Don’t
blink but the ever-evolving and constantly content driven financial news
site CBS MarketWatch.com filed to go public at what our analysis shows
could be 18x annualized quarterly sales or an estimated 10x 1999 sales.
The San Francisco-based outfit employs 40 journalists to varying degrees
(fulltime to freelance) to produce daily stock market news and commentary
and wants to sell a piece of the operation to the public, some 2.75 million
shares at a target $11 per share through underwriters led by BT
Alex.Brown.
With 11.75 million shares outstanding after the offer, or 13.66 million
fully-diluted shares counting options, MarketWatch seeks a $150 million
initial market cap. See table here:
CBS MarketWatch | proposed |
pro forma IPO estimates | ticker |
Proposed ticker | MKTW |
Does what? | financial news |
Shares offered | 2.75 |
Greenshoe | 0.41 |
Target share price | $ 11.00 |
Gross proceeds | $ 31.38 |
Shares outstanding | 11.75 |
IPO market cap | $ 129.25 |
Options/warrants | 1.50 |
Fully-diluted shares (FDS) | 13.66 |
FDS market cap | $ 150.29 |
Working capital | $ 22.84 |
Long-term debt | $ – |
FDS enterprise value | $ 127.45 |
Quarter ending Sept. 30 revenue | $ 1.80 |
Quarter ending Sept. 30 loss | $ (2.54) |
Latest quarter annualized | $ 7.20 |
Est. CY99 revenue | $ 12.50 |
Valuation metrics | |
FDS enterprise/annualized | 17.7 |
FDS market cap/est. CY99 revenue | 10.3 |
Page views (October) | 48.0 |
PAGEDEX (FDS marketcap per page view) | $ 3.13 |
Visitors (October) | 2.2 |
WEBDEX (FDS marcap per visitor) | $ 68.31 |
Lead underwriter | BT Alex.Brown |
© 1998 internet.com LLC, isdex.com | |
all figures in millions, except share price, multiples |
MarketWatch (the official company name) posted $1.79 million sales and
$2.54 million loss for the quarter ending September 30, 1998. The site
began as DBC in 1995 and later formed a 50-50 joint venture with CBS for
MarketWatch in October, 1997.
CBS kicked in ad time on CBS TV and radio
networks now through the year 2002 in exchange for its equity position. The
ad value was originally set at $50 million then reduced to $30
million.
After the IPO, both CBS and DBC will own 38% of MarketWatch.com
and effectively control it. In addition, CBS gets a piece of all revenue,
6% to 8% (down from 30%).
For October it reported 2.2 million users and 48 million page views and
charged a CPM ad rate between $25 and $50, about double what a larger
general purpose Web content aggregator may charge. More than 75 firms have
advertised on the site including brokerages, financial news sites, and a
few consumer goods firms. Four clients made up about half its ad revenue as
of year-end 1997.
Risks: the usual suspects–heavy competition from
portals, financial magazine Web sites, online services, year 2000 unknowns
(bugs in computers systems that may occur as a result of the year “2000”
being unrecognized by some computer systems), uncertainty of ad
market.
Rewards: CBS MarketWatch has built a widespread offering of
financial content with some top-notch writers and editors. Although the
revenues lag its distant kissing cousin, CBS Sportline.com, we think
MarketWatch may perform somewhat like Sportsline (NASDAQ:SPLN) in terms of
growth and stock movement over time.
Finance and sports are amazingly
similar content businesses, both stat driven and real-time oriented with
huge followings. The real question is if CBS TV and radio can drive people
to use MarketWatch, can the ‘Eye Network” deliver the eyeballs?
Sportsline, for example, saw spikes in its usage following CBS
broadcasting the Olympics and promos pointing to Sportsline.com, but
traffic waned afterwards.
Finance sites have similar spikes around big
market swings up or down and some tapering off in between. And $30 million
ad time may seem like a lot but in the high-rolling world of TV and radio
time it’s not. Nearly $6 million has already been spent with years to go on
the contract.
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