37,380
|                               |  |                      |        |                         |   |         |                    |  |                    |        |  |   |       

Intangible assets that are subject to amortization are amortized on a straight-line basis and have original
estimated useful lives as follows: tradenames and trademarks, two to fifteen years; existing relationships, three to seven years; developed technology, three years; content, two to five years; and other, two to five years. Useful lives are
reviewed regularly to ensure that a change in circumstances has not occurred that would result in a change in useful life. Estimated future amortization expense related to other intangible assets at June 30, 2006 was as follows:



|               |  |   |       
|-------------- |  | - | ------
|(in thousands) |  |  
|Q3 and Q4 2006 |  | $ | 5,509 
|2007           |  |   | 9,514 
|2008           |  |   | 6,927 
|2009           |  |   | 5,417 
|2010           |  |   | 4,788 
|Thereafter     |  |   | 3,643 
|               |  |   |       
|               |  | $ | 35,798
|               |  |   |       



9



---

Goodwill.The following table sets forth the changes in goodwill by reporting unit for the six months
ended June 30, 2006:



|                                 |  |           |        |                 |   |      |                 |  |      |       |        |   |        |  |   |       |  |   |         |  
|-------------------------------- |  | --------- | ------ | --------------- | - | ---- | --------------- |  | ---- | ----- | ------ | - | ------ |  | - | ----- |  | - | ------- | -
|(in thousands)                   |  | U.S.Media |        | ComputerShopper |   |      | ChannelServices |  | Asia |       | Europe |   | Total  | 
|Balances as of December 31, 2005 |  | $         | 96,065 |                 | $ | 300  |                 |  | $    | 5,626 |        | $ | 25,653 |  | $ | 2,014 |  | $ | 129,658 |  
|Disposals                        |  |           |       |                 |   | (300 | )               |  |      |      |        |   |       |  |   |      |  |   | (300    | )
|Acquisitions                     |  |           | 2,390  |                 |   |     |                 |  |      |      |        |   | 241    |  |   |      |  |   | 2,631   |  
|Foreign translation adjustments  |  |           |       |                 |   |     |                 |  |      |      |        |   | 4      |  |   | 138   |  |   | 142     |  
|                                 |  |           |        |                 |   |      |                 |  |      |       |        |   |        |  |   |       |  |   |         |  
|Balances as of June 30, 2006     |  | $         | 98,455 |                 | $ |     |                 |  | $    | 5,626 |        | $ | 25,898 |  | $ | 2,152 |  | $ | 132,131 |  
|                                 |  |           |        |                 |   |      |                 |  |      |       |        |   |        |  |   |       |  |   |         |  

The U.S. Media and Channel Services reporting units operate in our U.S. Media segment, as did the Computer Shopper
business until its sale in the first quarter of 2006, and thus will no longer be a reporting unit. The Asia and Europe reporting units operate in CNET Networks International segment. As a result of the sale of the Computer Shopper
business, Computer Shopper will no longer be a reporting unit.

The increase in goodwill in 2006 is due to the acquisitions in the second quarter of 2006
offset by the sale of our Computer Shopper business in the first quarter of 2006.

(5) EMPLOYEE STOCK BENEFIT PLANS

EMPLOYEE STOCK PURCHASE PLAN

In July 1996, CNET Networks
adopted an Employee Stock Purchase Plan that covers substantially all domestic employees, whereby participants may elect to purchase CNET Networks 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 Networks stock is 15%
subject to a limitation of $25,000 (of total value) in a calendar year. A total of 55,658 shares where purchased for the quarter ended June 30, 2006. The number of shares available for purchase under the Employee Stock Purchase Plan
at June 30, 2006 was 4,986,336.

EMPLOYEE STOCK OPTION PLANS

Stock Option Program Description

As of June 30, 2006, CNET Networks had the following stock option incentive
plans:



|                                   |  |                             |  |                              |  |                                     
|---------------------------------- |  | --------------------------- |  | ---------------------------- |  | ------------------------------------
|(in thousands)  Plan Name          |  | Number of Shares Authorized |  | Number of Shares Outstanding |  | Number of Shares Available for
Grant
|                                   |  |                            
|                                   |  |                            
|Stockholder-approved Plans         |  | 41,000                      |  | 11,705                       |  | 10,635                              
|Plans not approved by stockholders |  | 8,827                       |  | 4,333                        |  | 688                                 
|Assumed Plans                      |  | Not Applicable              |  | 1,182                        |  |                                    
|                                   |  |                             |  |                              |  |                                     
|Total                              |  |                             |  | 17,220                       |  | 11,323                              
|                                   |  |                             |  |                              |  |                                     

Stock options for the CNET the 1994 Stock Option Plan, 1997 Stock Option Plan, the CNET 2000 Stock Incentive Plan,
and the CNET 2004 Incentive Stock Plan were approved by the stockholders. Stock options for



10



---

the 2001 CNET Networks, Inc. Stock Incentive Plan and the TwoFold Photos, Inc. 2003 Common Stock Incentive Plan were not approved by the
stockholders. Assumed plans are stock option plans that CNET Networks assumed in connection with various acquisitions. All stock options have terms of 10 years, except for options issued to employees in Switzerland which have a term of 12
years, and generally vest and become fully exercisable four years from the date of grant. The vesting schedule for stock option grants are generally as follows: 25% of the grant vests upon one year from date of grant with the remainder of
the grant vesting in 36 equal monthly installments thereafter.

On May 24, 2006 the stockholders of CNET Networks, Inc. by the affirmative vote of the
holders of 90.1% of the shares of our common stock present, in person or by proxy, and entitled to vote on the matter, approved the Amended and Restated 2004 CNET Networks, Inc. Incentive Stock Award Plan (the Amended Plan). The Amended
Plan included, among other things, an increase in the number of shares authorized for issuance under the 2004 Plan by 7,600,000 shares.

General Option
Information

The following table summarizes stock options activity for the six months ended June 30, 2006:



|                                             |  |                        |   |  |                                |       |                                           |     |                         |   |       
|-------------------------------------------- |  | ---------------------- | - |  | ------------------------------ | ----- | ----------------------------------------- | --- | ----------------------- | - | ------
|Options                                      |  | Number ofShare Options |   |  | Weighted AverageExercise Price |       | Weighted AverageRemainingContractual Term |     | AggregateIntrinsicValue
|                                             |  | (in thousands)         |   |  |                                |       |                                           |     | (in thousands)         
|Outstanding at December 31, 2005             |  | 18,959                 |   |  | $                              | 9.99  |                                           | 7.2 |                         |   |       
|                                             |  |                        |   |  |                                |       |                                           |     |                         |   |       
|Granted                                      |  | 196                    |   |  |                                | 13.87 |                                           |     |                         |   |       
|Exercised                                    |  | (616                   | ) |  |                                | 6.31  |                                           |     |                         |   |       
|Forfeited or expired                         |  | (466                   | ) |  |                                | 9.77  |                                           |     |                         |   |       
|                                             |  |                        |   |  |                                |       |                                           |     |                         |   |       
|Outstanding at March 31, 2006                |  | 18,073                 |   |  |                                | 10.16 |                                           | 7.0 |                         | $ | 92,722
|                                             |  |                        |   |  |                                |       |                                           |     |                         |   |       
|Granted                                      |  | 173                    |   |  |                                | 10.94 |                                           |     |                         |   |       
|Exercised                                    |  | (360                   | ) |  |                                | 6.53  |                                           |     |                         |   |       
|Forfeited or expired                         |  | (666                   | ) |  |                                | 9.73  |                                           |     |                         |   |       
|                                             |  |                        |   |  |                                |       |                                           |     |                         |   |       
|Outstanding at June 30, 2006                 |  | 17,220                 |   |  | $                              | 10.26 |                                           | 6.6 |                         | $ | 21,379
|                                             |  |                        |   |  |                                |       |                                           |     |                         |   |       
|Vested and expected to vest at June 30, 2006 |  | 15,594                 |   |  | $                              | 10.17 |                                           | 6.4 |                         | $ | 20,741
|                                             |  |                        |   |  |                                |       |                                           |     |                         |   |       
|Options exercisable at June 30, 2006         |  | 10,133                 |   |  | $                              | 9.68  |                                           | 5.3 |                         | $ | 18,414
|                                             |  |                        |   |  |                                |       |                                           |     |                         |   |       

The aggregate intrinsic value of $21.4 million as of June 30, 2006 is based on CNET Networks closing
stock price of $7.98 on that date and represents the total pretax intrinsic value which would have been received by the option holders had all option holders exercised their options as of that date. The total intrinsic value of options
exercised during the six months ended June 30, 2006 was $6.6 million. The total number of in-the-money options exercisable as of June 30, 2006 was 8,686,833 shares.

As of June 30, 2006, there was $39.0 million of total unrecognized compensation cost related to non-vested share-based awards granted under the option plans. That cost is expected to be recognized over a
weighted-average period of 2.7 years.



11



---

Valuation and Expense Information under SFAS 123(R)

The following table summarizes stock compensation expense related to employee stock options and employee stock purchases under SFAS 123(R) for the three months and six months ended June 30, 2006 which was
incurred as follows:



|                                        |  |                                 |       |                               |   |      
|--------------------------------------- |  | ------------------------------- | ----- | ----------------------------- | - | -----
|(in thousands)                          |  | Three Months EndedJune 30, 2006 |       | Six Months EndedJune 30, 2006
|Stock compensation expense included in: |  |                                 |       |                               |   |      
|Cost of revenues                        |  | $                               | 1,972 |                               | $ | 3,936
|Sales and marketing                     |  |                                 | 876   |                               |   | 1,772
|General and administrative              |  |                                 | 1,785 |                               |   | 3,681
|                                        |  |                                 |       |                               |   |      
|Stock compensation expense              |  | $                               | 4,633 |                               | $ | 9,389
|                                        |  |                                 |       |                               |   |      

The weighted-average estimated fair value of employee stock options granted during the three and six months ended
June 30, 2006 was $5.22 and $5.92 per share, respectively, and for the three and six months ended June 30, 2005 was $5.57 and $5.53 per share, respectively. The fair value of stock options granted under its stock-based compensation plans
was estimated using the Black-Scholes option pricing model with the following weighted-average assumptions for grants during the three and six months ended June 30, 2006 and 2005:



|                              |  |                             |  |                           |  |               |  |           
|----------------------------- |  | --------------------------- |  | ------------------------- |  | ------------- |  | ----------
|                              |  | Three Months Ended June 30, |  | Six Months Ended June 30,
|                              |  | 2006                        |  | 2005                      |  | 2006          |  | 2005      
|Stock options:                |  |                             |  |                           |  |               |  |           
|Dividend yield                |  | 0%                          |  | 0%                        |  | 0%            |  | 0%        
|Expected volatility           |  | 71.5% - 76.8%               |  | 83.5%                     |  | 56.9% - 76.8% |  | 83.5%     
|Risk-free interest rate       |  | 4.80% - 5.0%                |  | 3.76%                     |  | 4.38% - 5.0%  |  | 3.52-3.76%
|Expected life (in years)      |  | 3.7 - 4.6                   |  | 3                         |  | 3.7 - 4.6     |  | 3         
|Employee Stock Purchase Plan: |  |                             |  |                           |  |               |  |           
|Dividend yield                |  | 0%                          |  | 0%                        |  | 0%            |  | 0%        
|Expected volatility           |  | 56.5% - 62.0%               |  | 34.5%                     |  | 34.0% - 62.0% |  | 34.5-54.2%
|Risk-free interest rate       |  | 4.33% - 4.63%               |  | 2.51-2.82%                |  | 3.98% - 4.63% |  | 2.23-2.82%
|Expected life (in years)      |  | 0.25-0.50                   |  | 0.25-0.50                 |  | 0.25-0.50     |  | 0.25-0.50 

CNET Networks computation of expected volatility is based on a combination of historical and implied stock
price volatility. The risk-free interest rate assumption is based upon U.S. Treasury bond rates appropriate for the term of CNET Networks employee stock options. The dividend yield assumption is based on CNET Networks history
and current expectation of no dividend payouts.

The expected term of employee stock options represents the period the stock options are expected to remain
outstanding from date of grant and is based on the historical average holding period of exercised options and the expected holding period of outstanding shares.



