Martha Stewart Living Sees Red Ink

Aug 3, 2004  •  Post A Comment

The ongoing legal struggle dogging Martha Stewart continued to take its toll on the lifestyle company bearing her name, as advertising declines in the television and publishing businesses put the company in the red for the second quarter.

However, the company announced a plan to rebuild its television production business, striking a deal with PBS to distribute the company’s newest television series, “Everyday Food,” to PBS stations nationwide.

Martha Stewart Living Omnimedia on Tuesday reported a second-quarter loss of $19.3 million, or 39 cents a share, compared with a profit of $931,000, or 2 cents a share, a year ago. Revenue tumbled 33 percent to $44 million.

The company’s TV operations reported a 53 percent decline in revenue to $3.1 million, and an operating loss of $3.5 million, vs. break-even in 2003, thanks to lower licensing and advertising revenue associated with the flagship television series “Martha Stewart Living,” which clears fewer households today than a year ago and is slated to be put on hiatus starting in September. The company blamed the operating loss also on severance costs associated with layoffs in the TV operation.

There were bright spots in the TV business, however. “Petkeeping with Marc Morrone” now has 90 percent coverage in the United States, and a deal struck in June with the Style network to run already-produced episodes of the flagship series is beginning to bear fruit.

Meanwhile, the company inked a multiyear deal with PBS presenting station WETA-TV in Washington to distribute “Everyday Food,” a new weekly series featuring a cast of cooks showcasing recipes from the MSO-published magazine of the same name. The launch of the series, as well as the magazine, is part of an ongoing effort at the company to rely less on the Martha Stewart name.

Ms. Stewart was sentenced in July to serve five months in prison and five months of house arrest following her March conviction of conspiring to cover up a stock sale and lying to federal investigators about that sale.