Shares of SportsLine USA surged 14.7 percent in morning trading, jumping to 40. The stock has traded as high as 50.5 and as low as 6.38 during the past 52 weeks. CBS stock fell 1.41 percent to 34.94, and has hit as high as 37.31, and as low as 18 in the past 52 weeks.
In March 1997, CBS and SportsLine USA first joined forces under a five-year agreement, creating CBS SportsLine and marking CBS's first strategic new media initiative. The original agreement has now been extended for an additional five years, through December 31, 2006.
The currency for the deal: on-air promotion. CBS will receive additional equity in SportsLine USA, in exchange for providing additional promotional and sales opportunities. CBS will also receive warrants to purchase additional shares of SportsLine USA common stock. Based on SportsLine USA's current stock price, CBS's ownership could grow to in excess of 27 percent.
CBS SportsLine provides online media service devoted exclusively to sports information, news, and merchandise.
"This marks another step in our strategy of leveraging our brands to increase our position in new media," said CBS chief executive Mel Karmazin.
The extended agreement provides for the CBS to promote CBS SportsLine during CBS Sports broadcasts. The promotional schedule that is projected is said to have a value in excess of $100 million over the five-year extension term.
"We believe that this is a favorable development because it will increase the commitment of CBS to SportsLine and therefore strengthen the SportsLine branding efforts," said Phil Leigh, an analyst at investment firm Raymond James.
Under the agreement, CBS will also immediately begin to expand the integration and packaging of advertising for the CBS SportsLine brand with CBS Sports and CBS Plus, CBS's cross-media sales organization.
"Our relationship with CBS resulted in the creation of the number-one sports content and commerce site on the Internet, and this extension illustrates our long-term commitment to continued growth," SportsLine USA CEO Michael Levy said in a statement. "The promotional and sales power that CBS brings to the table, combined with SportsLine USA's award-winning content and products, positions CBS SportsLine as the premier interactive sports brand for years to come."
Revenue sharing in connection with the CBS SportsLine site has also been revised to further give incentives to CBS to help grow and participate in SportsLine USA's multiple revenue streams, which include advertising, membership and premium services, and e-commerce, the companies said.