A Network Finds Its Innertube

Will CBS’ new broadband channel float?

CBS plunged into the open waters of online video last week with the launch of Innertube, its free, ad-supported broadband entertainment portal. But media buyers and industry executives are wondering: Is the venture little more than the network’s attempt to make a big splash?

While many dismissed last Thursday’s launch as a pre-upfront stunt, advertisers have already signed on and will likely show more interest during next week’s upfront confab. But the potential of Innertube—which offers original series for the Web and extra content for existing CBS-branded shows—is hobbled by the fact that CBS can’t put its hottest shows online, at least not yet.

Carat Digital Executive VP Mitch Oscar says CBS had to create this broadband venture in order to compete. Oscar, whose clients include Schick, Hyundai and Chase, adds that, while CBS is wise to signal it isn’t lagging behind other networks in providing advertisers with new digital opportunities, Innertube isn’t offering Web viewers anything particularly compelling.

CBS says that it is offering original reality series on Innertube to attract a young audience that may not watch the network’s on-air product. Current fans of CBS shows are being courted with extras like a behind-the-scenes look at Survivor and programs that didn’t succeed on broadcast, like Love Monkey.

But the real draw could be the full-length episodes of shows that CBS is restricted from offering. Although the network currently has episodes of Survivor on its Web site for 99¢, affiliation deals prevent CBS from repurposing prime time programming.

And given that affiliates contribute to the network’s NFL and NCAA TV deals, the stations have a powerful bargaining chip in negotiating any revenue- sharing with Innertube. (Separately, CBS is developing an entertainment channel, tentatively called CBS 2, for affiliates’ digital-broadcast spectrum.)

Moreover, even though CBS generated more than $4 million in ad revenue and attracted 5 million users to its online streaming of NCAA men’s basketball tournament games in March—the highest ever for a live-TV Webcast—sports won’t be featured on Innertube. The site is “our entertainment play on the Web,” explains CBS Digital Media President Larry Kramer.

CBS says it will promote its site on-air and add full-length episodes of current series in the future, but right now there is little to recommend the site over other, more popular venues for viewing online video, such as YouTube. (CBS says any similarity between the two sites’ tubular names is unintentional.)

However viewers receive the content, advertisers will likely be keen on testing the product. Cadbury Schwepps, Pier 1 Imports and Verizon SuperPages.com have signed on to support Innertube through banner ads and product integration into broadband series.

“Regardless of whether it’s broadcast or cable, you see a shift toward the digital platforms,” says Kari Hooper, associate media director at Starcom USA’s video-investment group. “Offering engaging opportunities will give you a leg up on the upfronts.”

In the meantime, CBS may want to strike a deal with Countrywide Tire & Rubber, the current destination for www.innertube.com.

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