Updated from 2:08 p.m. EDT

TheStreet.com Inc.

(TSCM)

, publisher of this Web site, said Wednesday that it was canceling its television program on the

Fox News Channel

, a move whose legality was challenged later in the day by Fox.

At the center of the dispute is

James J. Cramer

, co-founder and columnist of TheStreet.com Inc., who Fox criticized for recommending TheStreet.com Inc. stock during a program that aired on April 15.

Thomas J. Clarke, chief executive of New York-based TheStreet.com Inc., said Wednesday that his company was canceling the program because

News Corp.

(NWS) - Get Report

, which owns

Fox News Channel

, had breached its contract and disparaged TheStreet.com Inc. in a

New York Daily News

story.

Clarke also said the cable program about stocks and the market, called "TheStreet.com," was not reaching a large enough audience.

"While the show was well received by our viewers, we had hoped to build a broad global audience through a deeper relationship with News Corp.," Clarke said in a statement. "But in spite of our best efforts, Fox News Chairman Roger Ailes' hard work and many attempts, News Corp. did not show an interest in such an expansion."

Fox News responded several hours later with a statement calling TheStreet.com Inc.'s accusations "unfathomable."

"TheStreet.com has no contractual right to cancel the television program which airs on the

Fox News Channel

prior to May 7, 2001," said Dianne Brandi, vice president of legal affairs, in the statement.

She also said

Fox News Channel

was reviewing its legal options against Cramer as well as against TheStreet.com Inc. and "other appropriate parties."

Clarke said in an interview that the disparaging remarks that led to the breach came in an April 26 article in the

New York Daily News

. That article said

Fox News Channel

was upset after Cramer, the largest shareholder in TheStreet.com Inc. with a 13% stake, called TheStreet.com Inc.'s stock "a good buy" on the program.

TheStreet.com Inc.'s stock has fallen sharply since topping $70 on its first day of trading in May 1999, after its initial public offering at $19 a share. On April 14, the day the program in question was taped, TheStreet.com Inc.'s stock closed at 5 3/4, just off its 52-week low of 5 1/2. The stock closed trading Wednesday up 7/8, or 12%, at 7 15/16.

An unidentified

Fox News Channel

spokesman told the

Daily News

, "Despite offering full disclosure of his ownership position, we do not approve of the touting of stock for personal gain on the air."

Clarke would not say what specific part of the

Daily News

article constituted disparagement. But in his statement, he said, "We cannot stand by and let a joint venture partner disparage our integrity and impugn our honesty."

Fox News refuted that contention. "Contrary to various statements put out today by TheStreet.com, the simple truth is that Mr. Cramer touted TheStreet.com stock in an inappropriate manner on the television program," Brandi said in the

Fox News Channel

statement.

The Fox statement quoted an editor's

note that appeared with Cramer's column on

TheStreet.com

on April 15 and a

column written by

Dave Kansas

, the Web site's editor in chief, that said Cramer's discussion of TheStreet.com Inc. stock was a mistake.

Clarke said

Fox News Channel

recently changed its policy on stock ownership disclosure without informing TheStreet.com Inc. "If anyone has seen the show, they would know that if Jim Cramer did not comment on stocks he owns, it makes it impossible to do his job," Clarke said in an interview. He added that Cramer had always fully disclosed that he might have ownership positions in the stocks he discussed.

In a statement issued Wednesday evening in response to the

Fox News Channel

statement, TheStreet.com Inc. said the network "was contradicting its own policies when it claimed that James Cramer was 'inappropriate' for making positive comments about a stock that he owned" on the show. Clarke said

Fox News Channel

was applying its standards regarding full disclosure inconsistently, and that the network "continues to host on its news shows fund managers, CEOs and founders who talk about stocks in which they have positions."

Asked to comment about

Fox News Channel's

allegations, Cramer responded with an e-mail saying: "I wholeheartedly support Tom Clarke's actions. I wish the show had worked out."

The

Fox News Channel

program first began airing in July. Sydney-based News Corp. bought a 1.6% stake in TheStreet.com Inc. in May 1999 as part of the initial public offering. Clarke said Wednesday's announcement applies only to the airing of the television program and does not address any other aspects of TheStreet.com Inc.'s relationship with News Corp.

New York Times

(NYT) - Get Report

owns an equity stake of about 6.3% in TheStreet.com Inc. The two companies operate a joint newsroom through a partnership agreement.

Clarke said in an interview that the relationship with

Fox News Channel

was proving restrictive in TheStreet.com Inc.'s ability to cultivate relationships with other potential media partners. "Basically, we never had an alignment of interests with News Corp.," Clarke said.

"We are looking forward to exploring the newly available possibilities with a wide variety of potential cable and broadcast partners," he said in the statement. Clarke declined to comment specifically on what those other relationships might be.

Earlier this year, TheStreet.com Inc. said it had hired the investment firm

Wasserstein Perrella

to help the company find strategic partners to extend its brand. At the time, there was speculation that TheStreet.com Inc. might be putting itself up for sale.

MarketWatch.com

(MKTW)

, a competitor of TheStreet.com Inc., was mentioned as a possible buyer.

Clarke has repeatedly denied that TheStreet.com Inc. is for sale and reiterated that on Wednesday.

TheStreet.com Inc. is preparing to convert its main site, at www.thestreet.com, from a largely subscription-based site to a free site. It will also operate separate subscription sites.

Clarke said the decision to cancel the show was made now because the company wanted to make any "decisive moves" it thought were needed before moving to the new strategy.

The show will be taped this Friday for airing Saturday and Sunday. It is not known when it will go off the air.

Shares of News Corp. closed Wednesday trading down 1, or 2%, at 49 1/8.