'MARTHA STEWART LIVING' MAGAZINE CUTS RATE BASE 22%

Guaranteed Circulation Goes From 2.3 Million to 1.8 Million

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NEW YORK (AdAge.com) -- Martha Stewart Living magazine is cutting its rate base by a hefty 22%, according to the company.
Martha Stewart's media empire is losing its advertising support as big advertisers stay on the sidelines.
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Effective with its January issue, the rate base, or circulation guaranteed to advertisers, will be 1.8 million. Currently it's 2.3 million.

'Strategic decision'
"What is going on," said Suzanne Sobel, executive vice president of advertising sales, "is that there's a much more crowded playing field, and the basic economics in the circulation world are very tough. Combine that with Martha's personal situation," she added, the company made what she termed "a strategic and longterm decision."

The move is not entirely unexpected, as key company metrics have suffered mightily since insider trader allegations began swirling around its founder last year. In a summertime earnings call with financial analysts, Chief Financial Officer James Follo broadly hinted at an imminent future rate base cut.

Tending downward
Consumer and advertiser indicators at Ms. Stewart's magazine have trended significantly downward. Single-copy sales of the magazine fell 18.1% for the first half of 2003, according to Audit Bureau of Circulations. Through September, ad pages were down 31.4%.

Ms. Stewart, who was indicted for securities fraud in June, is slated to go to trial in January.

Ms. Sobel said that the magazine is nonetheless approaching advertisers with a 6% CPM increase for 2004, which would raise CPMs to $59.80 from $56.42.

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