12



---

Pro Forma Information under SFAS 123 for Period Prior to 2006

The table below reflects pro forma net income (loss) and diluted net income (loss) per share as if CNET Networks had applied the fair value recognition of SFAS 123 to
stock-based compensation for the three and six months ended June 30, 2005 compared to diluted net income (loss) for the three and six months ended June 30, 2006:



|                                                                                                  |  |                             |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|------------------------------------------------------------------------------------------------- |  | --------------------------- | ------ | - | ------------------------- | - | ------ | ---- |  | - | ------- | - |  | - | ------- | -
|(in thousands, except per share data)                                                             |  | Three Months Ended June 30, |        |   | Six Months Ended June 30, |  
|                                                                                                  |  | 2006                        |        |   | 2005                      |   |        | 2006 |  |   | 2005    |  
|Net income - as reported for the period                                                           |  |                             | N/A    |   |                           | $ | 5,331  |      |  |   | N/A     |   |  | $ | 4,517   |  
|Add: Stock-based employee compensation expense included in reported net income, net of tax        |  |                             | N/A    |   |                           |   | 2,301  |      |  |   | N/A     |   |  |   | 3,237   |  
|Deduct: Stock-based compensation expense determined under fair value based method, net of tax (1) |  | $                           | (5,071 | ) |                           |   | (5,540 | )    |  | $ | (10,175 | ) |  |   | (11,580 | )
|                                                                                                  |  |                             |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|Net income (loss), including the effect of stock compensation expense (2)                         |  | $                           | 5,160  |   |                           | $ | 2,092  |      |  | $ | 3,858   |   |  | $ | (3,826  | )
|                                                                                                  |  |                             |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|Basic and diluted net income per share:                                                           |  |                             |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|Diluted net income per share - as reported for the period                                         |  |                             | N/A    |   |                           | $ | 0.04   |      |  |   | N/A     |   |  | $ | 0.03    |  
|Diluted net income (loss) per share, including the effect of stock-based compensation expense (2) |  | $                           | 0.04   |   |                           | $ | 0.01   |      |  | $ | 0.03    |   |  | $ | (0.03   | )

---

|(1) | Stock compensation expense prior to 2006 is calculated based on the pro forma application of SFAS 123.
|--- | ------------------------------------------------------------------------------------------------------

|(2) | Net income (loss) and net income (loss) per share prior to 2006 represents pro forma information based on SFAS 123.
|--- | -------------------------------------------------------------------------------------------------------------------

(6) NET INCOME PER SHARE

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



|                                                |  |                            |         |                          |   |         |  |      |         |  |   |        
|----------------------------------------------- |  | -------------------------- | ------- | ------------------------ | - | ------- |  | ---- | ------- |  | - | -------
|(in thousands, except share and per share data) |  | Three Months EndedJune 30, |         | Six Months EndedJune 30,
|                                                |  | 2006                       |         | 2005                     |   | 2006    |  | 2005
|Income available to common stockholders         |  | $                          | 5,160   |                          | $ | 5,331   |  | $    | 3,858   |  | $ | 4,517  
|                                                |  |                            |         |                          |   |         |  |      |         |  |   |        
|Weighted average shares - basic                 |  |                            | 149,549 |                          |   | 144,862 |  |      | 148,857 |  |   | 144,288
|Stock options                                   |  |                            | 3,226   |                          |   | 6,309   |  |      | 4,070   |  |   | 6,446  
|                                                |  |                            |         |                          |   |         |  |      |         |  |   |        
|Weighted average shares - diluted               |  |                            | 152,775 |                          |   | 151,171 |  |      | 152,927 |  |   | 150,734
|                                                |  |                            |         |                          |   |         |  |      |         |  |   |        
|Basic income per common share                   |  | $                          | 0.04    |                          | $ | 0.04    |  | $    | 0.04    |  | $ | 0.03   
|                                                |  |                            |         |                          |   |         |  |      |         |  |   |        
|Diluted income per common share                 |  | $                          | 0.04    |                          | $ | 0.04    |  | $    | 0.03    |  | $ | 0.03   
|                                                |  |                            |         |                          |   |         |  |      |         |  |   |        

Basic net income per share is computed using the weighted average number of shares of common stock outstanding
during the period. Diluted net income per share is computed using the weighted average number of shares of common stock and dilutive common stock equivalents outstanding during the period.

Statement of Financial Accounting Standards No. 128, Earnings per Share, requires that employee equity share options, nonvested shares and similar
equity instruments granted by the CNET Networks be treated as potential common shares outstanding in computing diluted earnings per share. Diluted shares outstanding include the dilutive effect of in-the-money options which is calculated based on
the average share price for each fiscal period using the treasury stock method. Under the treasury stock method, the amount the employee must pay for exercising stock options, the amount of compensation cost for future service that CNET Networks has
not yet recognized, and the amount of benefits that would be recorded in additional paid-in capital when the award becomes deductible are assumed to be used to repurchase shares.



13



---

The following table summarizes potential common shares outstanding excluded from the calculation of diluted net income
per share for the three and six months ended June 30, 2006 and 2005, because their effect is anti-dilutive:



|                                                           |  |                                  |  |                                  |       |                         |       |                                |   |      
|---------------------------------------------------------- |  | -------------------------------- |  | -------------------------------- | ----- | ----------------------- | ----- | ------------------------------ | - | -----
|(in thousands)                                             |  | Three Months Ended June 30, 2006 |  | Three Months Ended June 30, 2005
|                                                           |  | Weighted Average Shares          |  | WeightedAverage ExercisePrice    |       | Weighted Average Shares |       | Weighted AverageExercise Price
|Shares issuable under stock options                        |  | 10,934                           |  | $                                | 13.49 |                         | 4,481 |                                | $ | 16.62
|Shares issuable pursuant to 0.75% Convertible Senior Notes |  | 8,333                            |  | $                                | 15.00 |                         | 8,333 |                                | $ | 15.00
|                                                           |  |                                 
|                                                           |  | Six Months Ended June 30, 2006   |  | Six Months Ended June 30, 2005  
|                                                           |  | WeightedAverage Shares           |  | WeightedAverage ExercisePrice    |       | WeightedAverage Shares  |       | Weighted AverageExercise Price
|Shares issuable under stock options                        |  | 7,307                            |  | $                                | 15.31 |                         | 4,591 |                                | $ | 16.46
|Shares issuable pursuant to 0.75% Convertible Senior Notes |  | 8,333                            |  | $                                | 15.00 |                         | 8,333 |                                | $ | 15.00

(7) COMPREHENSIVE INCOME

The components of other comprehensive income for the three and six months ended June 30, 2006 and 2005 are as follows:



|                                                                |  |                            |       |   |                          |   |       |      |  |   |       |   |  |   |       |  
|--------------------------------------------------------------- |  | -------------------------- | ----- | - | ------------------------ | - | ----- | ---- |  | - | ----- | - |  | - | ----- | -
|(in thousands)                                                  |  | Three Months EndedJune 30, |       |   | Six Months EndedJune 30, |  
|                                                                |  | 2006                       |       |   | 2005                     |   |       | 2006 |  |   | 2005  |  
|Net income                                                      |  | $                          | 5,160 |   |                          | $ | 5,331 |      |  | $ | 3,858 |   |  | $ | 4,517 |  
|Other comprehensive income:                                     |  |                            |       |   |                          |   |       |      |  |   |       |   |  |   |       |  
|Unrealized holding gains arising during the period, net of tax  |  | $                          | 27    |   |                          | $ | 168   |      |  | $ | 63    |   |  | $ | 214   |  
|Unrealized holding losses arising during the period, net of tax |  |                            | (119  | ) |                          |   | (41   | )    |  |   | (172  | ) |  |   | (97   | )
|Foreign currency translation loss                               |  |                            | (895  | ) |                          |   | (612  | )    |  |   | (760  | ) |  |   | (937  | )
|                                                                |  |                            |       |   |                          |   |       |      |  |   |       |   |  |   |       |  
|Comprehensive income                                            |  | $                          | 4,173 |   |                          | $ | 4,846 |      |  | $ | 2,989 |   |  | $ | 3,697 |  
|                                                                |  |                            |       |   |                          |   |       |      |  |   |       |   |  |   |       |  

(8) SEGMENTS

CNET Networks primary areas of measurement and decision-making include two principal business segments, U.S. Media and International Media. U.S. Media consists of an online network focused on four content categories: technology, games
and entertainment, business and community. International Media includes the delivery of online technology information and several technology print publications in non-U.S. markets.



14



---

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



|                                 |  |           |         |                    |   |        |       |  |   |         |   |  |   |        
|-------------------------------- |  | --------- | ------- | ------------------ | - | ------ | ----- |  | - | ------- | - |  | - | -------
|(in thousands)                   |  | U.S.Media |         | InternationalMedia |   |        | Other |  |   | Total  
|Three Months Ended June 30, 2006 |  |           |         |                    |   |        |       |  |   |         |   |  |   |        
|Revenues                         |  | $         | 72,795  |                    | $ | 19,582 |       |  | $ |        |   |  | $ | 92,377 
|Operating expenses               |  |           | 55,333  |                    |   | 18,206 |       |  |   | 14,011  |   |  |   | 87,550 
|                                 |  |           |         |                    |   |        |       |  |   |         |   |  |   |        
|Operating income(loss)           |  | $         | 17,462  |                    | $ | 1,376  |       |  | $ | (14,011 | ) |  | $ | 4,827  
|                                 |  |           |         |                    |   |        |       |  |   |         |   |  |   |        
|Three Months Ended June 30, 2005 |  |           |         |                    |   |        |       |  |   |         |   |  |   |        
|Revenues                         |  | $         | 63,401  |                    | $ | 17,292 |       |  | $ |        |   |  | $ | 80,693 
|Operating expenses               |  |           | 50,827  |                    |   | 16,254 |       |  |   | 8,930   |   |  |   | 76,011 
|                                 |  |           |         |                    |   |        |       |  |   |         |   |  |   |        
|Operating income(loss)           |  | $         | 12,574  |                    | $ | 1,038  |       |  | $ | (8,930  | ) |  | $ | 4,682  
|                                 |  |           |         |                    |   |        |       |  |   |         |   |  |   |        
|Six Months Ended June 30, 2006   |  |           |         |                    |   |        |       |  |   |         |   |  |   |        
|Revenues                         |  | $         | 140,560 |                    | $ | 35,467 |       |  | $ |        |   |  | $ | 176,027
|Operating expenses               |  |           | 111,854 |                    |   | 35,341 |       |  |   | 26,327  |   |  |   | 173,522
|                                 |  |           |         |                    |   |        |       |  |   |         |   |  |   |        
|Operating income(loss)           |  | $         | 28,706  |                    | $ | 126    |       |  | $ | (26,327 | ) |  | $ | 2,505  
|                                 |  |           |         |                    |   |        |       |  |   |         |   |  |   |        
|Six Months Ended June 30, 2005   |  |           |         |                    |   |        |       |  |   |         |   |  |   |        
|Revenues                         |  | $         | 122,217 |                    | $ | 29,881 |       |  | $ |        |   |  | $ | 152,098
|Operating expenses               |  |           | 100,516 |                    |   | 31,998 |       |  |   | 15,979  |   |  |   | 148,493
|                                 |  |           |         |                    |   |        |       |  |   |         |   |  |   |        
|Operating income(loss)           |  | $         | 21,701  |                    | $ | (2,117 | )     |  | $ | (15,979 | ) |  | $ | 3,605  
|                                 |  |           |         |                    |   |        |       |  |   |         |   |  |   |        

Since operating income (loss) before depreciation, amortization, stock compensation expense and stock option
investigation costs 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 table above, represent all depreciation and amortization expenses, as well as stock compensation expense and stock option investigation costs.

For the three and six months ended June 30, 2006, Other includes depreciation and amortization expenses of $8.0 million and $15.5 million and stock compensation expense of $4.6 million and
$9.4 million, respectively. Other also includes $1.4 million of stock option investigation costs for both the three and six months ended June 30, 2006. For the three and six months ended June 30, 2005, Other
represents depreciation and amortization expenses of $6.6 million and $12.8 million and stock compensation expense of $2.3 million and $3.2 million, respectively.

Assets are not allocated to segments for internal reporting purposes. Segment operating income (loss) before 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.

(9) SUBSEQUENT EVENTS

United States Attorney and SEC Inquiries

On
June 26, 2006, CNET Networks received a grand jury document subpoena from the United States Attorney for the Northern District of California requesting records pertaining to the granting of stock options. In addition in May 2006, CNET Networks
received notice that the Securities and Exchange Commission (SEC) was conducting an informal inquiry into CNET Networks stock option grants. CNET Networks is cooperating, and will continue to cooperate fully with the United States Attorney for
the Northern District of California and the SEC. CNET Networks cannot predict the outcome of these investigations.



15



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Listing on the Nasdaq Stock Market

On December 5, 2006, CNET Networks received notice that the Nasdaq Listing Qualifications Panel granted CNET Networks request for continued listing of its common stock on The Nasdaq Global Select Market.
The continued listing of CNET Networks common stock is subject to the condition that on or before February 2, 2007, CNET Networks files with the SEC its Quarterly Reports on Form 10-Q for the quarters ended June 30, 2006 and
September 30, 2006 and any necessary restatements of prior financial statements. Although CNET Networks believes the filing of this Form 10-Q and our concurrent filings of our amended Annual Report on Form 10-K/A, our amended Quarterly Report
on Form 10-Q/A for the quarter ended March 31, 2006, and the delinquent Quarterly Report on Form 10-Q for the quarter ended September 30, 2006 satisfy the Nasdaq Listing Qualifications Panels requirements, there can be no assurance
that the Panel will be satisfied with these filings.

Shareholder Derivative Suits

On May 31, 2006, a purported shareholder derivative complaint was filed in the Superior Court of California, County of San Francisco, by a party identifying itself as a shareholder of CNET Networks purporting to
act on behalf of CNET Networks against the directors of CNET Networks and certain present and former officers of CNET Networks. CNET Networks is also named as a nominal defendant. The suit, captioned Paskar v. Bonnie, et al.,
alleges breaches of fiduciary duty and unjust enrichment arising from stock options granted between 1996 and 2004. The complaint seeks monetary damages, disgorgement, rescission of stock options and other relief against the defendants on behalf of
CNET Networks. The complaint does not seek monetary damages from, or the imposition of equitable remedies on, CNET Networks. Subsequently, on June 2, 2006, June 19, 2006 and September 22, 2006, three additional purported
shareholder derivative actions were filed in the Superior Court of California, County of San Francisco. These three complaints, captioned Hutton v. Bonnie, et al., Raniolo v. Bonnie et al. and Berger v. Bonnie, et al., contain
substantially similar allegations as the aforementioned shareholder derivative complaint. These four shareholder derivative cases were consolidated on October 23, 2006 and the plaintiffs filed a consolidated complaint on November 16, 2006.
CNET Networks filed a motion to stay these purported shareholder derivative actions pending before the California Superior Court. At a hearing on January 3, 2007, the Superior Court denied CNET Networks motion to stay but ordered that no
discovery or substantive motion practice shall proceed until further order of the Court.

