The recent acquisition of The Deal should help bolster TheStreet's subscription services as the financial media company faces growing competition from ad-driven websites.
“The hardest thing to do is to build content-subscription businesses,” said Elisabeth DeMarse, chairman-CEO of TheStreet. “In the ad-model free content business, it's offline dollars to digital dimes to mobile pennies, and that's why I do think it is a bit of a preemptive strike to build a foundation where we have these very lucrative subscription products that have extraordinarily high retention rates.”
In September, TheStreet announced it had acquired The Deal from private equity company Wasserstein & Co. for $5.8 million in cash. The move combines the two news operations, including content development and marketing resources. William Inman, who took charge as editor in chief of TheStreet in March, will oversee the combined operation.
The Deal Pipeline, an information subscription service and database, is being folded into TheStreet's portfolio of subscription services, which includes Jim Cramer's Action Alerts Plus, RateWatch and RealMoney. TheStreet said it is shuttering the monthly print version of The Deal and moving the brand to an all-digital format.
“We're shutting down the area of The Deal that was bearing all of the costs and keeping the lucrative part, which is the online database business,” DeMarse said. “From The Deal's perspective, that makes a lot of sense. It's just accelerating them into the shift from print to digital.”
Kevin Worth, CEO of The Deal, will transition to president of The Deal, which will operate as a subsidiary of TheStreet.
Founded in 1999 as The Daily Deal newspaper, The Deal reaches 40,000 business professionals, including senior-level bankers, law firm partners, private equity partners and hedge fund managers.
TheStreet plans to incorporate The Deal's content into The Daily Pipeline to increase sales to hedge funds, while The Deal's sales force will start to offer content such as TheStreet's Chat on The Street and Options Profits.
DeMarse said the acquisition of The Deal will immediately add to cash flow on a pro forma basis. In the last two years, The Deal Pipeline grew at a 45% compound annual growth rate.
“The Deal did an exceptionally good job of turning on a dime and transitioning their business into an information business, and they did it at just the right time,” said Reed Phillips, managing partner at media investment bank DeSilva & Phillips, which represented The Deal in the transaction. “We're certainly seeing other print properties that have not developed their digital assets, and they've got a tough row to hoe in terms of what the future is going to be for those businesses.”