VentureBeat

Struggling online tech publication CNET is facing a hostile takeover from a group of investors that includes venture firms Spark Capital and Velocity Interactive Group.

The investors, together, have a 21 percent stake in the public company, the New York Times reports. They sent a proposal to the CNET board two weeks ago, wherein they would replace two current board members and amend the bylaws to expand the board from eight to thirteen members.

The investors themselves would join the board, giving them a seven to six majority, and poising the company for dramatic restructuring. From we can tell, this would include the sale of some CNET properties to other media organizations.

The investors’ proposal was rejected by the CNET board. Now, the investors plan to nominate themselves at the company’s upcoming shareholder meeting; the parties are also in court, fighting over the bylaws amendment. More details at Forbes and PaidContent.

The group is an interesting mix of takeover firms and media investors.

It is led by Jana Partners, an $8 billion fund that has previously mounted successful shareholder proxy battles against large companies.

Velocity is a new, media-focused firm that is, from what has been previously reported, aiming to “roll up” multiple internet properties into a single, larger entity (our coverage). It has an option to invest $10 million in CNET and will nominate co-founder Jon Miller to the CNET board.

Spark has committed to investing $20 million in the company and will nominate founder Santo Politi to the board.

Top Hollywood talent agency Creative Artists Agency is also involved, with executive Brian Weinstein seeking a board spot. Other investors include Sandell Asset Management, AskJeeves search technology creator Paul Gardi, former Overture COO Jaynie Studenmund and Rock Creek Ventures.

San Francisco-based CNET has faced increasing competition from free-standing tech blogs, despite being home to a number of impressive reporters. CNET’s investors have suffered a 19 percent loss over the past three years as advertisers have gone to more narrowly focused niche blogs, as the Times article notes. The article quotes an analyst at ThinkEquity who says that CNET’s core tech ad business is expected to end down three to four percent, even as the online tech ad business has been growing 30 to 40 percent for the past several quarters.

CNET has been busy buying and selling companies to bolster its performance. Most recently, it purchased article-indexing site FindArticles for $20.5 million in November (our coverage), having previously sold off photo-sharing site Webshots for $45 million (our coverage) — which it had bought for $70 million in 2004. The company also recently took out a $250 million loan.