On June 19, 2006, a purported shareholder derivative
complaint was filed in the United States District Court for the Northern District of California by a party identifying itself as a shareholder of CNET Networks purporting to act on behalf of CNET Networks against the directors of CNET Networks and
certain present and former officers of CNET Networks. CNET Networks is also named as a nominal defendant. The suit, captioned Melzer v. Bonnie, et al., alleged violations of federal securities law, California securities law, as
well as breach of fiduciary duty, unjust enrichment, and insider trading arising from stock options granted between 1997 and 2003. On July 13, 2006, another purported shareholder derivative complaint, captioned Finn v. Bonnie et al., was
filed in the same court containing identical allegations. These purported shareholder derivative actions pending before the United States District Court for the Northern District of California were consolidated on August 31, 2006 and the
plaintiffs in those cases have subsequently filed a consolidated complaint on September 28, 2006. That consolidated complaint was amended on November 9, 2006. The complaint seeks monetary damages, disgorgement, rescission of stock options
and other relief against the defendants on behalf of CNET Networks. The complaint does not seek monetary damages from, or the imposition of equitable remedies on, CNET Networks.

Amendment of Exercise Prices

On December 20, 2006, certain of CNET Networks executive officers holding
stock options which were granted with per share exercise prices below the fair market value of a share of CNET Networks common stock on the appropriate measurement date (referred to as discount stock options) each entered into agreements pursuant to
which they agreed to amend the exercise price of the discount stock options to the extent not vested as of December 31, 2004 and still outstanding at December 20, 2006. These executive officers held approximately 1.0 million discount
stock options with a weighted average exercise price of approximately $9.03 per share which



16



---

were re-priced to their fair market value. Under these agreements, the amended exercise prices of such options have been changed to and are equal to the fair
market value of a share of CNET Networks common stock on the appropriate measurement date of each option. Based on the re-pricing, the 1 million options had a revised weighted average exercise price of approximately $9.92 per share.

The non-executive members of CNET Networks board of directors each entered into similar agreements to those entered into by the executive officers
described above except that each non-executive director also agreed to re-price any discount option, whether or not vested as of December 31, 2004. The non-executive directors also agreed, with respect to any discount options which were
previously exercised, to repay to the company an amount equal to the difference between the original exercise price and the fair market value of CNET Networks common stock on the appropriate measurement date of such options, net of taxes.
Approximately 283,000 discount stock options with a weighted average exercise price of $9.40 per share held by non-executive members of CNET Networks board of directors and were re-priced to their fair market value. The weighted average
exercise price of these 283,000 shares after the re-pricing was $10.07 per share. The estimated amount of repayment to the company for the difference between the original exercise price and the fair value of these approximately 27,000 options which
were previously exercised by these directors is approximately $16,000 before taxes.

The companys former Chairman and chief executive officer and a
member of CNET Networks board of directors, entered into a similar agreement to those entered into by the companys non-executive directors covering 700,000 discount options outstanding with a weighted average exercise price of $3.96 per
share and were re-priced to their fair market value. This agreement did not provide for the repayment of amounts related to previously exercised options because the former Chairman had not exercised any options. The weighted average exercise price
of these 700,000 shares after the repricing was $8.57 per share.

Repayment of Debt

On September 12, 2006, CNET Networks entered into a new one-year credit agreement. Under the terms of this agreement, CNET Networks can borrow up to an aggregate principal amount of $60.0 million, which can be
drawn down as revolving loans or term loans.

On September 13, 2006, CNET Networks announced that it had commenced a solicitation of consents from
holders of its outstanding $125.0 million principal, 0.75% Senior Convertible Notes due 2024 (the Notes). The consents were to waive and amend certain obligations under the indenture governing the Notes resulting from CNET Networks failure to timely
file with the SEC any required reports or filings. The prepared amendments and waivers pertained to CNET Networks failure to timely file its Quarterly Report on Form 10-Q for the quarter ended June 30, 2006 and possible delisting of CNET
Networks stock from the Nasdaq Global Select Market.

On October 11, 2006, CNET Networks modified and extended its solicitation of consents. The
consent solicitation was modified to offer holders a two-year extension of the call protection period so that such period would end on April 20, 2011 rather than April 20, 2009. The solicitation expired on October 18, 2006 and CNET
Networks did not receive a sufficient number of consents from holders to satisfy the 70% requisite consent threshold. On October 25, 2006, CNET Networks received a notice of acceleration under the indenture from Wells Fargo Bank, National
Association, the trustee for the holders of the Notes. The acceleration letter declared the principal amount outstanding under the Notes, together with any accrued and unpaid interest immediately due and payable. On October 30, 2006, CNET
Networks repaid the $125.0 million of subordinated notes with existing cash and by fully drawing on the $60.0 million, one-year credit facility. At December 31, 2006, CNET Networks total long-term debt balance was approximately $78.0
million.

ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of Operations

This report contains forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially. Further information
about these forward-looking statements and risks associated with our business can be found in ITEM 1A. Risk Factors.



17



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OVERVIEW

CNET
Networks, Inc. is a worldwide media company and creator of authentic brand experiences in multiple categories. We operate industry leading websites, each with its own distinct brand, in four content categories: technology, entertainment,
business and community.

Explanation of Key Management Metrics

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



| |  |  | Revenues
| | - |  | --------



| |  |  | Operating income
| | - |  | ----------------



| |  |  | Net income and earnings per share
| | - |  | ---------------------------------

We evaluate our liquidity primarily on
the following key measurements:



| |  |  | Net cash provided by operating activities
| | - |  | -----------------------------------------



| |  |  | Operating income (loss) before depreciation, amortization and stock compensation expense
| | - |  | ----------------------------------------------------------------------------------------



| |  |  | Free cash flow
| | - |  | --------------

We had an average of 116.2 million unique users per
month in the second quarter of 2006, compared to 115.1 million unique users in the second quarter of 2005, an increase of 1%. These users generated over 92.8 million Web page views per day during the second quarter 2006 compared to
97.7 million in the second quarter of 2005, a 5% decrease. The increase in unique users reflects growth from most of our properties partially offset by a decline in users of Webshots. The decrease in page views for the quarter was
also primarily due to Webshots, which has experienced increasing competitive pressure. While increases or decreases in unique users and daily average page views are not necessarily 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 believe that operating income before depreciation, amortization and stock compensation expense is useful to management and investors as a supplement to
our U.S. GAAP (accounting principles generally accepted in the United States) financial measures for evaluating the ability of the business to generate cash from operations. Depreciation and amortization are non-cash items and include within them
amounts related to past transactions and expenditures that are not necessarily reflective of the current cash or capital requirements of the business. Stock compensation expense is a non-cash item that does impact our ability to generate cash
from operations.

Management refers to operating income before depreciation, amortization and stock compensation expense 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 compensates for these
limitations by relying primarily on our GAAP financial measures, such as capital expenditures, and using operating income before depreciation, amortization and stock compensation expense only on a supplemental basis. Although
depreciation and amortization are non-cash charges, the capitalized assets being depreciated and amortized will often have to be replaced in the future, and operating income before depreciation, amortization and stock compensation
expense does not reflect any cash requirements for such replacements. This measure also does not take into account interest expense, or the cash requirements necessary to service interest or principal payments on our debt. Nor does the measure
reflect changes in, or cash requirements for, our working capital needs. Operating income before depreciation, amortization and stock compensation expense should be considered in addition to, and not as a substitute for, other measures
of financial performance prepared in accordance with GAAP.



18



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Revenues

We have
determined that our business segments are U.S. Media and International Media. U.S. Media consists of an online network focused on four content categories: technology, games and entertainment, business and community. International Media includes
the delivery of online technology information and several technology and gaming print publications in non U.S. markets. Within these business segments, we earn revenues from:



| |  |  | 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) and 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); and sales of advertisements in our
print publications
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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

Expenses

Our operating expenses
primarily consist of revenues, sales and marketing and general and administrative costs, which are primarily cash related expense activities. The majority of our cash related expenses are costs associated with employee compensation, benefits
and facilities, which represented approximately 59% of our total cash operating expenses for the three months ended June 30, 2006 and 2005, and 61% and 59% of our total cash operating expenses for the six months ended June 30, 2006 and
2005, respectively. Noncash related expenses consist of depreciation, amortization of intangible assets and stock compensation expense and are included in our operating income.

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 operations are compensation and related expenses for the editorial, production and technology staff and associated costs for facilities and equipment. A substantial portion of expenses included in our cost of revenues remain
consistent from period to period and do not necessarily fluctuate proportionately with fluctuations in revenues.

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

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

Changes in 2006

On January 1, 2006, CNET
Networks adopted Statement of Financial Accounting Standards No. 123 (revised 2004), Share-Based Payment, (SFAS 123(R)) which requires the measurement and recognition of compensation expense for all share-based awards
made to employees and directors, including employee stock options and employee stock purchases, based on estimated fair values. Prior to the adoption of SFAS 123(R), CNET Networks accounted for stock-based awards to employees and directors using the
intrinsic value method in accordance with Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees. Under the intrinsic value method, which had been allowed under the original provisions of Statement 123,
no stock compensation expense was recognized in CNET Networks statement of operations if the exercise price of CNET Networks stock options granted to employees and directors equaled the fair market value of the underlying stock at the
date of grant.

On February 2, 2006, we sold our Computer Shopper magazine business. In accordance with the provisions of SFAS 144, we have accounted
for this disposal as a discontinued operation, and thus, all revenues and expenses, including the gain on sale, related to the Computer Shopper business have been presented as discontinued operations. This results in a reclassification of
revenues and expenses in 2005 to conform to this presentation.



19



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RESULTS OF OPERATIONS

Revenues

The following table sets forth our revenues for the three and six months ended June 30, 2006 and 2005:



|                             |  |                             |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|---------------------------- |  | --------------------------- | ------ | - | ------------------------- | - | ------ | ---- |  | - | ------- | - |  | - | ------- | -
|                             |  | Three Months Ended June 30, |        |   | Six Months Ended June 30, |  
|(in thousands)               |  | 2006                        |        |   | 2005                      |   |        | 2006 |  |   | 2005    |  
|Revenues:                    |  |                             |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|Marketing services           |  | $                           | 79,796 |   |                           | $ | 69,781 |      |  | $ | 151,030 |   |  | $ | 129,569 |  
|Licensing, fees and user     |  |                             | 12,581 |   |                           |   | 10,912 |      |  |   | 24,997  |   |  |   | 22,529  |  
|                             |  |                             |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|                             |  | $                           | 92,377 |   |                           | $ | 80,693 |      |  | $ | 176,027 |   |  | $ | 152,098 |  
|                             |  |                             |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|As a Percentage of Revenues: |  |                             |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|Marketing services           |  |                             | 86     | % |                           |   | 86     | %    |  |   | 86      | % |  |   | 85      | %
|Licensing, fees and user     |  |                             | 14     | % |                           |   | 14     | %    |  |   | 14      | % |  |   | 15      | %
|                             |  |                             |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|                             |  |                             | 100    | % |                           |   | 100    | %    |  |   | 100     | % |  |   | 100     | %
|                             |  |                             |        |   |                           |   |        |      |  |   |         |   |  |   |         |  



| |  |  | 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), and sales of advertisements in our
print publications.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Licensing, Fees and User: licensing our product database and online content, subscriptions to online services and print publications, and other paid services.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------

Total Revenues. Total revenues were $92.4 million and $80.7 million for the three months ended June 30, 2006 and 2005, and were
$176.0 million and $152.1 million for the six months ended June 30, 2006 and 2005, respectively. Total revenues increased 14% and 16% for the three and six months ended June 30, 2006 as compared to the corresponding periods in 2005
primarily due to growth in our marketing services revenues.

For the three and six months ended June 30, 2006, approximately $3.9 million and $7.4
million, respectively, of our revenues were derived from barter transactions. For the three and six months ended June 30, 2005, approximately $3.2 million and $6.1 million, respectively, of our revenues were derived from barter
transactions. Barter transactions occur when we deliver marketing services for the 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 $79.8 million and $69.8 million for the three months ended June 30, 2006 and 2005,
respectively, and represented 86% of total revenues for both of the three month periods. Marketing services revenues were $151.0 million and $129.6 million and represented 86% and 85% of total revenues for the six months ended June 30,
2006 and 2005, respectively. The increase in marketing services revenues of $10.0 million, or 14%, and $21.4 million, or 17%, for the three and six months ended June 30, 2006, respectively, as compared to the same periods of the prior year
reflects growth in branding advertising in the categories where we have traditionally seen demand, such as computing, consumer electronics and games, and to a lesser extent from new categories, such as automobiles, consumer goods, and
entertainment. The growth in branding advertising revenue was partially offset by a decrease in transactional activity among our users, resulting in lower revenue from leads to merchants, as well as a decrease in advertising in our
international print publications.

Although our marketing services revenues have increased in the current year periods as compared to the same periods in
prior year, we believe the growth has been somewhat slowed by certain product delays in the personal computing and gaming industries. The personal computing industry is experiencing a transition to a new



20



---

Microsoft operating system, and a delay in that transition to 2007 was announced in March of 2006. This has created uncertainty in the marketing and
product development plans of several companies in the personal computing industry who were advertisers in our technology category, which we expect to result in the delay or reduction of some spending on our properties. In addition, a transition
is occurring in the video games industry, as two large video game hardware manufacturers are expected to launch new platforms toward the end of 2006. During hardware transitions, game publishers launch fewer games as they wait for new platform
availability, resulting in a reduction in marketing expenditures and fewer video game sales. While our games and entertainment category continues to exhibit strong growth, the reduction in gaming-related marketing has resulted in lower expected
growth in our game-related revenues in 2006 compared to 2005.

