CBS Says Its Net Divisions Will Profit This Year

Mar 02 2001

In one of the more surprising media pronouncements so far this year, CBS Television President Leslie Moonves declared Friday that his broadcast network's Internet and interactive TV divisions "will be profitable" by the end of this year.

Speaking at Jupiter Communications ' Media Forum in New York, Moonves outlined the way CBS intends to leverage online profitability through Web sites that serve as companions to its most successful TV shows. The site associated with "Survivor" has posted 60 million page views since January and last month pushed CBS.com's traffic up 500 percent, Moonves said. The network is building new sites for its shows JAG, The King of Queens and 60 Minutes II.

"If you watch TV, then you go online," he said. "It fits."

Moonves had little to do with the company's interactive operations until he was made responsible for overseeing the CBS broadcast and Internet units in a minor restructuring of the company's Internet assets earlier this year. The former head of the CBS Internet Group, Russ Pillar, moved to a new position as head of Viacom Interactive Ventures, a separate operating group that seeks out investments and deals for the entire company. CBS Internet Group COO Lisa Simpson, a high-profile exec the company brought over from Sony , left CBS late last year.

Until now, CBS has touted its portfolio of more than a dozen equity investments, including the sweepstakes portal iWon .com, MarketWatch.com and others. Several of these investments have gone out of business. Most recently, StoreRunner.com filed for bankruptcy.

One source familiar with the matter says CBS Internet's sales goals have been set at $25 million, a fairly modest figure when you consider that the average annual take of a television network is between $4 billion and $5 billion. A CBS spokesman declined to comment.

Still, the mere confidence to project a profit is notable when most other major media companies' online ventures have been eliminated or severely downscaled. Just weeks ago, Disney eliminated the Go Network as a separate division and will no longer trade Go as a separate tracking stock. NBCi, a joint venture among several companies including NBC and CNET, has also pulled back from several growth initiatives and has faced numerous rounds of layoffs. Disney's ABCNEWS.com division has also laid people off.

Viewed through the lens of the past year, CBS' reluctance to create its own umbrella portal to house its myriad investments now seems smart.

"We were always considered the backward children in this area, weren't we?" Moonves said. "We do have a strategy ... we're building destinations we can drive people to with our programming."

In touting CBS's success in promotional and programming convergence, Moonves pointed to the Net tie-ins with the Grammy Awards ceremony and the Super Bowl, both of which the CBS TV network aired this year.

"There are great Internet companies. And there are great media companies," Moonves told the conference. "But there are very few, I think, who are putting their traditional and new media together as effectively."