A little comic relief from NY Times, Business section, Page 1
May 18, 2000
TheStreet.com Threatens to Cancel
Program in a Dispute With Fox
By FLOYD NORRIS
When James J. Cramer, the co-founder of TheStreet.com,
went on TheStreet.com's cable television program and
plugged TheStreet.com's own stock, he set off a battle
over the ethics of stock promotion that may result in cancellation
of the program.
In a highly unusual war of news releases yesterday,
TheStreet.com announced that it was canceling its program,
which appears each weekend on the Fox News Channel, a cable
channel. Fox fired back that TheStreet.com had no right to
cancel it, and TheStreet.com relented and said it would keep
producing the program for an undetermined period.
While Fox and TheStreet.com were exchanging salvos, Mr. Cramer
was said by his office to be unavailable because he was
attending his daughter's birthday party.
The dispute was set off by a program taped April 14 and
broadcast April 15, the weekend after the Nasdaq stock market
suffered its worst day ever. Mr. Cramer, who is a hedge-fund
manager as well as a commentator for TheStreet.com, mentioned
a number of stocks, including the American Home Products
Corporation, which he said was his biggest stock position and one
he was buying.
Then, after a commercial, Mr. Cramer was asked for another
forecast. He replied, "Stock that's near and dear to my heart that
I own a lot of is stock called TheStreet.com. I've watched it go
from $70 to $5. I think it's done going down because it's got
$4.75 in cash."
Fox left that in when it broadcast the program, but put a notice
on the screen that Mr. Cramer was the largest shareholder and a
co-founder of TheStreet.com, an Internet site that provides
news and commentary on financial markets.
The comment brought immediate criticism. Dave Kansas, the
editor in chief of TheStreet.com, published a column the next day
on TheStreet .com Web site criticizing Mr. Cramer for making the
comment and noting that before the program was taped he had
refused to say what he planned to recommend, as participants
usually did. "I don't like Cramer or anyone else discussing our
stock on the show or on the site," Mr. Kansas wrote.
Then, on April 26, The Daily News printed an article in which an
unnamed Fox spokesman criticized Mr. Cramer. "Despite offering
full disclosure of his ownership position, we do not approve of the
touting of stock for personal gain on the air," the spokesman was
quoted as saying. The article quoted Mr. Cramer as saying there
was no personal gain because he had no intention of selling any
shares.
Yesterday, in announcing that TheStreet.com was canceling the
program, Thomas Clarke, the chief executive , said that
amounted to a breach of contract because Fox has unilaterally
changed policies regarding the program.
He pointed to The Daily News article as being a statement of
Fox's new policy, which he said went beyond TheStreet.com's
policy of requiring that all participants disclose any interests they
have in stocks they discuss. "It would be interesting to know if
they had the policy for their other shows, where people come on
and talk about stocks without any disclosure," Mr. Clarke said in
an interview, speaking of Fox News, a unit of the News
Corporation.
Asked about that, Diane Brandi, a Fox News vice president,
replied that it was "an absurd premise. We do not announce
policies in The Daily News." She declined to say just what the
station's policy was, or whether it allowed Mr. Cramer to
recommend stocks his hedge fund owns, as he regularly does.
But she did say that Mr. Cramer, who has not appeared on the
program since the incident, would be in violation of his contract
with Fox if he did not appear this weekend, since his contract
called for a minimum number of annual appearances. Mr. Clarke
said that the program would be taped, as part of an orderly
shutdown of the broadcast, but that Mr. Cramer would not
appear. Fox has two separate contracts, one with TheStreet.com
to make the program and another with Mr. Cramer providing for
him to appear on it and limiting his appearances on other
networks.
There may be other things at work here. In the days after Mr.
Cramer recommended the stock on Fox, he appeared on a Cable
News Network program and then on NBC's "Today" show. Ms.
Brandi said those appearances violated his contract with Fox. Mr.
Clarke speculated that Fox's anger over those appearances had
led Fox to criticize Mr. Cramer in the first place.
One person on the Fox side, speaking on the condition of
anonymity, said the affair might somehow be related to a Fox
refusal in March to invest more money in TheStreet.com, in which
Fox now owns a 1.6 percent stake. Mr. Clarke said he had sought
a greater strategic alliance with Fox, but not because
TheStreet.com needed cash.
While Mr. Cramer was not available for comment, his assistant at
his hedge fund issued a statement saying Mr. Cramer "is totally
on board with TheStreet.com's decision. We were proud of the
show, but it didn't work out as we had hoped."
The Street.com went public last May at $19 a share and traded
as high as $71.25 the first day. But it soon slid, and reached its
low of $5.50 on April 14, the day Mr. Cramer made his comments.
Yesterday it rose 87.5 cents, to $7.9375.
The New York Times Company owns a 6.3 percent stake in
TheStreet.com and operates a joint newsroom with it that files
articles for the Web sites of both TheStreet.com and The New
York Times. |
