CBS waits on the Net

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The IPO community is waiting for CBS to spin off its CBS Internet Group, but CBS President Mel Karmazin says it will have to wait a bit longer.

During a conference call last Tuesday concerning CBS' first-quarter earnings, Karmazin said the key to any Internet spin-off is first finding a "very satisfactory business model. If I'm satisfied [with it], then I think I can convince you that it's a business model as well," he told the analysts. "It's high visibility, high priority, and we're working on it. But we just want to make sure the strategy is something other than sending it out to get a multiple of a dotcom."

The Internet Group segment incurred an EBITDA (earnings before interest, taxes, depreciation and amortization, minority interests and equity losses) loss, primarily non-cash, of $33 million in the first quarter. The loss was largely attributable to its investment in iWon.com.

Jessica Reif-Cohen, a media analyst for Merrill Lynch Global Securities, believes that CBS' Internet moves to date have been solid. "They've been really smart about everything they do. They were the first and most aggressive in exchanging promotion for equity, but they've been careful, not too slow, and smart. You don't need an absolutely defined strategy at this time."

And first-quarter results for wholly owned subsidiary MarketWatch.com showed a 300% jump in revenue over the year-ago period and a 49% increase in Web traffic from the previous quarter.

The company, which publishes the CBS.MarketWatch.com Web site, said revenue rose to $12.4 million for the quarter ended March 31, up from $3.1 million in the year-ago period. First quarter 2000 saw a net loss of $22.7 million, or $1.62 per share, compared with $6.1 million, or $0.52 per share, in first quarter '99.

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