It's the End of the Road for TheStreet.co.uk
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[London, ENGLAND] TheStreet.co.uk has been consigned to Dotcom Graveyard by its parent TheStreet.com in a cost-cutting exercise aimed at protecting the core U.S. business.
The sudden closure of the U.K. site has come as a shock to the 64 employees, including Nils Pratley, editor, who had previously resigned his post on national newspaper "Sunday Business" to join TheStreet.co.uk.
The cost-cutting does not stop with the closure of TheStreet.co.uk, but will continue until TheStreet.com's workforce has been reduced by 20 percent. Other measures include winding down a joint venture newsroom with The New York Times by the end of this month.
Thomas J. Clarke, chief executive of TheStreet.com, warned that in today's environment dotcoms have two clear choices. They must either chart a direct path to profitability or shut down.
"We're in this for the long haul. And to go the distance, we must operate at peak efficiency while continually exploring ways to grow top-line revenue."
The burn-rate at TheStreet.co.uk was said to be in the region of a half-million dollars a month, the site having gobbled nearly US $14 million since its February launch. It was, however, also earning substantial advertising revenues and getting extra revenue from other sources such as syndication.
TheStreet.com, which owned 63 percent of TheStreet.co.uk, was unable to come to an agreement with the other investors about the site's future. According to reports, venture capitalists led by Chase Capital Partners and Barclays Private Equity were willing to put in more money, but wanted a larger share of the equity than TheStreet.com would accept.
The U.S. firm will purchase the 2.55 million shares held by the other investors for an aggregate consideration of $3 million in cash and 1.25 million shares of TheStreet.com's common stock. TheStreet.com is also expected to incur a one-time discontinued operations charge of between $6 million and $8.5 million.
The demise of TheStreet.co.uk is part of a worrying trend, reported by internetnews.com this week in "Study : Dot-Com Shutdowns Are Accelerating." Since October, 45 online operations have closed, including pets.com, mothernature.com. mortgage.com, cyberhomes.com, furniture.com and garden.com.
Thomas J. Clarke said it was never easy to shut down a company, especially a fledgling one like TheStreet.co.uk.
"We applaud what was accomplished there by the entire U.K. team. The site was growing but, with projected future losses at an estimated US $16 million, it couldn't grow fast enough to meet our profitability timetable."
At the end of its third quarter this year, TheStreet.com still had US $90 million in the bank, slightly less than the value of the entire company, worth around US $85.5 million at a share price of just over US $3.