NEW YORK — CBS has acquired a 22% stake in the online sports service SportsLine USA, as expected (Daily Variety, March 4), creating a partnership that marks the Eye network’s biggest foray onto the Internet to date.
The deal comes at a time when media companies are showing increasing interest in the potentially lucrative online sports business.
CBS will pay no cash but has acquired the equity stake in exchange for advertising and promotion for CBS Sport-sLine, as it has been renamed, which they claim will yield a value of $100 million during the next four years, execs from the two companies said at a press conference Wednesday. CBS also has an option to increase its equity holding to 33% over the term of its five-year contract.
“We had two choices,” CBS Sports president Sean McManus said. “We could’ve invested money and developed our own sports online service, which would’ve cost us tens of millions of dollars, or associated ourselves with the best product available now.”
The deal comes as Disney is in negotiations to buy a one-third stake in Starwave Corp., which runs ESPN Sport-sZone, SportsLine’s direct competitor; and NBC is reported to be considering an online sports venture with MSNBC.
CBS will provide programming for SportsLine, including news, video clips and some broadcasted games — in-cluding the upcoming NCAA Final Four basketball tournament — though CBS must seek Internet rights before it can provide footage from the games it carries, including NFL football, PGA golf and the U.S. Open tennis tourna-ment. CBS will hire a small staff to furnish SportsLine with content.
CBS promotion of SportsLine will include audio references during its sports broadcasts, identification on its onscreen graphics and limited numbers of 30-second ad spots.
McManus said CBS expects to gain “significant revenues” from advertising, subscriptions and merchandising of CBS SportsLine, and eventually, profits, although the service is not yet in the black.
John Mansell, an analyst at Paul Kagan Associates, said online sports services, including SportsLine and ESPN SportsZone, will soon begin to bring in considerable revenues. “Down the road these services will see significant profit,” he said.
SportsLine’s main revenue source is advertising, with such heavy-hitting clients as Coke, Pepsi and two car manu-facturers already on board. It also charges subscription fees of $4.95 a month or $39.95 a year for access to its premium services, though much of its content is available for free.
Need to diversify
CBS president and CEO Peter Lund said CBS’ Internet foray represents the network’s current strategy of di-versification. “In this day and age of uncertainty, you need to be in a lot of different businesses,” he said.
Former Sony Corp. of America prexy Michael Schulhof, one of SportsLine’s backers, also was on hand for the press conference.