Licensing, Fees and Users Revenues. Licensing, fees and user revenues were $12.6
million and $10.9 million for the three-month periods ended June 30, 2006 and 2005, respectively, and represented 14% of total revenues for both three-month periods. Licensing, fees and user revenues were $25.0 million and $22.5 million
and represented 14% and 15% of total revenues for the six-month periods ended June 30, 2006 and 2005, respectively. The $1.7 million, or 15%, increase in the three months ended June 30, 2006, and the $2.5 million or 11% increase in
the six months ended June 30, 2006 reflects growth from existing operations.

Operating Expenses



|                           |  |                             |        |                |   |              |  |                  |        |                |   |              |  |   |       |  |   |       
|-------------------------- |  | --------------------------- | ------ | -------------- | - | ------------ |  | ---------------- | ------ | -------------- | - | ------------ |  | - | ----- |  | - | ------
|                           |  | Three Months Ended June 30,
|                           |  | 2006                        |        | 2005          
|(in thousands)             |  | OperatingExpense            |        | Noncashexpense |   | Cash expense |  | OperatingExpense |        | Noncashexpense |   | Cash expense
|Operating expenses:        |  |                             |        |                |   |              |  |                  |        |                |   |              |  |   |       |  |   |       
|Cost of revenues           |  | $                           | 40,552 |                | $ | 1,972        |  | $                | 38,580 |                | $ | 37,608       |  | $ | 489   |  | $ | 37,119
|Sales and marketing        |  |                             | 24,689 |                |   | 876          |  |                  | 23,813 |                |   | 19,636       |  |   | 219   |  |   | 19,417
|General and administrative |  |                             | 12,933 |                |   | 1,785        |  |                  | 11,148 |                |   | 12,138       |  |   | 1,593 |  |   | 10,545
|Stock option investigation |  |                             | 1,401  |                |   |             |  |                  | 1,401  |                |   |             |  |   |      |  |   |      
|Depreciation               |  |                             | 5,265  |                |   | 5,265        |  |                  |       |                |   | 4,285        |  |   | 4,285 |  |   |      
|Amortization               |  |                             | 2,710  |                |   | 2,710        |  |                  |       |                |   | 2,344        |  |   | 2,344 |  |   |      
|                           |  |                             |        |                |   |              |  |                  |        |                |   |              |  |   |       |  |   |       
|Total operating expenses   |  | $                           | 87,550 |                | $ | 12,608       |  | $                | 74,942 |                | $ | 76,011       |  | $ | 8,930 |  | $ | 67,081
|                           |  |                             |        |                |   |              |  |                  |        |                |   |              |  |   |       |  |   |       



|                           |  |                           |         |                |   |              |  |                  |         |                |   |              |  |   |        |  |   |        
|-------------------------- |  | ------------------------- | ------- | -------------- | - | ------------ |  | ---------------- | ------- | -------------- | - | ------------ |  | - | ------ |  | - | -------
|                           |  | Six Months Ended June 30,
|                           |  | 2006                      |         | 2005          
|(in thousands)             |  | OperatingExpense          |         | Noncashexpense |   | Cash expense |  | OperatingExpense |         | Noncashexpense |   | Cash expense
|Operating expenses:        |  |                           |         |                |   |              |  |                  |         |                |   |              |  |   |        |  |   |        
|Cost of revenues           |  | $                         | 81,971  |                | $ | 3,936        |  | $                | 78,035  |                | $ | 74,561       |  | $ | 1,047  |  | $ | 73,514 
|Sales and marketing        |  |                           | 47,652  |                |   | 1,772        |  |                  | 45,880  |                |   | 38,241       |  |   | 444    |  |   | 37,797 
|General and administrative |  |                           | 26,962  |                |   | 3,681        |  |                  | 23,281  |                |   | 22,949       |  |   | 1,746  |  |   | 21,203 
|Stock option investigation |  |                           | 1,401   |                |   |              |  |                  | 1,401   |                |   |             |  |   |       |  |   |       
|Depreciation               |  |                           | 10,087  |                |   | 10,087       |  |                  |        |                |   | 8,289        |  |   | 8,289  |  |   |       
|Amortization               |  |                           | 5,449   |                |   | 5,449        |  |                  |        |                |   | 4,453        |  |   | 4,453  |  |   |       
|                           |  |                           |         |                |   |              |  |                  |         |                |   |              |  |   |        |  |   |        
|Total operating expenses   |  | $                         | 173,522 |                | $ | 24,925       |  | $                | 148,597 |                | $ | 148,493      |  | $ | 15,979 |  | $ | 132,514
|                           |  |                           |         |                |   |              |  |                  |         |                |   |              |  |   |        |  |   |        

Cost of Revenues, Sales and Marketing, General and Administrative.We refer to cost of revenues, sales and
marketing, and general and administrative expenses (excluding non-cash stock compensation expense) as cash related expenses. We incurred cash-related expenses in aggregate of $74.9 million and $67.1 million for the three months
ended June 30, 2006 and 2005, respectively, representing approximately 81% and 83% of total revenues, respectively. We incurred cash-related expenses in aggregate of $148.6 million and $132.5 million for the six months ended June 30,
2006 and 2005, representing approximately 84% and 87% of total revenues, respectively. The majority of our cash-related expenses are costs associated with employee compensation, benefits and facilities, which represented over 59% and 61% of our
total cash operating expenses during the three and six months ended June 30, 2006, respectively. Total cash-related expenses increased approximately 12% for the three and six months ended June 30, 2006 when compared to the prior year,
respectively. The increase related primarily to higher compensation and benefits costs resulting from approximately 12% increase in our headcount for the first six months ended June 30, 2006 compared to the six months ended June 30,
2005.



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Non-cash stock compensation expense was $4.6 million and $2.3 million for the three months ended June 30, 2006 and 2005,
respectively, and was $9.4 million and $3.2 million for the six months ended June 30, 2006 and 2005, respectively. Non-cash stock compensation expense included in cost of revenues was $2.0 million and $0.5 million, in sales and marketing
was $0.8 million and $0.2 million and in general and administrative expenses was $1.8 million and $1.6 million for the three months ended June 30, 2006 and 2005, respectively. Non-cash stock compensation expense included in cost
of revenues was $3.9 million and $1.0 million, in sales and marketing was $1.8 million and $0.5 million and in general and administrative expenses was $3.7 million and $1.7 million for the six months ended June 30, 2006 and 2005,
respectively.

Stock Option Investigation. We have recorded expenses of $1.4 million for the three and six months ended June 30, 2006 related to
costs incurred in connection with the investigation of our stock option dating practices and the adjustment of our historical financial statements to correct errors found in the investigation. These expenses represent costs for outside legal counsel
and outside accounting experts that were engaged by both the special committee of the Board of Directors and management in performing an internal investigation relating to past option grants, the timing of such grants and related accounting matters.
For more information regarding the restatement, see Item 7, Managements Discussion and Analysis of Financial Condition and Results of Operations  Restatement of Consolidated Financial Statements, and Note 2 of the Notes to
the Consolidated Financial Statements of our Annual Report on Form 10-K/A for the year ended December 31 2005.

Depreciation and
Amortization. Depreciation expense was $5.3 million and $4.3 million for the three months ended June 30, 2006 and 2005, and was $10.1 million and $8.3 million for the six months ended June 30, 2006 and 2005, respectively. The
increase in depreciation expense is due to increased capital expenditure spending related to the launch of new products and to accommodate growth in users and usage.

Intangible asset amortization expense was $2.7 million and $2.3 million for the three months ended June 30, 2006 and 2005, and $5.4 million and $4.5 million for the six months ended June 30, 2006 and 2005,
respectively. Our amortization expense has increased due to the amortization of intangible assets that were acquired in 2005.

Operating Income

Operating income for the three and six months ended June 30, 2006 was $4.8 million and $2.5 million, respectively, compared to operating
income of $4.7 million and $3.6 million for the three and six months ended June 30, 2005, respectively. The increase in operating income in 2006 as compared to 2005 was due primarily to an increase in revenues of $11.7 million and $23.9
million, offset by an increase in operating costs of $11.5 million and $25.0 million, which included $4.6 million and $9.4 million of non-cash stock compensation expense for the three and six months ended June 30, 2006,
respectively, as compared to the prior year.

The following table sets forth operating income before depreciation, amortization and stock compensation
expense to operating income (loss) as calculated in accordance with GAAP for the three and six months ended June 30, 2006 and 2005:



|                                                                                  |  |                             |        |                           |   |        |  |      |        |  |   |       
|--------------------------------------------------------------------------------- |  | --------------------------- | ------ | ------------------------- | - | ------ |  | ---- | ------ |  | - | ------
|                                                                                  |  | Three Months Ended June 30, |        | Six Months Ended June 30,
|(in thousands)                                                                    |  | 2006                        |        | 2005                      |   | 2006   |  | 2005
|Operating income                                                                  |  | $                           | 4,827  |                           | $ | 4,682  |  | $    | 2,505  |  | $ | 3,605 
|Stock compensation expense                                                        |  |                             | 4,633  |                           |   | 2,301  |  |      | 9,389  |  |   | 3,237 
|Depreciation                                                                      |  |                             | 5,265  |                           |   | 4,285  |  |      | 10,087 |  |   | 8,289 
|Amortization                                                                      |  |                             | 2,710  |                           |   | 2,344  |  |      | 5,449  |  |   | 4,453 
|                                                                                  |  |                             |        |                           |   |        |  |      |        |  |   |       
|Operating income before depreciation, amortization and stock compensation expense |  | $                           | 17,435 |                           | $ | 13,612 |  | $    | 27,430 |  | $ | 19,584
|                                                                                  |  |                             |        |                           |   |        |  |      |        |  |   |       

We expect lower revenue growth rates in 2006 compared to 2005, combined with our continued focus on investing in
the business and adding new products, services and content categories in order to expand our audience and customer bases, are expected to translate into lower incremental profit margins in 2006 compared to 2005. Incremental profit margin is
another non-GAAP financial measurement that our management uses to evaluate our results. This measure reflects the change in the current periods operating income before depreciation, amortization, impairment and stock compensation as compared
to the same period in the prior year, divided by the change in revenues for the corresponding period.

Nonoperating Income and Expense

Realized Gain/Loss on Sale of Investments. We recognized a loss of $0.2 million during the three months ended June 30, 2005 from sales of certain
privately-held investments. We recognized gains of $0.5 million and $0.4 million during the six months ended June 30, 2006 and 2005, respectively.

Interest Income and Interest Expense.Interest income is earned on our cash and cash equivalents and investments in marketable debt securities. Interest income increased by approximately $0.8 million
and $1.5 million for the three and six months ended June 30, 2006, respectively, as compared to the three and six months ended June 30, 2005, due to higher cash and investment balances and an increase in interest rates.

Discontinued Operations

Discontinued operations represents the
results of operations for our Computer Shopper business which was sold on February 2, 2006. Current year results include a $0.8 million gain on sale. Our net operating loss from discontinued operations was $0.8 million for the six months
ended June 30, 2006. Net operating income from discontinued operations for the three and six months ended June 30, 2005 was $0.4 million and $0.5 million, respectively.



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Segment Revenues and Operating Expenses

For the three and six months ended June 30, 2006 as compared to prior year, revenues have increased for both the U.S. Media segment and the International Media segment. The increase in revenues for the U.S.
Media segment is related to an increase in marketing services revenue. The increase in revenues for the International Media segment is due to an increase in interactive advertising revenue as well as from revenue from businesses acquired in the
past year , offset by lower revenues from print businesses and the impact of changes in exchange rates on revenues denominated in certain foreign currencies.

For the three and six months ended June 30, 2006, the U.S. Media segment cash-related expenses as a percentage of revenues was relatively flat as compared to the prior year. The International Media segment cash related expenses
were 93% and 100% of revenues in the three and six months ended June 30, 2006, respectively, compared to 94% and 107% of revenues in the three and six months ended June 30, 2005, respectively.

Liquidity and Capital Resources

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



|                                      |  |              |         |                  |   |        
|------------------------------------- |  | ------------ | ------- | ---------------- | - | -------
|(in thousands)                        |  | June 30,2006 |         | December 31,2005
|Cash and cash equivalents             |  | $            | 79,040  |                  | $ | 55,895 
|Short-term marketable debt securities |  |              | 42,736  |                  |   | 41,591 
|Long-term marketable debt securities  |  |              | 19,258  |                  |   | 12,432 
|Restricted cash                       |  |              | 2,248   |                  |   | 2,248  
|                                      |  |              |         |                  |   |        
|                                      |  | $            | 143,282 |                  | $ | 112,166
|                                      |  |              |         |                  |   |        

We evaluate our liquidity primarily on the following key measurements:



| |  |  | Net cash provided by operating activities
| | - |  | -----------------------------------------



| |  |  | Operating income before depreciation, amortization and stock compensation expense
| | - |  | ---------------------------------------------------------------------------------



| |  |  | Free cash flow
| | - |  | --------------

Other key factors that impact our liquidity include:



| |  |  | Capital expenditures
| | - |  | --------------------



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



| |  |  | Debt obligations or debt retirement
| | - |  | -----------------------------------



| |  |  | Proceeds from sales of our stock through stock option and employee stock purchase plan
| | - |  | --------------------------------------------------------------------------------------

Net Cash Provided by Operating Activities

Net cash provided by operating activities of $44.1 million for the six
months ended June 30, 2006 included net income of $3.9 million and non-cash depreciation and amortization charges totaling $15.5 million, as well as non-cash stock compensation expense of $9.4 million. Net cash provided by
operating activities also included cash generated by a decrease in working capital requirements, primarily accounts receivable of $15.8 million. Net cash provided by operating activities of $21.8 million for the six months ended June 30,
2005 included net income of $4.5 million and non-cash depreciation and amortization totaling $12.8 million and non-cash stock compensation expense of $3.2 million. We may from time-to-time require cash for working capital purposes as our
business expands.

