CBS Acquires Stake In Medscape, Plans Healthcare Launch

While it might lag behind in the Nielsen ratings, television network CBS Corporation (NYSE: CBS) is definitely out in front of the pack when it comes to building an Internet presence. The company added to its online portfolio Thursday, with the announcement that it acquired a 35 percent stake in Medscape, a popular health and medical information site for the medical community.

The agreement will give Medscape a license to use the CBS trademark and logo and provide it with $150 million (US$) in promotion and branding over a period of seven years across all CBS properties.

“CBS.Medscape.com is a terrific complement to our growing roster of new media interests, and comes at a time when direct-to-consumer healthcare is one of the fastest growing advertising sectors,” said CBS President and CEO, Mel Karmazin.

New Consumer Site On The Horizon

The two new partners intend to launch a Web site for consumers at cbs.medscape.com, which will become the exclusive consumer healthcare site incorporated into CBS News and the media giants affiliated sites.

In an exclusive interview, Medscape spokesman David Fluhrer told the E-Commerce Times that some 380,000 consumers have registered with the company’s site, which is earmarked primarily for physicians and other medical professionals. A total of 1.1 million registered users have signed up with Medscape since it was launched in 1995.

“Our current professional site is at a much higher level of sophistication than other consumer healthcare sites,” Fluhrer said. “From the amount of consumers that have registered, we can tell that many people are looking for that level of knowledge at the consumer level. The idea is to launch this site with CBS and give people higher-level content and ground-breaking editorial in a friendly format.”

The company’s revenue stream is derived almost exclusively from advertising, Fluhrer said, but e-commerce venues could open up in the future, he added.

Stiff Competition

In launching the new site, Medscape and CBS will be going up against the likes of drkoop.com and other emerging consumer healthcare sites. In fact, there are and estimated 15,000 health-related sites on the World Wide Web.

With this new deal however, Medscape does appear to have the pedigree that few others could attain. The company has attracted $32 million in private placement equity since 1997 and filed with the SEC in May for an initial public offering.

It’s CEO is a former Dow Jones VP who oversaw the online edition of the Wall Street Journal — and the editor-in-chief of its medical journal is the highly-respected former editor of the Journal of the American Medical Association.

CBS has additional Internet investments in Sportsline USA, Marketwatch.com, Office.com, StoreRunner, Inc., ThirdAge Media, Hollywood.com and Switchboard Incorporated.