TheStreet.com (TSCM) gets more than its share of negative coverage in the blogosphere. Henry Blodget calls it “the biggest single risk-factor at any one company since Martha Stewart Living Omnimedia.” Michael Panzner argues that Cramer’s fortunes may be turning.

True, TSCM remains tied largely to Cramer. With an enterprise value of over five times revenue, its not cheap either. But Blodget and Panzner miss the larger point.

TheStreet.com stands to benefit from two emerging trends:

Financial media m&a: News Corp. bids for Dow Jones. Thompson buys Reuters. While TheStreet.com is certainly not in the same class as either of these companies, it does have cachet among retail investors. Consider CNBC as a possible suitor. If it loses the Dow Jones relationship to Fox News, NBC will have to strengthen its ties to TheStreet.com. Who else is there? The only other first tier company is Bloomberg, and it is a rival to CNBC. And there are other possibilities. With an enterprise value of $277M, TheStreet.com is a manageable acquisition for many media companies.

And what about TheStreet.com’s longtime rival, Marketwatch.com? That was acquired by Dow Jones in 2004 for over $450 million.

Online brokers beefing up offerings: online brokers are fighting tooth and nail to win the accounts of retail investors that either trade actively or maintain large balances. In years past, these battles focused on lower commission rates, but now the brokers are offering first class trading tools and research. According to this article, Ameritrade ponied up $90M to buy the QuoteTracker and StrategyDesk tools it offers free of charge to Apex customers.

Ameritrade also cut a deal with Minyanville to give free access to Apex customers (note: I have two accounts at Ameritrade, am an Apex customer, and use StrategyDesk occasionally and free access to Minyanville daily). Scottrade cut a similar deal with Trade-Ideas. The brokers finally figured it out — if these services can convince their accountholders to place one or two more trades per month, they can generate a huge amount of revenue. TheStreet.com’s RealMoney and Minyanville’s Buzz & Banter have more than a dozen well-reasoned trading ideas each day. With Minyanville already snagged by Ameritrade, RealMoney could be a nice fit for E*trade to offer to its E*Trade Pro level customers. This could be either a licensing deal or a takeover.
Beyond these potential boosters, TheStreet.com has other assets which are generally ignored by the market. In particular, the Stockpickr acquisition stands out (on that note, a long overdue congratulations to James Altucher, whose vision and execution guided the site from concept to beta to buyout at breakneck speed). Don’t underestimate the revenue potential if this becomes the standout winner among financial web 2.0 sites. I also think that the pro level Street Insight. while a relatively small factor now, could be leveraged into something more substantial.

I’m not buying just yet. I have a strong bias towards deep value, and TSCM doesn’t fit that bill. But I have added it to my watch list and might start nibbling if it breaks above resistance around $12.25-.50.

DISCLOSURE: I have no position in TSCM, or any other stock mentioned in this article. I have two brokerage accounts at Ameritrade and am a subscriber to RealMoney, an offering of TSCM. Not a recommendation to buy or sell any security. For informational and educational purposes only.

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