another take on the sape news...
CBS invests in million-dollar gimmick
By Bloomberg News
Special to CNET News.com
October 5, 1999, 1:15 p.m. PT
update NEW YORK--CBS, owner of the top-rated U.S. television network, said it bought a majority stake in iWon.com, an Internet search directory that will try to attract users by giving away millions of dollars.
Closely held iWon, known until today as CTC Bulldog, will get about $70 million in advertising from CBS in exchange for a majority ownership stake. CBS chief executive Mel Karmazin will be a director of iWon, and Neil Austrian, president of the National Football League, will be nonexecutive chairman. He will retain his posts at the NFL.
Through iWon, whose smallest prize will be a $10,000-a-day giveaway, CBS hopes to tempt people onto its online sites, such as CBS.com, which will be part of the new service. iWon, which also will give away a guaranteed $1 million a month and $10 million once a year, is trying to stand out among a raft of Internet portals that perform the same basic services.
"If you get up on the roof and start throwing dollar bills off the roof, you are going to get noticed," said Bill Daugherty, cofounder and co-CEO of iWon. "There's never been a large-scale cash sweepstakes that has failed to generate a considerable response."
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iWon will offer email, search services, and online shopping, as well as content from Web sites owned or partly owned by CBS, including CBS.com, MarketWatch.com, SportsLine USA, and Hollywood.com.
Jonas Steinman is a cofounder and co-CEO along with Daugherty. They took the idea to Karmazin and CBS chief financial officer Fred Reynolds, who also will be an iWon director, in March. The two sides agreed to become partners in April.
New York-based CBS plans to make iWon a separately traded company in the first half of 2000, people familiar with the companies' plans said.
For more than a year, Karmazin has been buying stakes in start-up Web sites in exchange for promotion on CBS's TV, radio, and billboard properties and use of the CBS name. He's said that CBS plans to house the sites, and possibly its radio stations, in a separate company.
CBS's portal play?
iWon, if successful, could become CBS's main Internet portal and a rival to Walt Disney's Go Network, the Web search directory that Disney, owner of the ABC TV network, formed in January with Infoseek. General Electric's NBC Internet, the NBC TV network's new online business, is set to begin trading publicly next month.
Other partners of iWon include Inktomi, which makes software for searching the Internet, and Sapient, which helped design and develop iWon.
Weather.com, Travelocity.com, and Mail.com also are partners. Other content providers include Autoweb.com, Apartments.com, and HealthScout.com.
iWon said it is especially enthusiastic about the site's prospects, given ABC's surprise summer television hit Who Wants to Be a Millionaire?
That show "is a case in point" and speaks to the "inherent appeal" of sweepstakes, Daugherty said.
CBS also hopes to attract iWon viewers to its network by announcing the monthly $1 million and yearly $10 million prizes during network prime time.
Under federal law, sweepstakes must have starting and ending dates. CBS said it will end the first run of the contest on April 17, when it will give away the $10 million. iWon then plans to begin the giveaways again.
CBS said there are no plans to include any of Viacom's online sites in iWon. Last month, CBS agreed to be bought by Viacom, owner of the Paramount film studio and MTV and Nickelodeon cable channels, for about $37 billion.
The vast Internet sites of both companies have investors and analysts wondering how the companies will end up combining their online businesses.
"Over time, CBS and Viacom both need to find a way to bring their Web sites together," said Tom Wolzien, analyst at Sanford C. Bernstein. "A portal could ultimately be the most useful" solution.
Copyright 1999, Bloomberg L.P. All Rights Reserved.
Related news stories
• CBS brings MarketWatch to television September 13, 1999
• CBS, AOL bring prime time online September 20, 1999
• CBS, Viacom in blockbuster merger September 7, 1999
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