A US$46 million IPO has unveiled a $43 million mistake. That's the real news coming out of Wednesday's announcement by Sportsline USA that it would seek an initial public offering to fund expansion of its online sports news service.
Last month, news organizations from The New York Times to Wired News reported on the investment by Westinghouse in Sportsline, which prompted the Ft. Lauderdale, Florida, Web company to change the name of its top site to CBS Sportsline. Nearly all of those news organizations reported that the value of CBS' investment was worth as much as $100 million. Only one problem: it isn't, according to documents filed by Sportsline USA with the SEC.
CBS has only committed to providing "at least $57 million in advertising and on-air promotion during the next five years" says the Sportsline USA prospectus. In exchange CBS gets a 22 percent stake, and a chance every year of the five-year contract to buy 950,000 additional shares in the company. That could give CBS as much as 33 percent of Sportsline by the end of the contract.
CBS executives, for their part, did their best to warn the media off the $100 million figure when the deal was announced last month. "We did not invest $100 million in cash," Sean McManus, the president of CBS Sports, said on 5 March at the Jupiter Online Conference in New York. "What we did invest was the promotion. I'm not really sure where the $100 million came from except it was in The New York Times yesterday," McManus said. But he also went on to muddy that statement by saying, "What we're offering is a lot more than $100 million in value."
Matching Sportsline's page views, as reported in the IPO documents, to page views reported previously in the media is another exercise in hype deflation, albeit on a smaller scale. Whether it was Sportsline's hype or the media's hype is hard to determine. On 5 March, a story on News.com reported that "Sportsline receives between 1.3 million and 1.4 million page views a day, president and CEO of Sportsline Michael Levy said today."
But the Sportsline prospectus says that for the month of March, Sportsline averaged 1.2 million page views per day, and some 155,000 unique visits. Asked about the 8 to 16 percent discrepancy, Sportsline spokesman Michael Tolliver said Thursday that Levy was likely referring a time frame other than the 30-day period described in the prospectus, and that on certain days the company had seen traffic range much higher.
Whatever the numbers, they apparently trail ESPNET Sportszone, which Sportsline describes as its chief competitor in its prospectus, by a significant factor. ESPNET operator Starwave doesn't release page view figures, but claimed last month that it receives as many as 3 million individual visitors each day.
