Martha Stewart Reports Ad Revenue up 75%

Gains in Ad Pages, TV Unit Help Narrow Losses

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NEW YORK ( -- Few expected Martha Stewart to resurrect her business when she was released from jail 19 months ago. Today, her company, Martha Stewart Living Omnimedia, led by
Photo: Sebastian Mylnarski

MSLO CEO Susan Lyne says the company's website will relaunch in 2007 to take advantage of new business models online.

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CEO Susan Lyne, extolled its ad revenue performance across the board and gave details of its plans to expand online during its third-quarter results call.

While the lifestyle-focused media giant is still losing money, advertising revenue was up 75% in the publishing division, compared with the same period last year. Overall revenue rose a healthy 48% to $61.05 million, up from last year's $41.32 million. Operating losses were $7.9 million, an improvement from operating losses of $26.9 million in the comparable quarter.

Relaunching website
On a conference call with analysts today, Ms. Lyne discussed the company's website, scheduled for a new look in the first quarter 2007. There are also plans to stream daytime's "The Martha Stewart Show" at (the cable repeat of the syndicated show on Discovery's TLC was dropped earlier this year). Revenue for the broadcast division, which also includes Ms. Stewart's radio show on Sirius Satellite Radio, was up to $10 million from $2.9 million in the year-ago period.

The company also has a deal in place to share video (and ad revenue) with Google, as well as a content-sharing relationship with Yahoo. The website also showed significant growth, with revenue up 82% to $2.8 million, following increases in web traffic.

Ms. Lyne declined to estimate future online revenue, but said: "We'll be rolling out more programs like Google over the next period of time. The one clear business model that is working for internet companies right now is the ad-based content business and in order to fully participate in that, we really had to invest in a new site."

The company is aiming to open its site to enable experts to share their tips. "We'll be working hard on personalization, community," Ms. Lyne said, detailing potential communities such as people looking for Halloween costume tips and crafters.

Ad page gains
In publishing, -- the company's biggest division -- revenue was up 32% to $36.3 million. MSLO's flagship title, Martha Stewart Living, gained 39% more ad pages while Everyday Food saw an 81% increase in ad pages. "We now expect the title to be profitable this year, a year ahead of schedule and only three years after our September 2003 launch," Ms. Lyne said on the call.

The company also invested $6 million to $7 million in the fledgling home-oriented magazine Blueprint, and set aside $4 million toward its internet and merchandising initiatives. A new collection at Macy's and a line of paints with Lowe's will debut next year in addition to Ms. Stewart's existing partnerships with KB Home and Kmart.

MSLO said that it lost $25.2 million, or 49 cents a share, compared with last year's loss of $26.1 million or 51 cents a share. Shares of MSLO rose $1.78 to $21.96, an increase of 9%, in early trading on the New York Stock Exchange today.
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