This discontent has been brewing for a while, and now, some investors are taking action: A consortium of investment funds has amassed a 21 percent stake in CNET (NSDQ: CNET) Networks, and are hoping taking over the majority of the board, reports NYT, citing a letter the consortium sent to the CNET board two weeks ago.

Some details:
-- The consortium is led by Jana Partners, an $8 billion fund that has mounted successful proxy fights against a number of big corporations, and includes Sandell Asset Management as well as a venture capital firm, Spark Capital, and Paul Gardi, an entrepreneur who created the underlying search technology for AskJeeves, the story says.

-- CNET has an eight-member board. The consortium is seeking to replace two members of the current board and amend the bylaws to expand the size of the board to 13; the consortium would appoint the five additional members and control 7 of the 13 seats. The consortium is planning to nominate Gardi and Santo Politi, founder of Spark Capital and former president of new media for Blockbuster (NYSE: BBI) Entertainment, for the two available seats this year.

-- CNET has rejected the proposal, the story says, contending that the consortium would effectively be taking over the company without paying a premium. CNET also said the consortium did not have standing to change the bylaws.

Of course, CNET’s woes are well documented, as its user base has been eroded by fierce competition from other tech sites and blogs. Also, tech advertising has moved from general tech sites to more specialized ones, and that too has hurt CNET’s online revenues. Meanwhile, longtime CEO Shelby Bonnie left last year amidst an SEC probe on backdating (though nothing came out of the inquiry) and the new management led by Neil Ashe has been trying to restructure and expand the company beyond its tech base. It has been disposing off some of its outlying properties (it sold Webshots last year) and of course has been buying smaller sites with regularity.

Update: Jana Partners has officially announced its intent to place seven new members on CNET’s board. In addition to Paul Gardi and Santo Politi, nominees include former AOL (NYSE: TWX) CEO and Velocity Interactive Group founder Jon Miller, Jaynie Studenmund (ex-COO Overture), Julius Genachowski (Rock Creek Ventures), Brian Weinstein (Creative Artists Agency) and Jana’s Giorgio Caputo. The firm also announced that it has filed suit in Delaware to prevent CNET from invoking certain bylaws that would block the nominees. Note the participation of Jon Miller and Velocity, which has an option to invest $10 million in CNET equity, was not part of the original report. More in the Release.

Jana, along with the other parties, has filed a more detailed report with the SEC, explaining its position and history.

Some highlights:

-- “JANA originally acquired Shares after representatives of JANA met in October, 2007 with Paul Gardi of AIM, who described what he believed to be operating issues at the Issuer and stated his belief that addressing such issues could result in a significant increase in the value of the Shares. Following subsequent meetings, Gardi introduced JANA’s representatives to representatives of Spark in November, 2007 to discuss working together to propose to the Issuer how these operating issues could be addressed.”

-- “Representatives of JANA held several calls with representatives of the Issuer throughout the month of October, 2007 as well as a call on November 1, 2007 with the Issuer’s Chief Executive Officer, Neil Ashe. On December 6, 2007, Santo Politi of Spark met with Jarl Mohn, the Chairman of the Board of Directors of the Issuer (the “Board"), to inform him of the investment in the Shares by JANA, CT-100 and Gardi and to discuss proposals for improving the operating performance of the Issuer.”

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