CBS Acquires $42 Million Stake in Office.com

CBS (NYSE: CBS) has built an impressive Internet presence with investments in content companies like Marketwatch (Nasdaq: MKTW) and Sportsline (Nasdaq: SPLN). Now the media giant is focusing on e-commerce. Today, CBS announced a deal to acquire 1/3 of Office.com, a destination site for small businesses.

Office.com, which is owned by broadband communications company WinStar Communications (Nasdaq: WCII), will receive $42 million (US$) of promotion and advertising over six years across CBS’ media properties, as well as those of its radio subsidiary, Infinity Broadcasting (NYSE: INF). Office.com will also have access to CBS’ cross-media sales force.

“Along with our planned investment in (shopping portal) StoreRunner.com, this represents our second entry into the world of electronic commerce,” said CBS president and CEO Mel Karmazin. “In that regard, we believe Office.com will be a key business-to-business destination, with appeal to small- and medium-sized enterprises, online customers and advertisers on both a local and national level.”

Earlier this month, CBS announced that it would acquire 50 percent of StoreRunner.com in exchange for $100 million in promotion and branding support over six years. CBS also agreed to a deal with Big Entertainment (Nasdaq: BIGE) to acquire a 35 percent stake of a joint venture company that will own online movie site Hollywood.com in exchange for $100 million of promotion, branding and content over seven years.

Full-Scale Launch in Third Quarter

The initial phase of Office.com launched in August of last year. The site is currently supplying editorial content and business tools to Yahoo! Small Business. The full-scale launch of Office.com is scheduled for the third quarter of this year. The site will then offer integrated content, e-commerce and communications tools. Also available will be forums with business leaders, as well as marketing and legal information about running a small business.

“Driving traffic onto any new destination site is crucial to a successful online launch,” said William J. Rouhana, Jr., chairman and CEO of WinStar. “The promotional power, expertise and related support that CBS is providing to Office.com will give the site the critical buzz it needs to attract customers in the business-to-business market.”

Stock Impact

Winstar stock opened sharply this morning at 48-11/16, up 4-9/16 from Wednesday’s close. The stock gave back about a point in early trading but still looks strong. Shares of CBS were up 11/16 to 44-1/4 in early trading.