CBS Plugs Into $135 Million Switchboard Deal

Media giant CBS (NYSE: CBS) continued its foray into the online world Wednesday, with the announcement that it reached an agreement to take a 35% stake in Switchboard.com in exchange for $135 million (US$) worth of branding and promotion over the next 10 years

A subsidiary of Banyan Systems Incorporated (Nasdaq:BNYN), Switchboard.com is one of the Internet’s leading online directories, attracting some 40 million hits each month. The site has e-mail and Web site directories, yellow and white phone directories and interactive maps.

As part of the agreement, Switchboard renamed its site CBS Switchboard. The broadcasting giant also will receive warrants to purchase 250,000 shares of Banyan stock and will receive warrants it can exercise to obtain an additional 5% of Switchboard.

In exchange, Switchboard will receive $135 million in promotion and branding across the full spectrum of CBS media properties, including TV and radio.

“The leadership Switchboard already enjoyed in its field will be further enhanced by its new name and the unparalleled promotional power of CBS’ many media platforms,” said CBS CEO, Mel Karmazin.

CBS’s Push Into Cyberspace

Formerly known as the stodgy old codger of the Big Three in American broadcasting, CBS has been active on many Internet fronts these days as it mounts a challenge to its rivals – particularly NBC – for online supremacy.

CBS invested earlier on in Sportsline USA, Inc. and MarketWatch.com and has watched those investments grow to a $500 million market capitalization.

More recently, the New York-based media conglomerate announced similar promotion in exchange for equity deals with Hollywood Online, Store Runner and Office.com. CBS says it intends to acquire 35% of Hollywood Online, 50% of Store Runner and 33.3% of Office.com in the future. The plan is for all of these sites to be connected to a single site through a co-branded interface.

The online acquisitions join a growing CBS family tree. The company has 14 CBS-owned TV stations, a cable network, two country stations, a regional sports operation, and an 80% stake in Infinity Radio and its vast 160-station network. Infinity announced last week that it was acquiring Outdoor Systems, Inc., the largest outdoor advertising company in the world.

In taking on 35% of Switchboard.com, CBS obtains a piece of one of the more established Internet institutions. Founded in 1995 in Westboro, Massachusetts, Switchboard was the first online directory to introduce white and yellow pages, breaking down the regional barriers that existed across the United States.

Switchboard is consistently rated as one of the Top 50 Web sites by Media Metrix and has signed strategic alliances with Ameritech, BellSouth, US WEST, Alta Vista and the AskJeeves search engine, to name a few.