CBS Corp. said it will receive $100 million in additional equity in SportsLine USA Inc., in exchange for providing additional promotional and sales opportunities over five years.
In March 1997, CBS and SportsLine USA first joined forces under a five-year agreement, marking CBS’s first strategic new media initiative. The original agreement has been extended for an additional five years, through 2006.
The announcement was made by Mel Karmazin, president and chief executive officer of CBS, and Michael Levy, president and chief executive officer of SportsLine USA.
“This marks another step in our strategy of leveraging our brands to increase our position in new media,” said Karmazin. “SportsLine USA provides the best sports content on the Internet, and together with our investment in CBS Marketwatch.com, and our new relationship with America Online as that company’s sole branded news provider, CBS is continuing to grow our strong presence on the Internet.”
Under the terms of the new agreement, CBS will receive additional equity in SportsLine USA, in exchange for providing additional promotional and sales opportunities. CBS will also receive warrants to purchase additional shares of SportsLine USA common stock.
Before the new agreement, CBS’s ownership in SportsLine USA was approximately 12.5 percent and could have grown to approximately 17 percent at the end of the five-year term. Under the terms of the new agreement, CBS’s stake in SportsLine USA will immediately increase to approximately 18 percent. Based on SportsLine USA’s current stock price, CBS’s ownership could grow to in excess of 27 percent, the company said.
The extended agreement provides for the CBS Television Network to promote CBS SportsLine during CBS Sports broadcasts pursuant to a promotional schedule that is projected to have a value in excess of $100 million over the five-year extension term. Additionally, to provide greater reach for advertisers, CBS will immediately begin to expand the integration and packaging of advertising for the CBS SportsLine brand with CBS Sports and CBS Plus, CBS’s cross-media sales organization.
Revenue sharing in connection with the CBS SportsLine site has also been revised to provide further incentive to CBS to help grow and participate in SportsLine USA’s multiple revenue streams, which include advertising, membership and premium services and e-commerce.
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