By Jon Lafayette and James Hibberd



Martha Stewart Living Omnimedia on Tuesday reported that its third-quarter net loss shrank to $25.2 million from $26.1 million a year ago.

The loss narrowed as advertising revenues rebounded from the days when founder Martha Stewart’s legal problems were front-page news and affected the company financially. “Our return to growth is evident in increased advertising revenue within our existing properties as well as in the success of our diversification efforts, with new magazines and new licensing agreements,” said company President and CEO Susan Lyne.

The company’s broadcast group, which includes the syndicated “The Martha Stewart Show” as well as Ms. Stewart’s satellite radio program, showed an increase in revenue to $10.1 million, up from $2.9 million a year ago. Its operating loss was $1.8 million, compared with $3.9 million a year ago.

According to the company, ratings for the TV show are on track with expectations. “Advertising sales were strong and the show was well sold through the upfront season,” the company said.

The company also said it expects to settle a class-action lawsuit against it, Ms. Stewart and two former officers for $30 million, and has set aside $18.2 million to cover its part of the settlement and legal fees. Ms. Stewart was found guilty in 2004 of lying about a stock transaction and served time in federal prison in West Virginia.

On Monday, NBC Universal Domestic Television Distribution announced the renewal of “The Martha Stewart Show” for a third season with several major station owners, including the NBC-owned station group.

Other station groups agreeing to carry the program’s third season include Gannett, Belo, Fisher Broadcasting and Scripps.

The announcement comes as co-executive producer Rob Dauber exits the production amid a disappointing season-to-date performance compared with the prior year. A replacement has not yet been named.

“The Martha Stewart Show” is produced by Martha Stewart Living Omnimedia and distributed by NBC Universal. Mark Burnett and Ms. Stewart are executive producers.