On the Record with Mike Levy

As the market’s love affair with everything B2B appears to have come to a screeching halt, a handful of established consumer Internet names appear poised to regain investor confidence. This is all music to the ears of Sportsline.com CEO Mike Levy.

Founded back in 1994, e-sports network Sportsline stands as one of the real grand daddies of online media companies. As one of the first Net companies to cut a long-term marketing deal with a major TV broadcaster, in this case minority investor CBS, now part of Viacom , Sportsline enjoys extensive on air advertising and promotion. Add in over $170 million in cash on hand, narrowing quarterly losses with improving gross margins, and Levy appears to have Sportsline poised to be a solid performer for the long haul.

Of course, all is not roses for Levy. Sportsline must constantly fight for eyeballs with Disney’s ESPN.com, as well as fend off emerging broadband sports providers like Quokka Sports . While this is not an easy task, Sportsline wisely exited the retail side of the sports business by announcing an alliance with high profile sporting goods e-tailer MVP.com earlier this year.

We recently sat down with Levy to learn more about Sportsline’s future plans for expansion into broadband services, interactive TV and wireless.

ISR: Let’s start off by getting a brief run down on Sportsline.com in your own words.

Levy: Sportsline provides just about every bit of information you would want to know about the major spectator sports on a global basis. If people are watching it on TV or if they’re going to a stadium to watch it, we usually cover it better than anyone else and in the U.S. that includes the NFL, college football, NCAA basketball, NHL, major league baseball, golf, and tennis.

ISR: That’s certainly a long list.

Levy: In most of the rest world, the biggest sport is, of course, soccer. We do a great job at Formula One, cricket and ruby as well.

ISR: In terms of competition, there’s dozens of sports sites online, but ESPN.com would appear to be your strongest competitor. What really separates Sportsline from them?

Levy: First of all, ESPN and us are really far ahead of anyone else. It’s a two horse race between the two of us. We’re the leader out there in terms of revenue generation, though. We have a clear lead on ESPN. We sell more advertising then they do and generate more revenue than they do. So in the areas that are most important, we’re the clear-cut number one.

ISR: What about site traffic and users?

Levy: In terms of reach and traffic, that’s a tight battle between the two of us, but no one else is really that close. I think the thing that really makes the biggest difference is to have the best content for the sports fans that really spend time on a sports site. Where ESPN.com has an advantage over us is in that they can get a lot more television promotion than we can because ESPN is up twenty-four hours a day, plus they get all the coverage on ABC as well. So they can beat us from a promotions standpoint. We have to make up for that by having deeper content in a lot of areas.

ISR: Right. I’m curious to hear your take on emerging online digital sports immersion companies like Broadband Sports and Quokka Sports?

Levy: Well, we’d like to be immersed in the kind of sports that are the major fan sports like the National Football League and Major League Baseball, and we’re working pretty hard with those rights holders and those sports to get the rights to do some of that stuff. It’s counterproductive for us to go out and spend a tremendous amount of money on

ISR: Niche sports.

Levy: Yes. Producing this massive kind of interactive content and video for sports that people don’t care about as much. From what I’ve heard, Quokka could end up spending between $20 and $30 million dollars to produce

the Olympics [Web site]. Well, there’s no way they’re going to monetize that. There’s no way they’re going to sell enough advertising to cover that.

ISR: Yes. It will be interesting to watch.

Levy: They’re a little ahead of their time with that. I think the only way people can really take advantage of that kind of content is if they have a high-speed Internet connections. That’s still a ways off. Once everybody can get that information and really take advantage of streaming video products from their home, we’re all going to be doing it.

ISR: Let’s talk about broadband into the home and interactive TV for a second. How is Sportsline positioned to capitalize off of the convergence of the TV and the Web?

Levy: Well, I think that we’re extremely well positioned for several reasons. We have a television partnership with CBS that runs through 2006. The television networks that carry major sports are certainly in the best position to leverage major rights holders to get the rights to use that type of streaming video product. It’s not a technology issue. What it really comes down to is having the rights to do it.

ISR: How competitive do you see the Internet broadcast rights for these different sports leagues becoming. How big can that get?

Levy: Well, I think what you’re going to really see is that it’s kind of like what we’re seeing with the NCAA tournament where the Internet rights were included in the television package that CBS negotiated for. I think you’re going to see the Internet rights packaged more and more with the television rights because the television rights for the foreseeable future are going to be a lot greater than any revenue that can be generated by the Internet.

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