MARTHA STEWART SCANDAL TAKES TOLL ON OMNIMEDIA

Execs Don't Give Investor Guidance Due to Ongoing Investigation

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NEW YORK (AdAge.com) -- Martha Stewart Living Omnimedia posted strong second-quarter results, but executives admitted the investigation into its namesake's stock trades is taking a toll on business.

In a conference call with analysts, management admitted the ongoing investigation of Chairman-CEO Martha Stewart's sale of ImClone Systems stock has begun to affect operations. Chief Financial Officer James Follo said he could not offer investors earnings guidance due to the uncertainty created by federal probe.

'Advertiser skittishness'
President-Chief Operating Officer Sharon Patrick said some advertisers have taken a "wait and see" attitude and are delaying decisions, and that new-business development in the merchandising unit has been affected, but she reassured investors that "advertiser skittishness" is relieved by the strong demographics the company delivers.

The company reported

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net income rose 29.6% to $6.7 million and revenues rose 15.9% to $78.6 million, thanks to strong results from its publishing and merchandising units, where revenue rose 15.3% and 81.6%, respectively.

Management tried to head off questions about the company's future by stressing Omnimedia has extensive executive ranks beyond Ms. Stewart. Ms. Patrick noted Omnimedia's TV unit -- the most reliant on Ms. Stewart's persona -- is developing programming not dependent on her by bringing in additional on-air experts and talent.

Listing personnel ranks
Ms. Stewart herself took pains to list the executive, editorial and creative personnel who make up Omnimedia's operations.

"One of my proudest accomplishments is my role in bringing those people together and in the process creating a business that is larger than myself," Ms. Stewart said. "The day-to-day operations of this company are in good hands."

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