TheStreet.co.uk shuts its doors

UK financial site lasts less than a year due to lack of funding.
Written by Matthew Broersma, Contributor on
The latest UK dot-com to face the axe is financial site TheStreet.co.uk, an affiliate of US-based TheStreet.com. The site ceased operations as of 4pm Thursday after failing to secure a new round of funding.

The company said it had met its targets, garnering four to five million page impressions per month and signing up 180,000 registered users since its launch in February, but that simply was not enough. "The US site had options for what to do with their money, and they decided they would rather spend it elsewhere," said Andy McQueen, TheStreet.co.uk's marketing director.

The UK company was burning about £500,000 a month and had enough to keep going for two months, according to reports.

TheStreet.com, which owns a controlling interest in TheStreet.co.uk, had an unsuccessful relaunch in the summer and said it was looking to link with partners in order to raise the funds to continue operations.

TheStreet.com also said Thursday it is planning to cut its work force by 20 percent, and record a charge. The job cuts will affect about 40 full-time employees in the United States.

The Street.com said TheStreet.co.uk accounted for about $9m of TheStreet.com's consolidated new losses for the nine months ended 30 September, 2000. It said that the British company was going to run out of the money by the end of this year.

TheStreet.com also said it plans to "wind down" its joint-venture newsroom with the New York Times by the end of this month. The New-York based company also said it expects to incur a one-time charge of between $6m and $8.5m from discontinued operations.

The UK site said it plans to finish operations in an orderly and businesslike way. "We are paying all our staff, all our suppliers and all our advertisers, and saying 'Thanks very much, goodbye,' " said McQueen.

Editorial content providers are especially vulnerable to the downturn that has hit dot-com companies this year because they largely rely on advertising -- which is often supplied by other dot-com companies. Red Herring Communications let 25 people go last month and other content providers have folded entirely.

The picture at large remains grim. In October, 5,677 jobs were cut in the dot-com sector, up 18 percent from the 4,805 layoffs in September, according to a report from Challenger, Gray & Christmas.

"We have hit a period here, especially in the business-to-consumer area, where many of those companies are going to face tough decisions," said John Challenger, chief executive of the outplacement firm, in a phone interview.

Many firms were launched with venture capital backing, with the understanding that they would be floated on the public markets as quickly as possible. That option is no longer viable for most companies, however, and companies are now struggling to find the funding to keep going.

"There was an unofficial recipe six months ago, that you launch, and then wait for the time to come to IPO [make an initial public offering], but that is no longer possible," said Mikael Arnbjerg, market analyst with IDC. "That's a healthy sign, because it wasn't supposed to work that way. But it's difficult for people who were hoping to IPO."

He noted that where it comes to content-oriented sites, the European market may not yet be able to support a number of competing content providers. "There is an oversupply of them at the moment," he said.

Last month Stamps.com cut its workforce by 40 percent, or 240 jobs, while Tribune cut 80 jobs in its Internet unit. In late September Internet health company WebMD said it would cut 1,100 jobs.

TheStreet.co.uk parted ways with editor-in-chief Martin Baker just three months after launch. Among its competitors in the UK is FT MarketWatch.com (ft.marketwatch.com), a joint-venture between US-based CBS MarketWatch.com and the Financial Times, which launched earlier this year.

The news of TheStreet.co.uk's closure follows closely on the failure of Garden.com, an online retailer of gardening products. On Wednesday Garden.com said it will shut down its retail operations and plans to sell its consumer business assets, after it failed to secure financing to fund operations or find a buyer for the company.

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