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MARTHA STEWART SEEKS BETTER DEAL;TIME INC. WANTS HER TO RE-SIGN

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Now that she has become one of Time Inc.'s most high-profile successes, Martha Stewart is pushing for a bigger share of the revenue from her products and so far has balked at signing a new deal with the media giant.

Industry executives said Ms. Stewart pushed to renegotiate her original 1990 contract earlier this year. But Time's new offer, though sweetened considerably, has not been enough to entice Ms. Stewart to re-sign.

"The old contract was very favorable to Time Inc.," said one industry executive. "The new contract is much more favorable to Martha."

Ms. Stewart's media empire, including Martha Stewart Living, Martha Stewart Television, and a host of books and ancillary products, generates an estimated $200 million in annual revenue, according to Entertainment Weekly, a Time Inc. sister title.

Ms. Stewart last week was tight-lipped about her ongoing negotiations with Time Inc.

"It's very complicated," she told Advertising Age. One of the reasons for the delay, she said, was "they changed my partner."

That's a reference to Robert Miller, the former president-CEO of Time Inc. Ventures, the Los Angeles-based unit that was dissolved in a corporate restructuring last month.

With Mr. Miller gone, negotiations are now being handled directly by Time Inc. President-CEO Don Logan.

The departure of Mr. Miller comes three years after that of former Time Inc. executive S. Christopher Meigher III, who also had built a close working relationship with Ms. Stewart.

"I heard Martha was very unhappy when Chris [Meigher] left. Then she came to love Bob [Miller]. Now, she's very mad," said one former editor for Time Inc.

So far, Ms. Stewart said she is not talking with other companies and doesn't plan to leave Time Inc.

But at the same time, insiders said the original goal of having a new contract signed by yearend won't be met.

Left unsigned, Ms. Stewart could be courted by any number of potential partners from Walt Disney Co. with Capital Cities/ABC to S.I. Newhouse Jr., whose Clarkson Potter/Publishers imprint, a unit of Crown Publishers, has been publishing Martha Stewart best sellers since "Entertaining," her first book in 1982.

Though Mr. Newhouse passed on the magazine concept in the late 1980s, it appears there has been a change of heart of late.

Said Conde Nast President Steve Florio last week, "If Martha Stewart Living ever went into play, we'd be very interested. It's more than a magazine. It's a media phenomenon with magazines, a syndicated TV show and books."

The magazine alone is estimated to be generating revenues of $50 million a year and to have a profit of between $3 million and $5 million.

Under her original 1990 agreement, Ms. Stewart, as the magazine's editor in chief, was paid a salary of about $400,000 plus perks and standard revenue-sharing incentives that brought the entire package up to about $750,000 a year.

But with the magazine's success and the addition of new TV revenues, Ms. Stewart sought to renegotiate for more significant equity in her products.

She has brought in high-powered entertainment lawyer Allen Grubman to plead her case with Time Inc. Among his clients: rock star Bruce Springsteen and Hollywood star Robert De Niro.

Ms. Stewart's non-Time Inc. relationships remain in place.

A spokesman for Crown Publishers President-Publisher Michelle Sidrane said the company expects to continue its relationship with Ms. Stewart "well into the next millennium."

Already, Martha Stewart's Cookbook is a best seller this year and Crown has slated Martha Stewart Healthy Cooking for release next year.

Time Inc. hopes its deal can be wrapped up in "due course."

A Time Inc. spokesman confirmed there are ongoing negotiations but insisted the two parties are not at an impasse.

"It's a contract extension," the spokesman said. "It's a normal, natural outgrowth of the business and we are having normal, natural business discussions on it."

Ms. Stewart's long-standing celebrity status has reached new heights of late. In recent weeks, she has made appearances on "60 Minutes," "Late Night With David Letterman" and the cover of TV Guide.

That's in addition to a prime-time holiday TV special that aired on CBS last week, regular appearances on NBC's "Today" show and her own weekly TV show, which is syndicated in more than 160 markets by Group W.

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The Martha Stewart empire

BOOK PUBLISHING

Clarkson Potter/Publishers, an imprint of Crown Publishers, New York. Began relationship in 1982 with "Entertaining"; plans are under way for Martha Stewart Healthy Cooking in 1996.

Oxmoor House, a unit of Time Inc.'s Southern Progress Corp., as part of a joint agreement with Clarkson Potter, publishes books on topics drawn from Martha Stewart Living.

MARTHA STEWART ENTERPRISES

Martha Stewart Living began regular publication in 1991 as an every-other-monthly; today, at 10 times a year, it has paid circulation of 1,214,902 with plans to increase the rate base by 27% by next September.

Martha Stewart Television: Includes production of a weekly TV show syndicated to 150 markets by Group W. Reruns recently began appearing on cable's Lifetime five days a week. Total estimated weekly television audience is 5 million.

OTHER

Every-other-weekly appearances on NBC's "Today."

Personal appearances at Kmart stores; chain sells a Martha Stewart Bed & Bath line.

Spokeswoman for American Express Co.'s Optima card.

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