Net Cash Used in Investing Activities

Net cash used in investing activities of $28.4 million and $15.3 million for the six months ended June 30, 2006 and 2005, respectively, was primarily due to capital expenditures, purchases of marketable debt securities and acquisitions
and investments.



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Acquisitions of property and equipments. Capital expenditures for the six months ended June 30, 2006
were $17.4 million. Capital expenditures for the full year 2006 are expected to be between $35.0 million and $38.0 million, an increase over the prior year due to the continued launch of new products and growth in users and usage.

Acquisitions and Investments.Cash used for acquisitions in the first six months ended June 30, 2006, represents payment of deferred consideration for
the 2004 ZOL acquisition of $0.8 million, as well as $5.5 million paid for three acquisitions in the second quarter of 2006. In the six months ended June 30, 2005 we made cash payments of $11.0 million for four acquisitions and payments of
$5.0 million related to deferred consideration from acquisitions completed in prior years. We routinely evaluate new business opportunities and ventures, including acquisitions, in a broad range of areas and expect to fund such investments
through our existing cash and marketable debt securities, cash generated from operations and available bank borrowings.

Operating income before
depreciation, amortization and stock compensation expense. Excluding non-cash charges consisting of depreciation, amortization and stock compensation expense, our operating income was $17.4 million and $13.6 million for the three months
ended June 30, 2006 and 2005, respectively. Excluding non-cash charges consisting of depreciation, amortization and stock compensation expense, our operating income was $27.4 million and $19.6 million for the six months ended June 30,
2006 and 2005, respectively. Operating income before depreciation, amortization and stock compensation expense is a key liquidity measurement as it can be one of the primary drivers of the cash provided by operating activities.

Free cash flow.Free cash flow is defined as net cash provided by operating activities less capital expenditures. Free cash flow for the
six months ended June 30, 2006 was $26.7 million (cash provided by operating activities of $44.1 million, less capital expenditures of $17.4 million). This compares to free cash flow for the six months ended June 30, 2005 of $10.9
million (cash provided by operating activities of $21.8 million, less capital expenditures of $10.9 million).

We believe that free cash flow provides
useful information about the ability of our business operations to generate cash after the purchase of property and equipment. A limitation of free cash flow is that it does not represent the total increase or decrease in the cash balance for
the period which would include activities such as acquisitions and debt or equity transactions. Free cash flow should be considered in addition to, and not as a substitute for, other measures of financial performance prepared in accordance with
U.S. GAAP.

Net Cash Provided by Financing Activities

Cash provided by financing activities of $7.0 million and $7.2 million for the six months ended June 30, 2006 and 2005, respectively, was primarily due to the issuance of common stock through the exercise of stock options and the
employee stock purchase plan.

Debt and Cash Balances

As of June 30, 2006, we had long-term obligations outstanding under notes payable totaling $12.4 million consisting primarily of notes payable related to acquisitions all of which are due in 2007 and 2008.



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Current portion of long term debt includes. notes payable of $125.0 million of 0.75% Convertible Senior Notes. These
notes were convertible, under certain circumstances, for shares of CNET Networks, Inc. common stock based on an initial effective conversion price of approximately $15.00 per share. On September 13, 2006, we announced that we had commenced
a solicitation of consents from holders of our outstanding $125.0 million principal, 0.75% Senior Convertible Notes due 2024. The consents were to waive and amend certain obligations under the indenture governing the Notes resulting from our failure
to timely file with the SEC any required reports or filings. The prepared amendments and waivers pertained to our failure to timely file our Quarterly Report on Form 10-Q for the quarter ended June 30, 2006 and possible delisting of our stock
from the Nasdaq Global Select Market.

On October 11, 2006, we modified and extended the solicitation of consents. The consent solicitation was
modified to offer holders a two-year extension of the call protection period so that such period would end on April 20, 2011 rather than April 20, 2009. The solicitation expired on October 18, 2006 and we did not receive a sufficient
number of consents from holders to satisfy the 70% requisite consent threshold. On October 25, 2006, we received a notice of acceleration under the indenture from Wells Fargo Bank, National Association, the trustee for the holders of the Notes.
The acceleration letter declared the principal amount outstanding under the Notes, together with any accrued and unpaid interest were immediately due and payable. On October 30, 2006, we retired all the Notes in response to the notice of
acceleration with existing cash and by fully drawing on the $60.0 million credit facility.

On September 12, 2006, we entered into a new one-year
credit agreement. Under the terms of this agreement, CNET Networks can borrow up to an aggregate principal amount of $60.0 million, which can be drawn down as revolving loans or term loans. Interest rates applicable to amounts outstanding under this
facility are at variable rates based on either the Federal Funds rate plus 0.5% or the LIBOR plus and applicable margin based on a ratio of our consolidated debt to earnings as defined in the agreement. Covenants under this credit facility require
that we maintain certain liquidity ratios and minimum earnings before depreciation, amortization, interest, taxes, stock compensation expense and certain other charges.

As of June 30, 2006, our aggregate cash balances totaled $143.2 million, consisting of $79.0 million cash and equivalents, $62.0 million of short-term and long-term investments in marketable debt securities as
well as $2.2 million of restricted cash. We believe that existing 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 could reduce our cash balances and may affect our liquidity and funding needs. However, as we routinely evaluate new business opportunities and ventures, including
acquisitions, this could reduce our cash balances and may affect our liquidity and funding needs. As a result, we may determine to raise proceeds through the issuance of debt or equity securities. Our ability to raise such additional capital
will depend on market conditions at the time.

RECENT ACCOUNTING PRONOUNCEMENTS

In May 2005, the FASB issued SFAS No. 154, Accounting Changes and Error Corrections (SFAS 154). SFAS 154 replaces Accounting Principles Board (APB) Opinion No. 20,
Accounting Changes, (APB 20) and SFAS No. 3, Reporting Accounting Changes in Interim Financial Statements. The statement requires a voluntary change in accounting principle to be applied retrospectively to
all prior period financial statements so that those financial statements are presented as if the current accounting principle had always been applied. APB 20 previously required most voluntary changes in accounting principle to be recognized by
including in net income of the period of change the cumulative effect of changing to the new accounting principle. In addition, SFAS 154 carries forward without change the guidance contained in APB 20 for reporting a correction of an error in
previously issued financial statements and a change in accounting estimate. This statement is effective for accounting changes and correction of errors made in fiscal years beginning after December 15, 2005, with earlier adoption permitted.

In June 2006, the Financial Accounting Standards Board (FASB) issued FASB Interpretation No. 48 (FIN 48), Accounting
for Uncertainty in Income Taxes. FIN 48 clarifies the accounting for uncertainty in income



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taxes recognized in accordance with FASB Statement No. 109, Accounting for Income Taxes. FIN 48 prescribes a comprehensive model for how a
company should recognize, measure, present and disclose in its financial statements uncertain tax positions that the company has taken or expects to take on a tax return. This interpretation is effective for fiscal years beginning after
December 15, 2006. We are currently evaluating the provisions of FIN 48.

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:



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



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



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



| |  |  | 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 orders or contracts that stipulate the types of advertising to be delivered and pricing. Our customers are billed based on
pricing as determined on the insertion order or contract, which may include certain discounts from list price. No amounts are subject to refund. When recognizing revenues, any discounts granted are applied to each type of advertisement purchased on
a pro-rata basis.

We refer to the fees charged to merchants based on the number of users who click on an advertisement or text link to visit the websites
of our merchant, download, search or white paper partners as activity-based advertising. The arrangements for activity-based advertising are evidenced by a contract that stipulates the fee per activity. The fee becomes fixed and
determinable upon a 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, we sell multiple deliverables to customers as part of a multiple-element arrangement. We consider these arrangements single units of accounting, and revenue is recognized in these arrangements on a proportional
performance basis. 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 arrangements within the previous six-month period. We also ensure that the value of barter delivered in each brand does not exceed the value of cash based revenue in any period.



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Licensing, Fees and Users.Revenues for subscriptions to our Internet sites and product databases are
recognized on a straight-line basis over the term of the subscription. CNET Networks completes our obligation to customers for these arrangements by granting them password access to our sites or databases. 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.

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 customers
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. As of June 30, 2006 and December 31, 2005, our allowance for doubtful accounts was $7.3 million and $7.5 million, respectively.

Stock compensation expense

On January 1, 2006, we adopted
Statement of Financial Accounting Standards No. 123 (revised 2004), Share-Based Payment, (SFAS 123(R)) which requires the measurement and recognition of compensation expense for all share-based awards made to our employees and
directors including employee stock options and employee stock purchases based on estimated fair values.

We use the Black-Scholes pricing model in our
determination of the compensation expense associated with share-based awards. Our determination of estimated fair value of share-based awards is affected by our stock price as well as assumptions regarding certain highly complex and subjective
variables. These variables include, but are not limited to our expected stock price volatility over the expected term of the awards, and actual and projected employee stock option exercise behaviors. The use of an option pricing model requires
the use of extensive actual employee exercise behavior data and the use of a number of complex assumptions including expected volatility, risk-free interest rate, expected dividends, and expected life of options.

Our computation of expected volatility is based on a combination of historical and implied stock price volatility consistent with SFAS 123(R) and SAB 107. Prior to
the first quarter of fiscal 2006, we had used our historical stock price volatility in accordance with SFAS 123 for purposes of our pro forma information. The selection of the implied volatility approach was based upon our assessment that a mix of
historical and implied volatility is more representative of future stock price trends than historical volatility.

The risk-free interest rate assumption
is based upon U.S. Treasury bond rates appropriate for the term of our employee stock options. The dividend yield assumption is based on our history and current expectation of no dividend payouts.

The expected term of employee stock options represents the weighted-average period the stock options are expected to remain outstanding and is based on the historical
average holding period of exercised options and the expected holding period of outstanding shares.

If factors change and we employ different assumptions
in the application of SFAS 123(R) in future periods, the compensation expense that we record under SFAS 123(R) may differ significantly from what we have recorded in the current period.

Goodwill and intangibles impairment

Goodwill of a reporting unit is reviewed for impairment if events or changes in
circumstances indicate that the carrying amount of its goodwill or intangible assets may not be recoverable. 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 for CNET Networks as a whole or a particular reporting unit of CNET Networks. Impairment



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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. The evaluation is prepared based on CNET Networks current and projected performance for each identified reporting unit. Even if there has not been an indicator of impairment, we 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 takes place.

Contingencies

We evaluate whether a liability must be recorded for contingencies based on whether a liability is probable and estimable. Our most significant
contingency is related to our lease guarantee for office space in New York City (as described in Note 11 of Item 8  Financial Statements in our Annual Report on Form 10-K/A). 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 September 30, 2006, the total lease payments
remaining until the end of the lease term were $150.8 million, excluding the amounts attributable to our sublease with respect to the floor we occupy.

ITEM 3. 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.As of October 2006, we have interest rate risk with respect to our credit facility
under which we can borrow up to $60.0 million. Interest rates applicable to amounts outstanding under this facility are at variable rates based on the Federal Funds rate plus 0.5% or the LIBOR plus an applicable margin based on our leverage. A
change in interest rates on this variable rate debt impacts the interest incurred and cash flows but does not impact the fair value of the instrument.

We
also have exposure to market rate risk for changes in interest rates due 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 ongoing 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 4. 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-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as of the end of the fiscal quarter covered by this Quarterly Report on Form 10-Q to ensure that
information we are required to disclose in
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| | reports that are filed or submitted under the Securities Exchange Act of 1934, as amended, are recorded, processed, summarized and reported within the time
periods specified by the Securities and Exchange Commission rules and forms. Based on this evaluation, our chief executive officer and chief financial officer have concluded that as of June 30, 2006, our disclosure controls and procedures were
effective.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|b) | Changes in internal control over financial reporting. There have not been any changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f)
and 15d-15(f) under the Securities Exchange Act of 1934) during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Given the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any,
which we may have detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Further, the design of a control system must
reflect the fact that there are resource constraints, and that benefits of controls must be considered relative to their costs. The design of any system of controls is also based in part on certain assumptions regarding the likelihood of future
events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

PART II. OTHER
INFORMATION

ITEM 1. Legal Proceedings.

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 Networks 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. A Consolidated Amended Complaint, which is now the operative complaint, was filed in the Southern District of New York
on April 19, 2002. 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 our
motion to dismiss the Section 10(b) claim with leave to replead, and denied the motion to dismiss the Section 11 claim. Plaintiffs did not replead the Section 10(b) claim, and the time to replead that claim has expired.

On October 13, 2004, the Court certified a class in six of the approximately 300 other nearly identical actions (the focus cases) and noted that the
decision is intended to provide strong guidance to all parties regarding class certification in the remaining cases. The Underwriter Defendants appealed the decision and the Second Circuit vacated the district courts decision granting class
certification in those six cases on December 5, 2006. Plaintiffs have not yet moved to certify a class in the CNET Networks case.

The majority of the
issuers, including CNET Networks, and their insurers have approved a settlement agreement and related agreements. The agreements set forth the terms of a settlement between CNET Networks, the plaintiff class and the vast majority of the other
approximately 300 issuer defendants. It is unclear what impact the Second Circuits decision vacating class certification in the six focus cases will have on the settlement, which has not been finally approved by the Court. Plaintiffs are
expected to file a petition for rehearing and rehearing en banc. On November 14, 2006, Judge Scheindlin held a hearing and stayed all proceedings, including a decision on final approval of the settlement and any amendments of the
complaints, pending the Second Circuits decision on Plaintiffs expected petition for rehearing.



