SportsLine Catches Viacom's Pitch

For the sports fan, it can be difficult to remember the dark days before the Internet revolution. We didn't need to know John Elway's up-to-the-minute game statistics, career passing yardage, or number of interceptions thrown on third down and long against the blitz in night games played at home. A simple score would have sufficed; are the Broncos winning? With a little luck, some might have stumbled across the final later that night on the TV or radio. Others were resigned to reading the newspaper the next morning. It was truly an uncivilized time.

Fortunately, with the help of companies such SportsLine.com (Nasdaq: SPLN), those days are far behind us. The firm's 10-year mission has been to provide enough scores, commentary, photos, contests, video, and other content to satiate the desire of even the most ardent sports enthusiast. Though the popular sports provider has found ways to monetize the competitive nature of those signing up for fantasy league or March Madness contests, profitability has been elusive.

With a loss of $37.7 million last year on $58 million in revenues and a stock hovering around 52-week lows, the company decided months ago to declare itself eligible for the draft -- hiring an investment banker to help position the company for a sale. Media giant Viacom (NYSE: VIA) showed interest, but SportsLine shareholders balked at the initial $39.8 million offer, which would have represented a 40% premium. Viacom decided to reach a little deeper, and today the two parties agreed to a $46 million ($1.75/share) deal.

Viacom was already a minority shareholder in SportsLine.com; the two originally teamed up in 1997 to collaborate on what is now CBS.SportsLine.com. Though not quite as popular as Disney's (NYSE: DIS) ESPN.com, the site competes effectively with Time Warner's (NYSE: TWX) AOL and Yahoo's (Nasdaq: YHOO) sports divisions. The firm also manages NCAASports.com, PGATour.com, and NFL.com, as well as e-commerce and radio programming operations.

With online advertising on the rebound and SportsLine.com trading at a market capitalization far less than last year's revenues, Viacom made a timely purchase of a popular and growing Internet property. Strategically, the deal will strengthen what was already a symbiotic arrangement, but with Viacom's 2003 net income exceeding $1.4 billion, don't expect the acquisition to have much of a near-term impact on the bottom line.

Fool contributor Nathan Slaughter is currently fourth in his baseball fantasy league but fully expects to regain the lead before the playoffs. He owns none of the companies mentioned.