It was a bad week for Martha Stewart, and we don’t mean the damaged-by-Sandy trees at her Bedford, NY farm.
Martha Stewart Living Omnimedia laid off 65 to 70 employees and announced it’s restructuring its media portfolio. It’s reducing the frequency by half of its Everyday Food magazine (from 10 to 5 editions, and moving from print to digital). MSLO also plans to sell its Whole Living title or fold the content into its flagship Martha Stewart Living magazine, moves that could save the company between $33 and $35 million a year.
Reports of clashes between Martha Stewart, founder and non-executive chairman and Lisa Gersh, president and CEO, are escalating, as the latest restructuring shrinks the brand’s print footprint in hopes that digital deals with partners like Hulu and AOL as well as television deals like PBS show, Martha Stewart’s Cooking School, will prove lucrative for the flailing company.[more]
After all, it’s almost 13 years since Stewart graced the cover of BusinessWeek and was on top of the world with her Martha Inc. business booming. Fast forward to September, when BW detailed the company’s sagging fortunes and Hail Mary move to digital from TV and print, where Stewart made her name:
Hallmark Channel this summer ended her daily TV show, the September issue of Martha Stewart Living magazine has almost 40 percent fewer ad pages than last year, according to Media Industry Newsletter, and her company seems headed toward its fifth consecutive year of red ink. At less than $3, Martha Stewart Living Omnimedia shares are worth a mere 8 percent of the $40 they hit after she took it public in 1999, serving orange juice and brioche to New York Stock Exchange traders. In today’s world, where Bravo’s Real Housewives throw tables, who wants to watch someone calmly teaching people how to repair one?
Her brand hasn’t entirely disappeared: Stewart still licenses her brand for products at Macy’s and has the legal go-ahead to launch another collection at at J.C. Penney, despite Macy’s breach of contract legal move to shut down her namesake JCP collection. Her namesake TV show still runs in repeats on Hallmark, while her new Martha Stewart’s Cooking School series debuted on PBS in September after Hallmark pulled the plug on new episodes. But there’s no question that times are tough for the Martha Stewart company — “Our performance in the quarter was in line with our expectations but not our ambitions for the company,” Gersh stated in the press release for the company’s third quarter earnings — and tough actions are called for, even if Stewart personally doesn’t like it.
“We have taken decisive action to drive the company’s return to sustainable profitability, in part by reducing our costs for production and distribution and in part by creating even more engagement with our audiences, and better and more valuable opportunities for our advertisers,” Gersh stated about the media restructuring. “The initiatives announced today, coupled with those we’ve taken over the past year, further the emphasis we have been placing on digital, mobile and video platforms, reflecting our commitment to put our expert lifestyle content in closer reach of consumers, with greater frequency and in the ways they demand today and will expect even more in the future.”
MSLO, publisher of magazines and books, TV producer and merchandiser, has been unprofitable for the last nine years (with the exception of 2007) and is headed for another year in the red. The company posted a loss of $50.9 million, or 76 cents a share, compared with a year-earlier loss of $9.7 million, or 18 cents a share with decreased revenue of 17% down to $43.5 million. Merchandising is the company’s one bright spot, up 7.3% with revenues of $13.2 million.
According to the New York Post’s Keith Kelly, last month MSLO was trying to sell Whole Living and potential buyers include Meredith, American Media and Rodale. Whole Living was acquired in 2004 for about $6 million as Stewart headed to prison for lying to federal investigators in the ImClone stock scandal.
Kelly hears that Stewart blames Gersh — the former president and CEO of Oxygen — for her eponymous brand’s failing fortunes. The company just announced its foray into digital video with the domestic doyenne’s “Countdown to Christmas,” as well as an iTunes app. Whether they’ll prove to be a good thing for the company’s bottom line remains to be seen.