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Pursuant to the settlement and related agreements, if the settlement receives final approval by the Court, our insurers
would participate in an undertaking to guarantee a minimum recovery by the plaintiffs as described below. Among other provisions, the settlement provides for a release of CNET and the individual defendants for the conduct alleged in the action to be
wrongful. We would agree to undertake certain responsibilities, including agreeing to assign away, not assert, or release certain potential claims we may have against its underwriters. The settlement agreement also provides a guaranteed recovery of
$1 billion to plaintiffs for the cases relating to all of the approximately 300 issuers. To the extent that the underwriter defendants settle all of the cases for at least $1 billion, no payment will be required under the issuers settlement
agreement. To the extent that the underwriter defendants settle for less than $1 billion, the issuers are required to make up the difference. On April 20, 2006, JPMorgan Chase and the plaintiffs reached a preliminary agreement for a settlement
for $425 million. The JPMorgan Chase settlement has not yet been approved by the Court. In an amendment to the issuers settlement agreement, the issuers insurers agreed that the JP Morgan settlement will only offset the insurers
obligation to cover the remainder of plaintiffs guaranteed $1 billion recovery by 50% of the value of the JP Morgan settlement, or $212.5 million. Therefore, if the JP Morgan settlement is finally approved, then the maximum amount that the
issuers insurers will be potentially liable for is $787.5 million. However, future settlements with other underwriters would further reduce that liability. It is unclear what impact the Second Circuits decision vacating class
certification in the focus cases will have on the JP Morgan Chase preliminary agreement.

It is anticipated that any potential financial obligation of the
Company to plaintiffs pursuant to the terms of the settlement agreement and related agreements will be covered by existing insurance. Therefore, we do not expect that the settlement will involve any payment by the Company. Based on the amount of our
insurance and the agreement of the insurers to cover legal expenses after June 1, 2003, we do not anticipate additional expenses or liability if the settlement is approved. The Company currently is not aware of any material limitations on the
expected recovery of any potential financial obligation to plaintiffs from its insurance carriers. The Company believes its carriers are solvent, and the Company is not aware of any uncertainties as to the legal sufficiency of an insurance claim
with respect to any recovery by plaintiffs. Therefore, we do not expect that the settlement will involve any payment by the Company. If material limitations on the expected recovery of any potential financial obligation to the plaintiffs from the
Companys insurance carriers should arise, the Company maximum financial obligation to plaintiffs pursuant to the settlement agreement would be less than $3.4 million. However, if the JPMorgan Chase settlement is finally approved, the
Companys maximum financial obligation to the plaintiffs pursuant to the settlement agreement would be less than $2.7 million.

There is no assurance
that the court will grant final approval to the settlement. If the settlement is not approved and we are found liable, it is anticipated that any potential financial obligation of CNET Networks to plaintiffs will be covered by existing insurance.

Regardless of whether the settlement is approved, and even if material limitations arise with respect to our expected recovery of any potential
obligations to plaintiffs from our insurance carriers, we do not expect that any payments required to be made by us will be material.

On August 3,
2004, two private citizens filed an action,Cisneros, et al. v. Yahoo! Inc., et al., San Francisco Superior Court, Case No. CGC 04433518, against CNET Networks, and a number of other defendants claiming that the defendants posted website
advertisements for Internet gambling sites in violation of California Business and Professions Code Section 17200. The plaintiffs sought a variety of remedies including disgorgement, restitution, and an injunction. In preliminary hearings, the
court has ruled that disgorgement or restitution claims are limited. On December 1, 2005, plaintiffs filed a motion seeking a preliminary injunction. The case is at the preliminary stage and little discovery has been conducted. Accordingly, it
is not possible to predict the impact of this litigation on our financial results.

United States Attorney and SEC Inquiries

On June 26, 2006, we received a grand jury document subpoena from the United States Attorney for the Northern District of California requesting records pertaining to
the granting of stock options. In addition in May 2006, we received notice that the Securities and Exchange Commission (SEC) was conducting an informal inquiry into our stock option grants. We are cooperating, and will continue to cooperate fully
with the United States Attorney for the Northern District of California and the SEC. We cannot predict the outcome of these investigations.



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Listing on the Nasdaq Stock Market

On December 5, 2006, we received notice that the Nasdaq Listing Qualifications Panel granted CNET Networks request for continued listing of our common stock on The Nasdaq Global Select Market. The continued
listing of our common stock is subject to the condition that on or before February 2, 2007, we file with the SEC our delinquent Quarterly Reports on Form 10-Q for the quarters ended June 30, 2006 and September 30, 2006 and any
necessary restatements of our prior financial statements. Although we believe the filing of this Form 10-Q and our concurrent filings of our amended Annual Report on Form 10-K/A, our amended Quarterly Report on Form 10-Q/A for the quarter ended
March 31, 2006, and the delinquent Quarterly Report on Form 10-Q for the quarter ended September 30, 2006 satisfy the Nasdaq Listing Qualifications Panels requirements, there can be no assurance that the Panel will be satisfied with
these filings.

Shareholder Derivative Suits

On
May 31, 2006, a purported shareholder derivative complaint was filed in the Superior Court of California, County of San Francisco, by a party identifying itself as a shareholder of CNET Networks purporting to act on behalf of CNET Networks
against the directors of CNET Networks and certain present and former officers of CNET Networks. CNET Networks is also named as a nominal defendant. The suit, captioned Paskar v. Bonnie, et al., alleges breaches of fiduciary duty
and unjust enrichment arising from stock options granted between 1996 and 2004. The complaint seeks monetary damages, disgorgement, rescission of stock options and other relief against the defendants on behalf of CNET Networks. The complaint does
not seek monetary damages from, or the imposition of equitable remedies on, CNET Networks. Subsequently, on June 2, 2006, June 19, 2006 and September 22, 2006, three additional purported shareholder derivative actions were filed
in the Superior Court of California, County of San Francisco. These three complaints, captioned Hutton v. Bonnie, et al., Raniolo v. Bonnie et al. and Berger v. Bonnie, et al., contain substantially similar allegations as the
aforementioned shareholder derivative complaint. These four shareholder derivative cases were consolidated on October 23, 2006 and the plaintiffs filed a consolidated complaint on November 16, 2006. We filed a motion to stay these
purported shareholder derivative actions pending before the California Superior Court. At a hearing on January 3, 2007, the Superior Court denied our motion to stay but ordered that no discovery or substantive motion practice shall proceed
until further order of the Court.

On June 19, 2006, a purported shareholder derivative complaint was filed in the United States District Court for
the Northern District of California by a party identifying itself as a shareholder of CNET Networks purporting to act on behalf of CNET Networks against the directors of CNET Networks and certain present and former officers of CNET Networks. CNET
Networks is also named as a nominal defendant. The suit, captioned Melzer v. Bonnie, et al., alleged violations of federal securities law, California securities law, as well as breach of fiduciary duty, unjust enrichment, and
insider trading arising from stock options granted between 1997 and 2003. On July 13, 2006, another purported shareholder derivative complaint, captioned Finn v. Bonnie et al., was filed in the same court containing identical
allegations. These purported shareholder derivative actions pending before the United States District Court for the Northern District of California were consolidated on August 31, 2006 and the plaintiffs in those cases have subsequently filed a
consolidated complaint on September 28, 2006. That consolidated complaint was amended on November 9, 2006. The complaint seeks monetary damages, disgorgement, rescission of stock options and other relief against the defendants on behalf of
CNET Networks. The complaint does not seek monetary damages from, or the imposition of equitable remedies on, CNET Networks.

There are no other legal
proceedings to which we are a party that are reasonably expected to be material to our business or financial condition.



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ITEM 1A. Risk Factors

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS AND RISK FACTORS

This Report on Form 10-Q contains forward- looking
statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are any statements other than 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, and statements concerning proposed new products
and services, and any statements of assumptions underlying any of the foregoing. In some cases, you can identify forward-looking statements by the use of words such as may, will, expects, should,
believes, plans, anticipates, estimates, predicts, potential, or continue, and any other words of similar meaning.

Any or all of our forward-looking statements in this report and in any other public statements we make may turn out to be wrong and our actual results to differ
materially from forecasted or historical results. They can be affected by inaccurate assumptions we might make or by known or unknown risks and uncertainties, including those outlined below. Consequently, no forward-looking statement can be
guaranteed. 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 reports to the Securities and Exchange Commission. Also note that we provide 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.

You should carefully consider the risks described below before making an investment decision regarding CNET Networks securities. Our business, financial condition or
results of operations could be materially adversely affected by any of these risks. The trading price of our common stock could decline due to any of these risks. The risks described below are not the only ones we face. Additional risks not
presently known to us or that we currently deem immaterial may also impair our business operations.

The matters relating to the Special
Committees and Managements review of our past stock option granting practices and the restatement of our consolidated financial statements have resulted in expanded litigation and regulatory proceedings and may result in future
litigation which could harm our financial results.

On May 22, 2006, we announced that our Board of Directors had appointed a Special
Committee comprised of independent directors to conduct, with the assistance of legal counsel and outside accounting experts, an internal investigation relating to past option grants, the timing of such grants and related accounting matters. As
described in our Annual Report on Form 10-K/A for the year ended December 31, 2006 under Item 7, Managements Discussion and Analysis of Financial Condition and Results of Operations and Note 2 to the Consolidated
Financial Statements, in Item 8, Financial Statements and Supplementary Data, the Special Committee reached a preliminary conclusion in July 2006 concluding that the actual measurement dates for certain stock options granted between 1998
and 2001 differed from the recorded measurement dates. Charges related to the change in these stock option measurement dates were determined to be material and, as a result, we announced that we expected to restate our financial statements for 2005,
2004 and 2003 and possibly the first quarter of 2006. We announced the findings of the Special Committees review of our option granting practices on October 11, 2006, and management concluded its review in January 2007. As a result of
these reviews, we have recorded substantial additional non-cash stock compensation expense, and related tax effects, related to stock option grants.

Our
review of our past stock option granting practices has required us to incur substantial expenses for legal, accounting, tax and other professional services, has diverted our managements attention from our business, and could in the future harm
our business, financial condition, results of operations and cash flows.

Our past stock option granting practices and the restatement of our prior
financial statements have exposed us to greater risks associated with litigation and regulatory proceedings. In June 2006, we received a grand jury document subpoena from the United States Attorney for the Northern District of California requesting
records pertaining to the granting of stock options. In addition, in May 2006 we received notice that the Securities and Exchange



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Commission (SEC) was conducting an informal inquiry into our stock option grants. We are cooperating, and will continue to cooperate fully with the United
States Attorney for the Northern District of California and the SEC. We cannot predict the outcome of these investigations. In addition, as described in Part II, Item 3, Legal Proceedings, several derivative complaints have been
filed against our directors and certain of our executive officers pertaining to allegations relating to stock option grants. We cannot predict the outcome of any litigation or regulatory proceeding against CNET Networks or our directors or officers.

As a result of our delayed filing of our Quarterly Report on Form 10-Q for the quarters ended June 30, 2006 and September 30, 2006, we will be
ineligible to register our securities on Form S-3 for sale by us or resale by others until we have timely filed all periodic reports under the Securities and Exchange Act of 1934 for a period of twelve months and any portion of a month from the due
date of our last untimely report. We may use Form S-1 to raise capital or complete acquisitions, but doing so could increase transaction costs and adversely impact our ability to raise capital or complete acquisitions of other companies in a timely
manner.

On August 14, 2006 and November 13, 2006, we received Nasdaq Staff Determination notices stating that we were not in compliance with
Nasdaq Marketplace Rule 4310(c)(14). The notices were issued in accordance with Nasdaq procedures because we did not timely file our Quarterly Reports on Form 10-Q for the periods ended June 30, 2006 and September 30, 2006. We requested
and were granted a hearing on September 26, 2006 with the Nasdaq Listing Qualifications Panel. On December 5, 2006, we received notice that the Nasdaq Listing Qualifications Panel granted our request for continued listing of our common
stock on the Nasdaq Global Select Market. The continued listing of our common stock is subject to the condition that on or before February 2, 2007, we must file with the SEC our Quarterly Reports on Form 10-Q for the periods ended June 30,
2006 and September 30, 2006 and any necessary restatements of our prior financial statements. Although we believe the January 29, 2007 filing of our Form 10-K/A and our concurrent filings of the Form 10-Q/A for the quarter ended
March 31, 2006 and the delinquent Form 10-Qs satisfy the Nasdaq Listing Qualifications Panels requirements, we cannot assure you that the Panel will be satisfied with these filings.

While we believe that we have made appropriate judgments in determining the correct measurement dates for option grants, the SEC may disagree with the manner in which we
have accounted for and reported, or not reported, the financial impact of past option grant measurement date errors, and there is a risk that any SEC inquiry could lead to circumstances in which we may have to further restate our prior financial
statements, amend prior filings with the SEC, or otherwise take other actions not currently contemplated. In addition, the SEC may issue additional guidance on disclosure requirements related to the financial impact of past option grant measurement
date errors that may require us to amend this filing or prior filings with the SEC to provide additional disclosures pursuant to this guidance. Any such circumstance could also lead to future delays in filing our subsequent SEC reports and delisting
of our common stock from the Nasdaq Global Market. Furthermore, if we are subject to adverse findings in any of these matters, we could be required to pay damages or penalties or have other remedies imposed upon us which could harm our business,
financial condition, results of operations and cash flows.

Our revenues might not grow, and they might decrease.

