Publish date:

Salon Gets the Money

Whether or not investors view the Salon deal as a bust in Internet IPO terms, the company raised enough money to stay in business for years.
Author:

If

Salon.com

(SALN)

is worth $100 million, what would

Talk

be worth if

Tina Brown

added a dot-com to the name? Gee, Tina, just call it Talk.com, bring it public on the heels of all this

Brooklyn Navy Yard

hoopla and raise enough money to stay in business for years to come.

Most of our readers are not from the world of magazines and newspapers. Before I got in this game, though, I lived and breathed commercial journalism, and I still keep my hand in that world. It is an insular world made up of

Time Warner

(TWX)

and

Hearst

and

Conde Nast

and a couple of other players.

Last night that world fell to pieces because Salon got the money.

Sure, the stock didn't have the pop that other Net deals have had. There was no 100% gain, or 200% gain for that matter. Online chat rooms label it a bust. TV says it went flat.

But it got the money

TheStreet Recommends

.

I cannot emphasize that point enough. Having started a few magazines in my time, I know that getting the money is all that matters. Everybody from

George

to

SmartMoney

thirsts for that money. Capital for new magazines is incredibly scarce because this magazine business is a very low-growth business. One reason why people are so focused on

Talk

in the magazine world is because it has deep pockets, something magazines need because they tend to lose a huge amount of money when they get started. It has backing.

Offline magazines almost always run out of money. They burn through money like there is no tomorrow. If Salon were just a magazine, I can't imagine it getting a dime. Not one red cent. It's a great opinion magazine for goodness sakes! It doesn't make any money. Even the great magazines don't make any money. Everybody in journalism knows this.

But there are plenty of people not in journalism who don't, I guess, because

Salon got the money

.

If I were backing

Talk

, where I would have to expect to lose millions and millions of dollars just on parties alone to generate offline buzz and envy, I would have to be asking, "What is the point of using my money?" Why not just add a dot-com and let the public pay for the darn thing? Why lay out your own dollars when you could go to an investment bank and get other people's?

To me, this Salon deal is a watershed deal. It ensures that

Talk

will be the last offline magazine ever launched in this millennium or any other millennium. Because no media company, let alone wealthy individuals, can afford to compete with the public's dollars. They just don't have enough.

And, obviously, the public has too many.

James J. Cramer is manager of a hedge fund and co-founder of TheStreet.com. At time of publication, his fund had no positions in any stocks mentioned. His fund often buys and sells securities that are the subject of his columns, both before and after the columns are published, and the positions that his fund takes may change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Cramer's writings provide insights into the dynamics of money management and are not a solicitation for transactions. While he cannot provide investment advice or recommendations, he invites you to comment on his column at

jjcletters@thestreet.com.