It was a failed meeting between TheStreet.com stock guru James Cramer and Rupert Murdoch, not merely criticism of Cramer, that led to the warfare between the financial Web site and FOX News Channel.
FNC went to state court in New York last week, suing TheStreet.com and Cramer, a well-known commentator and hedge-fund manager, charging that they couldn't unilaterally quit their weekly show on FNC.
While the suit seeks to force the TheStreet.com to continue producing the show for FNC, the action is largely intended to keep it from going to CNN or CNBC until May 2001 and to tie Cramer up under a non-compete clause of a personal-services contract until September 2002.
The squabble stems from a meeting last March, at which Cramer and TheStreet.com Editor-in-Chief David Kansas pitched new ideas to Murdoch and senior News Corp. executives. Cramer and Kansas wanted to expand TheStreet.com's non-Web reach beyond the single TV show on FNC. They envisioned a similar program on technology, international outlets and more print-related products in Murdoch's newspapers.
But, said executives familiar with the meeting, Murdoch was underwhelmed. TheStreet.com's stock was dropping from $71 last year to as low as $5.50. News Corp. had just 1.6% of the Web site's stock and didn't see much percentage in expanding the relationship or its investment in the operation.
But TheStreet.com's FNC deal precluded Cramer and Kansas from cutting deals with others, particularly competing cable news networks. Industry executives said the duo felt handcuffed.
A few weeks later, Cramer went on the air and threw a temper tantrum that further strained the two companies' relationship. According to FNC, Cramer went to the taping for TheStreet.com's April 15 show and refused to give the network's producers the usual notice of what he planned to say on the air in a segment called "Predictions."
What he did was tout TheStreet.com's battered stock. He said a "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." When another panelist on the show said that he wasn't permitted to talk about TheStreet.com's own stock, Cramer replied, "Nobody's allowed to comment; that's the big joke. But I don't care, because I think it's too cheap."
It's commonplace for money managers to tout stocks they already hold in a fund. It's usually why they are eager to participate in everything from CNBC's Street Sweep to a Barron's roundtable. News organizations consider it a different ethical issue when a money manager talks up a company he personally owns, particularly on his own newscast.
Even Kansas reprimanded Cramer, his partner, in a column on the Web site. But what set Cramer off was a remark by an FNC spokesperson in the New York Daily News, stating that "we do not approve of touting of stock for personal gain." Cramer took that as violating a non-disparagement clause in the two companies' programming agreement and moved to yank the show.
TheStreet.com CEO Tom Clarke counters that, if FNC was so upset about the comments, network executives could have edited them out of the pre-taped show or not replayed the show twice after its initial Saturday morning run.
"That, of course, is the point," said one media executive familiar with the dispute.