News out on sportsline, but it will effect qsti
The Daily Double - A review of a company whose stock price has doubled within the last year.
Nov 22, 1999
SportsLine.com Inc.
Ticker: (Nasdaq:SPLN - news)
Phone: 954-351-2120
Website: www.sportsline.com
Price (11/19/99): $46
By Rick Aristotle Munarriz
How Did it Double?
Who said, "Winning isn't everything -- it's the only thing"? Vince Lombardi? Henry "Red" Sanders? The camps are divided on the exact
origin, and isn't that the way it should be. Competitive rivalries. Intangible bragging rights.
It's a fitting for the realm of Internet sports media, too. Winning is the only thing when it comes to mindshare. For a while it looked as if the
Disney (NYSE:DIS - news) owned espn.com had the offline brand to blow out the online competition. While SportsLine.com found deep
pockets to help it out early on in Intel (Nasdaq:INTC - news) and Matsushita (NYSE:MC - news) , those global blue chips lacked athletic
appeal. That all changed when CBS (NYSE:CBS - news) came on board in 1997.
Suddenly the SportsLine site was receiving tons of promotion on the popular CBS Sports programming. The CBS moniker was tacked on
to the site name -- fueling mainstream legitimacy. However, over the summer when SportsLine couldn't maintain the record ratings it
achieved in March during the CBS-televised NCAA men's basketball tournament, the stock began to sink like a Michael Jordan free throw.
But you can't keep a good stock down. With sales shooting up 85% so far this year, and record numbers of visitors once again, SportsLine
shareholders have been winning big -- and that would make Lombardi and Sanders proud.
Business Description
Florida-based SportsLine provides more than 400,000 pages of online content, including multimedia sports information, entertainment, and
e-commerce. While most of the content is free to access, the company also offers a $39.95 a year Rewards Plus membership plan that
provides premium content and community access features.
SportsLine was founded in 1994. In March of 1997 it renamed its namesake offering as CBS SportsLine. This past May the company
launched Sports.com, the company's gateway to European sports.
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SportsLine also maintains the official league sites for Major League Baseball and the PGA TOUR. SportsLine also maintains celebrity-based
sites for athletes like Tiger Woods, Michael Jordan, and Cal Ripken Jr.
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Financial Facts
Income Statement
12-month sales: $48.6 million
12-month income: ($27.6 million)*
12-month EPS: ($1.29)*
Profit Margin: N/A
Market Cap: $1071.8 million
(*Includes non-recurring items)
Balance Sheet
Cash: $64.5 million
Current Assets: $140.4 million
Current Liabilities: $12.9 million
Long-term Debt: None
Ratios
Price-to-earnings: N/A
Price-to-sales: 22.1
How Could You Have Found This Double?
In August, just as the stock was bottoming out at $15 3/4, the company began to buy back its debt. SportsLine had $60 million in
convertible bonds outstanding, and it bought it all back at a discount.
While equity-backed notes are a popular route to raising capital, they are dilutive. In exchange for lower yields, and in SportsLine's case the
bonds were paying out a paltry 5% coupon, investors buy in for the stock kicker. SportsLine, by buying back the debt as the shares hit new
lows, was teaching Wall Street a lesson on "Buy Low, Sell High" -- an axiom that neither Lombardi nor Sanders is crediting with coining.
Sports enthusiasts might have seen the merit in the company's bargain hunting ways. The football season was about to get under way while
hoop action was just a few weeks away. With CBS a vital broadcaster of the NFL, NBA, and NCAA, a record-breaking turnout was
practically a lock.
Where to From Here?
According to Media Metrix, SportsLine had 4.7 million unique visitors in the September quarter. Last month was even sweeter as the
company's sites recorded more than 400 million page views for the first time ever.
In October, SportsLine usage peaked on Sundays. During that month, the company doled out no fewer than 22 million page views on any
given Sunday. That is understandable given the popularity of the NFL football contests played on that day. CBS Sports' recently announced
exclusive 11-year deal to broadcast the NCAA men's basketball tournament also bodes well for SportsLine as the football season draws to
a close toward the end of the year and the basketball heats up.
With the holiday season approaching, SportsLine is hoping to cash in on its content haven through e-commerce. The company has lined up
50 different online specialty retailers selling more than 80,000 items. While it won't land the company in profitability soon (earnings estimates
are calling for a loss of $2.51 a share this year and a $2.35 deficit next year), it should provide a strong boost to revenues.
The CBS deal has naturally given the company the high profile it needs to attract sponsors. It has also landed SportsLine with syndicated
radio deals. With the consumer's passion for sporting news showing no sign of abating (just ask me why I'm in three different fantasy football
leagues this year), SportsLine should continue to fare well. This time. It doesn't look like it's going to be "deja vu all over again," as Yankees
catcher Yogi Berra once said. That was Yogi? Right? |