Several factors, many of which are outside of our control, contribute to our revenue growth. Some scenarios that might impede our revenue growth in the future are listed
below.



| |  |  | our failure to maintain existing marketing customers and to attract new marketing customers due to competition from other media outlets, dissatisfaction with our services, reduced
advertising budgets;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | our loss of advertising and other marketing opportunities to competitors, especially as other media companies increase their online presence in areas where we focus;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | our inability to attract advertisers for our newer websites;
| | - |  | ------------------------------------------------------------



| |  |  | our inability to respond to ad-blocking technology might decrease the effectiveness of online advertising;
| | - |  | ----------------------------------------------------------------------------------------------------------



| |  |  | a loss of revenues from our publishing operations, as more advertising dollars shift from publishing to the Internet;
| | - |  | ---------------------------------------------------------------------------------------------------------------------



| |  |  | weakness in corporate and consumer spending may lead to a decline in advertising, which is the primary source of our revenues;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------



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| |  |  | a decline in general economic conditions, which could occur as a result of currency fluctuations, rising interest rates, or other factors;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------



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



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

We may not be able to achieve our targeted incremental profit margins and accordingly we may fail to make expected improvements in our
overall profit margins.

We have identified incremental profit margins as a useful performance measure. Incremental profit margin is the percent of
each dollar of new revenue that we earn in current periods as compared to prior periods that flows to operating income before depreciation, amortization, asset impairment and stock compensation expense. We may fail to achieve our incremental profit
margin targets. Some of the factors that could cause us not to achieve these targets include:



| |  |  | greater than expected expenses due to a decision to invest in new products, services or websites;
| | - |  | -------------------------------------------------------------------------------------------------



| |  |  | acquisitions of businesses that cannot immediately achieve these profit margins;
| | - |  | --------------------------------------------------------------------------------



| |  |  | greater than expected compensation expenses due to competition for qualified employees;
| | - |  | ---------------------------------------------------------------------------------------



| |  |  | a failure to achieve projected revenue growth, as described in the first risk factor above; or
| | - |  | ----------------------------------------------------------------------------------------------



| |  |  | a failure to manage the costs associated with innovation and growth.
| | - |  | --------------------------------------------------------------------

We have generated significant losses in the past 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 maintain
positive net income.

We have generated an operating loss in eight of the past ten years and have generated a net loss in seven of the past ten
years. Although we generated positive net income in 2005, our ability to generate positive net income in 2006 or subsequent periods may be negatively impacted by:



| |  |  | the implementation of Financial Accounting Standards Board Statement No. 123R, Revised Share-Based Payments (SFAS 123R), which requires us to recognize expenses for stock
options for periods beginning after January 1, 2006;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | an inability to decrease expenses in a timely manner to offset any revenue shortfalls or expenses associated with cost-reduction measures, such as severance, lease termination
payments, contract termination costs or impairment charges;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | payments associated with contingent liabilities, such as litigation or our guarantee of the New York lease of Ziff-Davis, Inc., as described in more detail in a subsequent risk
factor; or
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | any unusual transactions such as impairments or losses on investments.
| | - |  | ----------------------------------------------------------------------

Competition is intense and we might not compete successfully.

The media industry is intensely competitive and rapidly evolving. We
compete for advertisers, users and business partners with numerous companies throughout the world that offer information and content in our primary areas of focus.



| |  |  | Traditional offline media. We have always competed for consumers and advertisers in our areas of focus with the traditional offline media, such as television, radio, cable
and print. For instance, mainstream business publications, such as The New York Times, The Wall Street Journal, Fortune, Forbes, and Business Week and other publications devoted to certain content areas such as games or technology, offer content
that competes with ours. Increasingly, these traditional offline media companies are developing broader reach by creating alternative channels of distribution for their content by building more robust Internet sites, acquiring online companies, and
partnering with other media outlets. As the traditional offline media continues to introduce more multi-media offerings into the market, we will continue to compete with them for consumers and advertisers in the areas where we focus.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Internet sites. Large general purpose portals, such as AOL, MSN and Yahoo! are also competitors, especially as these properties expand their content
offerings in our areas of expertise. We also compete with
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| | niche sites focused on the same vertical markets on which we focus. For example, our gaming properties compete with other gaming sites such as IGN
Entertainment, and our business technology properties compete with smaller, niche sites such as TechTarget. In addition, many traditional media companies are increasing their online offerings.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Search engines. Search engines such as Google and Yahoo! compete with us by attracting users looking for goods, services and content similar to those offered on our websites.
They also compete with us by attracting marketing dollars from companies trying to reach those users.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Online comparison shopping services. Specialized online comparison shopping services such as Shopping.com and PriceGrabber.com and the online shopping services operated by
large general purpose portals have sought to expand the reviews and information offerings on their sites. They compete with us for users and the companies trying to reach those users.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Online retail and auction companies. These companies, such as Amazon.com and eBay, offer goods and services similar to those that can be obtained through our websites. They
compete with us for users and the companies trying to reach those users.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

We may have difficulties with our acquisitions, investments
and new product developments.

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



| |  |  | 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;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | issuance of additional equity interests, which would be dilutive to current stockholders;
| | - |  | -----------------------------------------------------------------------------------------



| |  |  | additional burdens on our management personnel and financial and operational systems;
| | - |  | -------------------------------------------------------------------------------------



| |  |  | difficulty assimilating the operations, technology and personnel of the new businesses;
| | - |  | ---------------------------------------------------------------------------------------



| |  |  | potential disruption of our ongoing business;
| | - |  | ---------------------------------------------



| |  |  | possible inability to retain key technical and managerial personnel;
| | - |  | --------------------------------------------------------------------



| |  |  | additional expenses associated with amortization of purchased intangible assets;
| | - |  | --------------------------------------------------------------------------------



| |  |  | additional operating losses and expenses associated with the activities and expansion of acquired businesses;
| | - |  | -------------------------------------------------------------------------------------------------------------



| |  |  | possible impairment of relationships with existing employees and advertising customers;
| | - |  | ---------------------------------------------------------------------------------------



| |  |  | the impact of our stock option investigation and related lawsuits on our ability to attract business partners;
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| |  |  | potential undisclosed liabilities associated with new or acquired businesses; and
| | - |  | ---------------------------------------------------------------------------------



| |  |  | for foreign acquisitions and investments, additional risks related to the integration of operations across different cultures and languages, currency risks, and the particular
economic, political, and regulatory risks associated with specific countries.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In addition, our one-year credit facility prohibits further
borrowings which could impact our ability to fund acquisitions or to pay for capital purchases.

Acceptance of our brands, content and services may
not continue.

Our future success depends upon the strength of our brands and our ability to deliver original and compelling content and services
that attract and retain users. We will endeavor to continue building existing brands such as CNET.com and GameSpot, and introducing new brands, that resonate with their audiences, but we may not be successful. The specialized nature of certain of
our sites may limit those sites potential user base. Our content and services might not be attractive to a sufficient number of users to generate revenues consistent with our estimates. In addition, we might not develop new content or services
in a timely or cost-effective manner. If we are not successful in growing our user base, then our ability to attract the advertisers who seek to market to the demographic represented by our user base may be affected which would in turn impact our
revenue. Our ability to successfully develop and produce content and services is subject to numerous uncertainties, including the ability to:



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



| |  |  | fund new program development;
| | - |  | -----------------------------



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



| |  |  | successfully expand our content offerings into new platform and delivery mechanisms.
| | - |  | ------------------------------------------------------------------------------------



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Some of our sites may have limited user bases which will affect our ability to attract advertisers.

We believe that our success depends on our ability to continue to grow our user base and increase user interaction with our sites.

We may not innovate at a successful pace.

Our industry is
rapidly adopting new technologies and standards to create and satisfy consumer demand. It is critical that we continue to innovate, anticipate and adapt to these changes to ensure that our content delivery platforms, services and products remain
interesting to our users, advertisers and partners. In addition, we may discover that we must make significant expenditures to achieve this goal. If we fail to accomplish these goals, we may lose users and the advertisers that seek to reach those
users.

We depend in part on third parties for traffic who may sever their relationships with us or fail to perform.

We depend in part on third parties for Internet traffic to our websites and changes to their operations or our failure to develop and maintain relationships with them
could result in decreased traffic. Any reduction in users of our websites could negatively impact our ability to earn revenue. A significant portion of our users visit our websites by conducting a search on a search engine, such as Google, MSN or
Yahoo! and following a link displayed in the search results. Changes in the methodologies used by these search engines to display results could result in our websites receiving less favorable placements, which could reduce the number or users who
link to our sites from these search engines.

In addition, 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, we could see a reduction in the numbers of users of our websites.

Most of our revenue is derived from short-term contracts which may not be renewed.

Our revenues are derived in large part from the sale of advertising and we expect that this will continue to be the case for the foreseeable future. Most of our advertising contracts are short-term and are subject to
termination by the customer at any time on thirty-day prior written notice. Advertisers who have longer-term contracts may fail to honor their existing contracts or fail to renew their contracts. If a significant number of advertisers or a few large
advertisers decided not to continue advertising on our websites, we could experience a rapid decline in our revenues over a relatively short period of time.

We depend on, and receive, a significant percentage of our revenue from a relatively small number of advertisers.

A relatively
small number of advertisers contribute a significant percentage of our revenue. Our top one hundred customers contributed approximately 67% of our U.S. revenue in 2005. These customers 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 customers could have a material adverse effect on our financial condition and results of operation.

A significant percentage of our revenues are derived from activity-based fees generated from our commerce Internet sites and we might not be able to attract
qualified users for which merchants are willing to pay us activity-based fees.

We earn fees when users visit the sites of our merchant partners to
view products that are listed on our commerce sites. There are currently many other businesses that offer similar services, often at lower prices than the ones we charge. 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 sites to make future purchases. If we are unable to continue to



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attract users to our shopping services or to maintain the fees we charge merchants for sending users to their sites, then our business, operating results and
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. In addition, the amount of activity based fees that we earn
is highly dependent upon consumer purchasing activity and trends. A decrease in consumer purchasing activity could result in a decrease in our activity-based fees.

Our advertising and other operating revenues may be subject to fluctuations, which could have a material adverse effect on our business, operating results and financial condition.

We believe that advertising spending on the Internet, as in traditional media, fluctuates significantly with economic conditions. Because a majority of our revenues are
derived from advertising, fluctuations in advertising spending generally, or with respect to Internet-based spending specifically, could adversely impact our revenue. In addition, marketing spending follows seasonal consumer behavior throughout the
calendar year to reflect trends during the calendar year, with spending historically weighted towards the fourth quarter. Consistent with industry trends, our revenues in 2005 were weighted toward the end of the year, with 30% of our revenues being
earned in the fourth quarter.

Our business may be affected by events that draw users away from our content.

Our business may be impacted by any event that decreases the amount of the time that users spend on CNET properties. During these times, our traffic and revenues may
decrease. Some of these factors include geopolitical events and natural disasters.

An inability to attract and retain key personnel could adversely
affect our operations.

Our success depends to a large extent on the continued services of our senior management team and qualified skilled
employees. Our success also depends on our ability to identify, attract, develop, retain and motivate other highly skilled officers, key employees and personnel in a competitive job environment. We currently have several key executive positions
open, and we cannot assure you that we will find qualified candidates in a timely manner. Our inability to do so may adversely affect our ability to operate our business. 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. As the overall industry for interactive content and Internet advertising grows, our employees are increasingly sought after by competitors. In
order to remain competitive in the employment market, we may need to increase compensation to retain or attract qualified employees, which could have an adverse effect our financial condition or operating results. Our inability to attain shareholder
approval of equity compensation plans may affect our ability to attract and retain key employees.

We have limited protection of our intellectual
property and could be subject to infringement claims that may result in costly litigation, the payment of damages or the need to revise the way we conduct our business.

Our success and ability to compete are dependent in part on the strength of our proprietary rights, on the goodwill associated with our trademarks, trade names, service marks, and on our ability to use U.S. and
foreign laws to protect them. Our intellectual property includes our original content, our editorial features, logos, brands, domain names, 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 claim common law protection on certain names and marks that we have used in connection with our business activities. 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. In addition to U.S. and foreign laws, we rely on confidentiality agreements with our employees and third parties, and protective contractual provisions to protect our intellectual property.

Policing our intellectual property rights worldwide is a difficult task and we might not be able to identify infringing users. We cannot be certain that third party
licensees of our content will always take actions to protect the value of our proprietary rights and reputation. Intellectual property laws, our agreements and our patents may not be sufficient



37



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to prevent others from copying or otherwise obtaining and using our content or technologies. Others may develop technologies that are similar or superior to
ours. In seeking to protect our trademarks, copyrights and other proprietary rights, or defending ourselves against claims of infringement brought by others, with or without merit, we could face costly litigation and the diversion of our
managements attention and resources.

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. For instance, 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. We have, on occasion, been approached by holders of patents alleging that our services infringe on their 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 damage awards, including damages for past infringement and royalties for future use of the patented method or technology. 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 do not have insurance for patent infringement.

In seeking to protect our trademarks, copyrights and other proprietary rights, or defending ourselves against claims of infringement brought by others, with or without merit, we could face costly litigation and the
diversion of our managements attention and resources. These claims could result in 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.

Our business involves risks of liability claims for Internet and print
content, 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:



| |  |  | defamation/libel;
| | - |  | -----------------



| |  |  | negligence;
| | - |  | -----------



| |  |  | copyright, patent or trademark infringement; or
| | - |  | -----------------------------------------------



| |  |  | 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 posted to our
Internet sites by third parties. For example, many of our sites offer users an opportunity to post profiles, software, videos, photos, reviews and opinions. Some of this user-generated content, and the content that appears in our indexes and
directories, may infringe on third party intellectual property rights or privacy rights or may otherwise be subject to challenge under copyright laws. Although we do not believe that our listing of any such material should expose us to liability, it
is possible that such a claim may be successfully brought.

Our insurance may not cover potential claims of defamation, libel, 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.

There are a number of risks associated with international operations that could adversely affect our
business.

