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Internet Company Buys 17th Street Productions
Jim Milliot -- 1/17/00

The scope of the deal is light-years away from the AOL-Time Warner merger, but another new (unprofitable) Internet company has acquired an older, profitable print publisher. Alloy Online has bought the book packager 17th Street Productions for an undisclosed price. Alloy, based in New York, operates a Web site (www.alloy.com) and direct-marketing operations aimed at the Generation Y market, the most important demographic for 17th Street, which has produced such bestselling teenage book series as Roswell High, Fearless and Sweet Valley High.

Leslie Morgenstein and his partner, Ann Brashares, acquired 17th Street from Dan Weiss last fall (News, Oct. 18, 1999); both will continue as copresidents of 17th Street, with Morgenstein focusing on operations and business development and Brashares remaining as editor-in-chief. Morgenstein said he anticipates that he will also help build Alloy's media properties as well as extend the Alloy brand. According to Morgenstein, joining forces with Alloy will give 17th Street "unparalleled marketing support and distribution for our current and future properties."

The two companies first got together when they agreed to a cross-promotion deal involving the Fearless series; Alloy promoted the line through its Web site and catalogue, while 17th Street promoted the Alloy site through its books. 17th Street also created a Fearless zone on the Alloy site. With the acquisition, Morgenstein sees many more opportunities for the print and online sides to generate increased exposure for their properties. "We think with our relationship with Alloy we will be able to offer publishers a better service package that should increase book sales," Morgenstein told PW.

17th Street may include some chapters of its books on the Web, but it will devote much more effort to developing new material that could not be included in its books. The creation of original material that is not part of an existing series--but which could be developed into books and/or TV programs--is also part of Morgenstein's strategy, as is selling books directly from the Alloy Web site.

Matt Diamond, CEO and cofounder of Alloy, said the acquisition "represents another step toward our long-term goal of expanding Alloy's multimedia platform."

Founded in 1996, Alloy went public last May. For the first nine months of 1999, total revenues jumped 131% to $15.5 million; the company reported a loss of $10.3 million, compared to a net loss of $5.4 million in the first nine months of 1998. As of October 31, 1999, Alloy had 1.3 million registered users and a total database of approximately three million teenage boys and girls.
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