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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Boplicity who wrote (51891)	5/24/2000 12:36:00 AM
From: Don Green	Respond to of 99985

TheStreet.com illustrates the term 'boob tube' By Paul Elias Redherring.com, May 24, 2000 TheStreet.com (Nasdaq: TSCM)'s foray online is deeply troubled. The financial news provider transitioned its business plan from a membership to a free model, key employees have departed, and its stock has taken a nosedive since its IPO. But the company's courtship of old media has created even worse results. On Monday, Fox News Network (NYSE: FOX), an investor in TheStreet.com, sued the upstart in a New York state court for breach of contract. The television network is miffed that the online business news outfit up and quit its weekly program last week with 14 months remaining on a contract. The trouble between the two started on April 15 when James Cramer, TheStreet.com's biggest shareholder and star columnist, told viewers to buy the online company's stock because it had bottomed out. Mr. Cramer's recommendation didn't exactly set off a stampede. After all, the show aired at 10 a.m. Eastern Standard Time Saturday morning and was viewed by an average of 120,000 people a week -- a pathetic .2 rating. In fact, the show's "limited reach" was one of the reasons TheStreet.com CEO Thomas Clarke cites for quitting television. FOR SHAME Mr. Clarke also says TheStreet.com went off the air because of Fox's "disparagement of the company and its brand." A few days after the April 15 show, an unidentified Fox spokesman blasted Mr. Cramer in a New York Daily News article for pimping his own stock. Even TheStreet.com editor-in-chief Dave Kansas, in a note to readers the same day the show aired, wrote that he found Mr. Cramer's comments "shameless" and editorially offensive. "I don't like Cramer or anyone else discussing our stocks on the show or on the site," he wrote. A month later, though, TheStreet.com apparently changed its stance about the Fox spokesperson's quotes, and Mr. Clarke told Fox it wasn't going on air anymore. Fox sued and wants unspecified damages and a judge to bar Mr. Cramer from appearing on another television network. All of which leaves TheStreet.com and Mr. Cramer looking like petulant child stars in rapid decline. Even before the contretemps with Fox, TheStreet.com's public image was in bad shape. Its stock, which traded as high as $71.25 on the day it went public last year, has been trading in the single digits for months. Investors, for the most part, say TheStreet.com's subscription-based business model is deeply flawed when myriad other business sites such as CBS Marketwatch offer the same information for free. In February, the company's CEO and chief technology officer quit, prompting Bear Stearns (NYSE: BSC) Asset Management to sell its 6.2 percent stake in the company. Despite its lawsuit, Fox still holds nearly 400,000 shares it bought at $19 a pop in May 1999. The New York Times (NYSE: NYT), too, is holding on to the 1.6 million pre-IPO shares it bought for $15 million in February 1999. TheStreet.com now says it has seen the error of its ways and will relaunch its site by the end of the month. The company plans to make most of its content free of charge in hopes of driving more eyes to the site and increasing advertisement revenues, which are already on the rise. First-quarter 2000 ad revenue was $2.1 million, up from $1.1 million a year ago. In fact, total revenue jumped from $2 million to $5.7 million in the first quarter, and Mr. Clarke predicted the company would become profitable by the second half of next year. Still, investors aren't impressed. The stock closed at $6.06.