CBS Corp has furthered its internet plans by acquiring a 35% stake in Medscape Inc, which provides online medical information for healthcare professionals. In return for the stake, CBS will provide $150m worth of promotion over a seven-year period across its media properties in broadcast and cable television, as well as those of its radio and outdoor advertising subsidiary, Infinity Broadcasting Corp. The deal is structured so that Infinity will receive a pro rata share of the investment. The terms also call for Medscape to receive a license to use the CBS trademark and logo.
Medscape currently operates a web site for medical professionals that boasts more than 1.1 million registered members. The two companies say they will work together to support a soon-to-be-launched site for consumers, CBS.Medscape.com, which will become the exclusive consumer healthcare site integrated into CBS News. CBS News will provide additional editorial content to the site, while Medscape will develop special online reports to add to the media giant’s healthcare programming.
CBS says Medscape complements its existing internet offerings – which are already strong in the areas of sports and finance – with the addition of health-related content, which it sees as a third area of great interest to web users. Competition has heated up in the area of internet healthcare recently, with a rash of activity including the planned $5.5bn merger of Healtheon Corp and WebMD Inc and the four-year, $89m promotional deal drkoop.com Inc has signed with America Online Inc.
CBS says the planned consumer site will differentiate itself from competitors, though, by combining comprehensive editorial content with simplified health management tools. In addition, access to the CBS’ many promotional vehicles should give the venture exactly the kind of exposure drkoop.com is seeking from AOL.
The Medscape deal follows a similar agreement CBS signed last month with web directory Switchboard Inc, in which it grabbed a 35% stake in exchange for $135m worth of promotional activity. The idea behind the strategy is that CBS gets a piece of a hot property with virtually nothing up front and stands to profit handsomely when the company goes public. Medscape filed with the SEC in May for a proposed IPO, but has yet to set a timetable for the offering.
CBS also has stakes in internet properties SportsLine USA Inc, MarketWatch.com Inc, StoreRunner Inc, Office.com Inc and ThirdAge Media Inc and hollywood.com. CBS chief executive Mel Karmazin said in February he was considering spinning off the company’s web-based assets into a separate, publicly-traded firm – a plan which it is still mulling. CBS shares dipped $0.625 Thursday to close at $44.25.
