Tale Of Two Sports Sites: ESPN Battles CBS.Sportsline.com

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.


But the quest today is not dilution, it’s the page view/impression
“impression” that ESPN and CBS.Sportsline have put forth the past few days.
While the PR folks have been busy cranking out the war of words, we looked
for a slam dunk in valuation, extracted CBS.Sportsline value per page view
(fully-diluted value of course), and plugged that figure into a possible
value for the privately-held ESPN Sportszone.com, owned by Mickey Mouse
(Disney) and Starwave (Paul Allen). The result:




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.

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