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CBS, AOL Stream Together in Radio Deal

CBS, AOL Stream Together in Radio Deal

AOL benefits from CBS' diverse portfolio of content, said Yankee Group analyst Mike Goodman. "For AOL, it's programming. AOL is audience-based, as well. They're in the business of providing content to Internet users. It's about aggregating programming to generate the greatest number of ad dollars. And even though CBS is selling the advertising, I guarantee you they're sharing some of the advertising revenue with AOL."

By Jim Offner E-Commerce Times ECT News Network
03/07/08 1:05 PM PT

CBS Radio is hoping to step up its Internet presence through a deal it announced Friday with AOL.

CBS, the second-largest radio broadcaster in the U.S., plans to offer advertising-supported streams from 150 online radio stations to listeners free of charge over AOL's online radio portal.

CBS Radio, second in size only to Clear Channel Communications, will sell ad spots for AOL's network of 200 stations, and the two partners will launch a new media player and support for Apple's Macintosh computers.

The new player, scheduled for a spring launch, will include all AOL stations and several big-market CBS outlets, including stations in New York, Los Angeles, Chicago and Atlanta. More stations will come online later, the companies said.

CBS' Online Strategy

"CBS Radio continues to invest in high-growth areas, including Internet streaming," said Dan Mason, the network's president and chief executive officer. "We have been very clear about our goals in this area, and teaming with AOL is a tremendous step forward in that regard."

Time Warner-owned AOL executive vice president Kevin Conroy emphasized that the move was about listener options.

"This partnership with CBS Radio reconfirms our commitment to the expanding online radio audience and provides significantly more programming choices for our listeners," said Conroy.

The deal will feature a variety of local news, sports and music programming to AOL. New York stations in the deal, for example, are all-sports WFAN-AM and news outlet WINS-AM. The two partners will be coming up with some unique programming, they said.

Marriage of Old, New Formats

Whether this melding of old and new formats works out remains to be seen, said Philip Leigh, principal analyst for Digital Media.

"I think it's a pretty clear indication that the Internet is the new media that old media content providers are going to have to adapt to," Leigh told the E-Commerce Times. "There's nothing more convincing that CBS is recognizing that their audience is moving to the Internet."

AOL could benefit from bringing in CBS as a partner, Leigh said. "It gives them content that's recognized."

How advertising is handled could determine the success of the venture, Leigh noted. Ad spots that interrupt programming as they do on over-the-air radio could hinder the success of the project.

"The new trend on the Web is nondisruptive advertising, where the advertising will be contextually related to what's on the screen," he said. "Simply taking old-media content and transposing it to new media is not recognizing the potential of the new media."

That is indeed a risk, agreed Yankee Group analyst Mike Goodman. "The risk is based on the ad load," he told the E-Commerce Times. "But we've seen a more equitable distribution of advertising, versus content (in online programming)."

However, there's a considerable upside for both parties, Goodman noted. "I'd say this is an extension of CBS' syndication strategy for digital programming. The other way to think about it is their radio programming is predominantly ad-supported, so anything they can do to extend their reach is beneficial for CBS. And who's one of the bigger providers out there? AOL."

Padding AOL's Programming Portfolio

AOL benefits from CBS' diverse portfolio of content, Goodman noted.

"For AOL, it's programming. AOL is audience-based, as well. They're in the business of providing content to Internet users. It's about aggregating programming to generate the greatest number of ad dollars. And even though CBS is selling the advertising, I guarantee you they're sharing some of the advertising revenue with AOL."

CBS shares were trading at US$22.06 late Friday on the New York Stock Exchange. The stock had a 52-week range of $21.34 and $35.75.

Time Warner shares were at $14.89, with a range of $14.64 and $21.97.


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