We maintain an international presence through a variety of international structures and business operations. We have wholly-owned
operations in Australia, France, Germany, Japan, Russia, Singapore, Switzerland and the United Kingdom and majority-owned joint ventures in Korea. We also have license arrangements in various other countries throughout the world. We operate our
operations in China through a variety of entities some of which are owned by local employees in order to comply with local ownership and regulatory licensing requirements. We believe our current ownership structure complies with all
existing Chinese laws. It is possible; however, that the Chinese



38



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government may change the applicable laws or take a different interpretation of existing laws. If we were found to be in violation of any existing or future
Chinese laws or regulations, we could be subject to fines and other financial penalties, have our licenses revoked, or be forced to discontinue our business entirely.

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



| |  |  | weak economic conditions in foreign markets, especially in the business sector;
| | - |  | -------------------------------------------------------------------------------



| |  |  | uncertainty of product acceptance in different countries,
| | - |  | ---------------------------------------------------------



| |  |  | longer collection cycles in some countries;
| | - |  | -------------------------------------------



| |  |  | current, and unforeseen changes in, legal and regulatory requirements;
| | - |  | ----------------------------------------------------------------------



| |  |  | difficulties in staffing and managing multi-national operations;
| | - |  | ----------------------------------------------------------------



| |  |  | currency exchange rate fluctuations, which could reduce our revenues as determined under U.S. GAAP, increase our expenses, and dilute our operating margins;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------



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



| |  |  | potential adverse tax requirements;
| | - |  | -----------------------------------



| |  |  | distance, language and cultural differences in doing business with foreign entities; and
| | - |  | ----------------------------------------------------------------------------------------



| |  |  | foreign political and economic uncertainty.
| | - |  | -------------------------------------------

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:



| |  |  | privacy and use of personally identifiable information;
| | - |  | -------------------------------------------------------



| |  |  | copyrights, trademarks and domain names;
| | - |  | ----------------------------------------



| |  |  | obscene or indecent communications;
| | - |  | -----------------------------------



| |  |  | pricing, characteristics and quality of Internet products and services;
| | - |  | -----------------------------------------------------------------------



| |  |  | marketing practices, such as direct marketing or adware;
| | - |  | --------------------------------------------------------



| |  |  | the ability of children to access our services; and
| | - |  | ---------------------------------------------------



| |  |  | taxation of Internet usage and transactions.
| | - |  | --------------------------------------------

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



| |  |  | decrease the growth rate of the Internet;
| | - |  | -----------------------------------------



| |  |  | reduce our revenues;
| | - |  | --------------------



| |  |  | increase our operating expenses; and
| | - |  | ------------------------------------



| |  |  | expose us to significant liabilities.
| | - |  | -------------------------------------

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, operating results and financial condition.

We may be subject to system disruptions, which could adversely affect our revenues.

Our ability to attract and maintain relationships with users, advertisers, and strategic partners will depend on the satisfactory performance, reliability and availability of our Internet 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 impressions and leads delivered. This could reduce revenue as the attractiveness of our sites to users, strategic partners and advertisers decreases. Our insurance policies provide only limited coverage for service
interruptions and may not adequately compensate us for any losses that may occur due to any failures or interruptions in our systems. Further, we do not have multiple site capacity for all of our services in the event of any such occurrence. We may
experience service disruptions for the following reasons:



| |  |  | occasional scheduled maintenance;
| | - |  | ---------------------------------



| |  |  | equipment failure;
| | - |  | ------------------



| |  |  | when traffic volumes to our sites increase beyond our infrastructures capacity;
| | - |  | --------------------------------------------------------------------------------



| |  |  | due to natural disasters, telecommunications failures, power failures, other system failures, maintenance, viruses, hacking or other events.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------



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Our networks may be vulnerable to unauthorized persons accessing our systems, which could disrupt our Internet
operations and result in the theft of our proprietary information.

A party who is able to circumvent our security measures could misappropriate
either our proprietary information or the personal information of our users and customers 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.

Our activities and the activities of third party contractors involve the storage and transmission of proprietary and personal 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, operating results and financial
condition may be impacted by certain contingencies related to our guarantee of certain lease obligations.

In conjunction with the ZDNet
acquisition in 2000, we assumed a guarantee of the obligations of Ziff Davis Media Inc., an unaffiliated company and primary lessee, under a New York City office lease for a total of 399,773 square feet. This lease expires in 2019. The annual
average cost per square foot is approximately thirty dollars over the remaining term of the lease. Ziff Davis Media Inc. currently occupies 144,682 square feet of this space. Ziff Davis Media Inc. subleases 205,951 square feet to The Bank of New
York, FOJP Risk Management and Softbank, collectively. In addition, we currently sublease and occupy 49,140 square feet of the office space from Ziff Davis Media Inc. These leases and subleases fully cover the current monthly lease payments.

As of September 30, 2006, the total lease payments remaining until the end of the lease term were $150.8 million, excluding the amounts attributable
to our sublease with respect to the floor we occupy. If the financial condition of any of the sublessees or the primary lessee were to deteriorate and thereby result in their inability to make lease payments, we would be required to make their lease
payments under the guarantee. In addition, any expiration of any sublease, the potential resulting vacancy and the inability of Ziff Davis Media Inc. to make the primary lease payments could result in us being required to make lease payments on
these vacancies.

In connection with that guarantee, we have a letter of credit for $15.0 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.

Our business could be adversely impacted if we have deficiencies in our disclosure controls and procedures or internal control over financial reporting.

The design and effectiveness of our disclosure controls and procedures and internal control over financial reporting may not prevent all errors, misstatements or misrepresentations. As part of managements review
of our accounting policies and internal control over financial reporting for the year ended December 31, 2004 pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, management concluded that there was a material weakness in our
internal control over financial reporting related to the lack of adequate staffing in the area of financial reporting resulting in managements inability to consistently follow some of its internal control over financial reporting related to
(a) the timely preparation of comprehensive documentation supporting managements analysis of the appropriate accounting treatment for non-routine and complex items and (b) the conducting of a critical secondary review of this
supporting documentation by internal staff or outside advisors to determine its completeness and the accuracy of the conclusions. We concluded that we have remediated this material weakness as of December 31, 2005. As discussed in Item 9A
in our Annual Report on Form 10K/A for the year ended December 31, 2005, Controls and Procedures, and in connection with the restatement of our financial statements, our Chief Executive Officer and Chief Financial



40



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Officer reevaluated our disclosure controls and procedures and internal control over financial reporting as of December 31, 2005 and concluded that our
disclosure controls and procedures and internal control over financial reporting were effective. While management will continue to review the effectiveness of our disclosure controls and procedures and internal control over financial reporting, we
cannot assure you that our disclosure controls and procedures or internal control over financial reporting will be effective in accomplishing all control objectives all of the time. Other deficiencies, particularly a material weakness in internal
control over financial reporting, which may occur in the future could result in misstatements of our results of operations, restatements of our financial statements, a decline in our stock price, or otherwise materially adversely affect our
business, reputation, results of operation, financial condition or liquidity.

Accounting rules regarding goodwill could make our reported results
more volatile.

Goodwill is tested for impairment annually or when an event occurs indicating the potential for impairment. The evaluation is
prepared based on our current and projected performance for the identified reporting units. The fair value of our reporting units is determined using a combination of the cash flow and market comparable approaches. If we conclude at any time that
the carrying value of our goodwill and other intangible assets for any of our reporting units exceeds its implied fair value, we will be required to recognize an impairment, which could materially reduce operating income and net income in the period
in which such impairment is recognized.

In the application of these methodologies, 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 changes in the economy, the business environment in which we operate, and/or our own relative
performance. Any differences in actual results compared to our estimates could result in further future impairments. Accordingly, our future earnings may be subject to significant volatility, particularly on a period-to-period basis.

We will record substantial expenses related to our stock compensation which may have a material negative impact on our operating results for the foreseeable
future.

Effective January 1, 2006, we adopted the SFAS 123R for stock-based employee compensation. Our stock compensation expenses are
expected to be significant in future periods, which will have an adverse impact on our operating income and net income. Our option-pricing model requires the input of highly subjective assumptions, including the options expected life and the
price volatility of the underlying stock. Changes in the subjective input assumptions can materially affect the amount of our stock compensation expense. Our estimated stock compensation expenses may also be greater than expected if the fair value
of our stock increases. In addition, an increase in the competitiveness of the market for qualified employees could cause us to issue more stock compensation than expected, which would increase our expenses.

Our debt obligations expose us to risks that could adversely affect our financial condition.

We have a substantial level of debt and interest expense. At December 31, 2006 we had approximately $78 million of outstanding indebtedness. The level of our indebtedness, among other things, could:



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



| |  |  | 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;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



| |  |  | reduce funds available for use in our operations;
| | - |  | -------------------------------------------------



| |  |  | place us at a possible competitive disadvantage relative to less leveraged competitors and competitors that have better access to capital resources;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------



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



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



41



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In October 2006, we received a notice of acceleration declaring the principal amount of our $125.0 million, 0.75% Senior
Convertible Notes Due 2024 and any accrued and unpaid interest immediately due and payable. We retired the entire $125.0 million balance with existing cash and by fully drawing on a $60.0 million, one-year credit facility.

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 covenants of our $60.0 million, one-year credit
facility, we would be in default, which would permit our lender 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, including the $60.0 million due under our one-year credit facility which matures in October 2007.

Changes in our tax rate could affect our future results.

Our future effective tax rates could be unfavorably affected by changes in the valuation of our deferred tax assets and liabilities, changes in the mix of earnings in countries with differing statutory tax rates, or
by changes in tax laws or their interpretations. In addition, we are subject to the continuous examination of our tax returns by the Internal Revenue Service and other tax authorities. We regularly assess the likelihood of adverse outcome resulting
from these examinations to determine the adequacy of our provision for income taxes. The outcomes from examinations may have an adverse effect on our business, operating results and financial condition.

The trading value of our common stock may be volatile and decline substantially.

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



| |  |  | quarterly variations in operating results;
| | - |  | ------------------------------------------



| |  |  | announcements of innovations requiring significant expenditures;
| | - |  | ----------------------------------------------------------------



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



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



| |  |  | restatements of previously issued financial results;
| | - |  | ----------------------------------------------------



| |  |  | our sale of common stock or other securities in the future;
| | - |  | -----------------------------------------------------------



| |  |  | changes in recommendations of securities analysts;
| | - |  | --------------------------------------------------



| |  |  | developments in litigations or other governmental proceedings against us, or new litigations or governmental proceedings;
| | - |  | -------------------------------------------------------------------------------------------------------------------------



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



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

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.

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:



| |  |  | authorize our Board of Directors to issue preferred stock with the terms of each series to be fixed by our Board of Directors;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------



42



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| |  |  | divide our Board of Directors into three classes so that only approximately one-third of the total number of directors is elected each year;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | permit directors to be removed only for cause; and
| | - |  | --------------------------------------------------



| |  |  | 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.

A substantial number of shares of common stock 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. As of September 30, 2006, we had 9,492,527 shares of common stock available for
future grant under our employee stock option plans and 18,978,378 issuable upon the future conversion of outstanding stock options. In addition, as of September 30, 2006,, we have approximately 250 million shares of authorized but unissued
shares of our common stock that are available for future sale. 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 or 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.

ITEM 2. Unregistered Sales of Equity Securities and Use of
Proceeds.

None.

ITEM 3. Defaults
Upon Senior Securities.

None.

ITEM 4. Submission of Matters to a Vote of Security Holders.

On May 24, 2006, CNET Networks held its annual meeting of
stockholders at which Shelby Bonnie and Eric Robison were re-elected as Class I directors. 132,095,201 votes were cast for Mr. Bonnie, and 3,313,551 votes were withheld. 127,603,402 votes were cast for Mr. Robison, and 7,805,350
votes were withheld. John C. Bud Colligan, Betsey Nelson, Jarl Mohn and Peter Currie continued as directors following the meeting.

109,632,090 votes were cast in favor of the amendment and restatement of the 2004 CNET Networks, Inc. Incentive Stock Award Plan to, among other modifications, increase the number of shares available for issuance under the plan by 7,600,000
shares. 12,944,410 votes were cast against this proposal and 43,830 votes were withheld.

ITEM 5. Other Information.

None.

ITEM 6. Exhibits.

The following exhibits are filed as part of this Report:



|     |  |                                                                                                                                                                                                            
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     | 
|10.1 |  | Amended and Restated 2004 CNET Networks, Inc. Incentive Stock Award Plan (Incorporated by reference from Appenix B of CNET Networks 2006 definitive proxy statement on Schedule 14A filed on
May 11, 2006)



43



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|     |  |                                                                                                                                                                                   
|---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     | 
|31.1 |  | Certificate of Principal Executive Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002
|     | 
|31.2 |  | Certificate of Principal Financial Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002
|     | 
|32.1 |  | Certificate of Principal Executive Officer pursuant to section 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes-Oxley Act of 2002                           
|     | 
|32.2 |  | Certificate of Principal Financial Officer pursuant to section 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes-Oxley Act of 2002                           



44



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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



CNET Networks, Inc.(Registrant)/s/ George E. MazzottaGeorge E. MazzottaExecutive Vice President,Chief Financial Officer


Dated: January 29, 2007



45



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EXHIBIT INDEX



|              |  |                                                                                                                                                                                                            
|------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Description                                                                                                                                                                                                
|10.1          |  | Amended and Restated 2004 CNET Networks, Inc. Incentive Stock Award Plan (Incorporated by reference from Appenix B of CNET Networks 2006 definitive proxy statement on Schedule 14A filed on
May 11, 2006)
|              | 
|31.1*         |  | Certificate of Principal Executive Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002                         
|              | 
|31.2*         |  | Certificate of Principal Financial Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002                         
|              | 
|32.1*         |  | Certificate of Principal Executive Officer pursuant to section 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes-Oxley Act of 2002                                                    
|              | 
|32.2*         |  | Certificate of Principal Financial Officer pursuant to section 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes-Oxley Act of 2002                                                    

---

|* | Filed herein.
|- | -------------



46