The Street.co.uk launches – same week as parent goes on sale

That's what you hire an investment bank for, isn't it?

Looks like TheStreet.com is up for sale. At very best, the online financial new service is looking for what Salon neatly calls a sugar daddy to help it through its expansion plans.

Faced with tumbling shares and stubbornly high losses ($9.1 million in the red on $5.1 million sales for its last quarter), the company has engaged investment bank Wasserstein Parella to explore all available options. We suppose TheStreet.com could have a life as a bolt-on to a traditional media empire. As an independent entity - certainly with its existing cost base - life looks a lot tougher.

The timing of TheStreet.com's announcement came just one day after the launch of its majority-owned UK subsidiary, TheStreet.co.uk.

Poacher turned Poacher

Late last year, TheStreet.co.uk approached a Register staffer with a job offer. Fair enough: except that the staffer was lured in to meeting TheStreet.co.uk on the pretext that the company had a news announcement it wanted to share with us. Slippery. Very slippery. We do not wish TheStreet.co.uk ill - it needs all the luck it can get. And that's without the problems of its American parent.

The company wants - no, needs - to tap into the UK's growing army of small share investors (16 million at last count) and quick. But it's got a pot of money in place. And, given the presence of external investors, presumably this money is ring-fenced from the US parent. TheStreet.co.uk is backed to the tune of £10.6 million in cash to burn through.

Investors in TheStreet.co.uk are TheStreet.com, Inc, Chase Capital Partners, Barclays Private Equity, 3i, ETF Group and Intel. They have signed off a business plan which will see the company spend £5 million on an advertising blitz incorporating one of "London's biggest ever poster campaigns". The campaign reflects TheStreet.co.uk's "real time edge and irreverent tone".

Quite a lot of TheStreet.co.uk's first round investment is going on journalism -- the company has hired 20 financial journalists, including four former national newspaper City editors. They will pump out free content and at some unspecified time paid-for, value-added services. In America, The Street charged, until recently, $99 a year for its service. Now it will only charge for the good stuff. (Failure of the subscription model could explain why it now needs a sugar daddy).

We can't see the UK editorial budget coming in at less than £1 million. Add in (possibly worthless) share options, desk space, running costs, and we're talking a minimum of £1.5 million per year. Probably, more like £2 million.

Show me the money

So where's the revenue going to come from? Well, it looks like advertising is the main thing. In the press release accompanying the launch, TheStreet.co.uk, announced "major advertising revenues well above expectations before publishing a single word". How meaningful is this? How major is major? What expectations did the company had, and what deals did it cut with its charter advertisers?

These customers will also - at some point - demand a return on their money; their media buyers will pore over the click-through rates; they will demand frequency caps (so people only see a banner two or three times), and this in turn will put pressure on TheStreet.co.uk to deliver the page impressions (or "inventory", as the online sales bunnies call it).

TheStreet.co.uk has signed content licensing deals with AOL, AOL-owned Compuserve and Lycos. Content licensing suggests syndication, but it could equally mean headline links from AOL et al to TheStreet.co.uk. Either way, the company's name gets around, and either way there will be very little in the way of revenue. More likely, TheStreet.co.uk is paying for the portals to carry these links. The company has also secured content placements with eTrade.co.uk and DLJ. If these online stockbrokers have any sense, they will demand TheStreet.co.uk pays through the nose.

What's in a name?

As a name, The Street, doesn't really mean that much in the UK (our shorthand for the money people is The City). Unlike The FT, a blue-chip British institution. This week, the FT revamped its Web site FT.com, presumably in response to the launch of TheStreet.co.uk. Little did it know that it was facing a paper(less) tiger.

The FT dominates British financial journalism on the paper front and it looks set to dominate the Web space, too. FT.com claims 22 million page impressions per month and £6 million annual advertising revenues from its site. But that's not all TheStreet.co.uk has to contend with: last weekend, Sunday Business revealed some details of Talkcast.com, a consortium of journalists culled from the national newspapers. A few weeks back, Hugo Dixon, editor of the FT's super-influential Lex column, and colleague Jonathan Ford, announced their intentions to run an instant analysis Web site, breakingviews.com. They are currently in recruitment mode. And right now, some Durlacher-operation is hoovering up journalists left right and centre for a financial/IT news service. Set to employ 50 people, the site is supposed to be adopting a subscription model.

Eyeball to eyeball

Can there be room for all these companies? Don't forget that Reuters and Bloomberg also occupy this space. And the WSJ, which is beefing up its interactive European operations (it's hiring up to 15 journos for its London office). And for raw news, there's AFX and the London Stock Exchange's Regulatory News Service, available - at a 20 minute lag - for free to all subscribers of the big financial bulletin board/share trading desks.

Yes, they all promise different things. And they all have different business models. But there are only so many eyeballs to go around this cornucopia of financial sites. Forget the millions of share-owners in the UK. And concentrate on the active private share traders. Numbers then plummet to - at very best --the very low 100,000s. On the whole people are not, as Misys boss Kevin Lomax points out, transaction-intensive. Or particularly information-intensive when it comes to that.

Those people who are information and transaction-intensive and financially liquid, the bulletin board watchers, the wannabe day traders, have only so many hours in the day. Hours that could be spent offline reading Investors Chronicle, Sunday Business, company prospectuses, tip-sheets, the FT, or the Daily Mail.

Does Britain need The Street? We don't think so. ®

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