For CBS the Web, not Imus, is the news
CBS Corp. grabbed headlines late last week, but not the ones it had intended.
The broadcaster had hoped to signal its rapid evolution from an old-media titan into a powerful Internet player with the announcement Thursday that it was creating its own "online network" in partnership with some of the biggest names in the business, including Microsoft Corp., Comcast Corp. and Yahoo Inc.
But the unveiling of its latest venture, known within CBS as Rolling Thunder, came a few hours before the company sacked its 66-year-old radio shock jock, Don Imus. Its Internet news was buried by the media storm over the racist and sexist comments Imus made about the Rutgers University women's basketball team.
The unfortunate timing underscores the plight of CBS Chief Executive Leslie Moonves. The veteran entertainment executive is striving to transform his company into a cool and relevant digital darling but continues to be hamstrung by the fading fortunes of his old workhorses, CBS Radio and the CBS broadcast network.
"This Imus thing will blow over, but they have bigger issues to resolve," said independent media analyst Harold Vogel. "The fact that Imus was their biggest star highlights how weak radio is. More people are listening to their iPods, satellite radio or just doing something else."
That's precisely why CBS charged ahead with Rolling Thunder, said Quincy Smith, president of CBS Interactive.
"We are moving aggressively into the Internet because that's where the future is," Smith said. "It's very forward-looking. It's not a defensive strategy, and we need those younger audiences."
CBS is more exposed to shifts in viewer behavior and ratings downturns than it was before January 2006, when its controlling shareholder, Viacom Inc. Chairman Sumner Redstone, split the broadcast assets of CBS from his cable TV holdings by separating them into two publicly traded companies. Unlike more diversified media rivals such as Rupert Murdoch's News Corp. and Walt Disney Co., CBS last year derived about 80% of its $14.3 billion in revenue from its television and radio operations.
Those two divisions, heavily reliant on advertising dollars, made up nearly 95% of the company's profit in 2006.
"Les has a very traditional set of assets, and he is working hard to breathe new life into them -- to re-create the company," said Merrill Lynch media analyst Jessica Reif Cohen.
