Tale Of Two Sports Sites: ESPN Battles CBS.Sportsline.com
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There's a heavy case of eyeball envy creeping up on CBS.Sportline.com. Case in point, ESPN's Sportszone.com claims 9.2 million daily page views vs. Sportsline's 2.8 million. Or, welcome to the $1.7 billion trail to ESPN Sportszone value.
For starters, the recent initial public offering of Sportsline (NASDAQ:SPLN), which debuted at $8 last November and has had a recent run, highlights the growing value of sports on the Web. SPLN closed January 14 at $17.75.
Significant because it has a ton of warrants and options out there that boosts actual fully-diluted market value to more than double what any first glancer would see. SPLN used options to lure in the big names, sports stars such as Shaq, Tiger, Joe Namath, and even the big eye network--CBS.
Trouble is, the option/warrant ("monopoly" money) only dilutes current SPLN investors if the firm ever posts earnings. It would incur more than 50% dilution should the band of holders plop them on the table at the nearest hint of profits. So if you're into SPLN, make sure you understand the fine print and stats here.
Sportsline Vs. Sportszone
|CBS.Sportsline.com vs. ESPNSportzone.com||SPLN|
|pro forma valuation estimates|
|Sportsline shares outstanding||13.63|
|Share price 1-14||$ 17.75|
|Market cap||$ 241.98|
|Fully-diluted shares (FDS) market cap||$ 531.34|
|SPLN FDS value per page view||$ 189.76|
|Harmon's valuation/page view ratio*|
|SportsLine (fully-diluted)||$ 189.76|
|ESPN average daily page views||9.20|
|Imputed ESPN Sportszone.com value @ SPLN comp||$ 1,745.83|
|* divides market cap/daily page views|
The tally shows SPLN valued at about $190 per page view. Using that comparable implies that Sportszone could be worth more than $1.7 billion based on its greater page views and awareness among Web sports enthusiasts.
It also clues the powers that be into the import of a network tie-in plugging the Web site. We estimate ESPN on cable (two channels) reaches more than 50 million viewers around the planet. That's a lot of programs featuring a lot of URL references to the Web site. As we said in the November 14, 1997 edition of Internet Stock Report, CBS TV's cross promo to Sportsline could be a boon to it's "coming of age."
Eventually Sportszone and Sportsline could be even keel in the sports fanatic race as page views equal out and references to these sports sites from other media--Disney and CBS--drive the value equation further. Why else did NBC and Microsoft just launch MSNBCSPORTS.com?
In our view these are like chia pets in a Seattle rainstorm, instant critical mass and value chain reactions. Expect more of the same in other topics. The future looks very much like cross-media pollination. It's coming soon to a PC and TV near you.