SBJ/March 27 - April 2, 2006/SBJ In Depth

Internet bubble two? Risks and rewards of the dot-com comeback

World Congress Panelists
Jim Bankoff
Executive VP, programming, products
AOL
Bob Bowman
President, CEO
MLB Advanced Media
David Card
VP, analyst
JupiterResearch
Christine Driessen
Executive VP, CFO
ESPN
Gordon Hodge
Partner, equity research
Thomas Weisel Partners
Jeff Price
President
SI Digital
Many investors still feel the sting of 2000’s Internet bust, but since then the dot-com industry has rebounded and is again attracting big corporate dollars. Advertisers are jumping in, accounting for double-digit gains in ad revenue of at least 22 percent each year since 2003. The country’s top 100 Internet advertisers spent more than $305.5 million on the medium last year, an increase of 6.8 percent over 2004’s top 100 spenders. Advertisers are sticking around, too, as nearly two-thirds of last year’s top 100 spenders also appeared on the 2004 list.

The gains are impressive, yet the online world has much room for growth. For example, Internet retail spending has nearly doubled since 2002, yet accounts for 2.4 percent of all U.S. retail spending. And investors, wary of getting burned again, overall are being more cautious with their moves.

The number of total visits to sports Web sites nearly doubled from 2002-05, reaching 5.7 billion cumulative sessions. ESPN continues to lead in traffic to sports sites, but last year lost market share to each of the other 10 most-visited sports sites.






In this section:

Internet stock trends
Internet advertising / Tracking online retail
Sports gaining ground on the Net
Big spenders
Competitors chip away at ESPN.com


Internet stock trends

Sources: National Cable & Telecommunications Association; PricewaterhouseCoopers LLP; Wilkofsky Gruen Associates; SEC filings

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Internet advertising / Tracking online retail

Internet advertising:
* Estimate
Source: IAB Internet Advertising Revenue Report

Tracking online retail:
* Includes projected $22.9 billion for the fourth quarter of 2005
Source: U.S. Census Bureau Retail Indicators Report (Feb. 2006)

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Sports gaining ground on the Net

* Estimate
Note: A cumulative session reflects each time someone visits a Web site.
Source: Nielsen/NetRatings

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Big spenders

Companies ranked by advertising dollars spent on sports and recreation Internet sites.

Rank
Company
2-year spending
1.
Orbitz $72,756,800
2.
General Motors Corp. $29,043,500
3.
Samsung Electronics Co. $20,703,300
4.
InterActiveCorp $20,230,300
5.
Vonage Holdings Corp. $16,735,900
6.
Sprint Corp. $14,499,400
7.
Netflix Inc. $13,172,200
8.
Toyota Motor Corp. $10,683,700
9.
Visa International $9,914,000
10.
SBC Communications Inc. $9,868,200

Note: Spending from 2004-05
Source: Nielsen / NetRatings

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Competitors chip away at ESPN.com

The following presents top sports sites from January through December 2005, with comparisons to 2003 and 2004.


Web Site
Cumulative Totals
2003 (000s)
2004 (000s)
2005 (000s)
Change
2003-05
ESPN.com 1,245,962 1,353,828 1,116,582 -10.4%
Yahoo! Sports 751,807 1,013,801 1,073,076 42.7%
Fox Sports on MSN* NA 293,350 568,018 93.6%
SportsLine.com** 367,300 390,139 452,875 23.3%
MLB.com 219,088 365,957 376,640 71.9%
NFL Internet Network 287,227 338,425 365,052 27.1%
SI.com 197,182 300,688 356,746 80.9%
AOL Sports 240,843 256,185 265,082 10.1%
NASCAR.com 198,999 240,353 221,840 11.5%
CSTV.com*** NA 147,814 169,088 14.4%

* Foxsports.com replaced ESPN.com as the primary sports content destination on the MSN system on July 1, 2004, giving the Fox site increased    exposure to MSN’s network of Internet users.
** Traffic to the SportsLine.com brand does not include traffic to its network of sites, such as the NFL Internet Network and PGA Tour.
*** Listed as CollegeSports.com in 2004 and OCSN.com in 2003.
Source: Nielsen / NetRatings
NA = Not available

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