Why It Took Martha Eight Years to Nab Emeril

MSLO Experience Shows Diversifying Beyond One Famous Face Isn't So Easy

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Way back in July 1999, long before Martha Stewart's incarceration made painfully obvious the limitations for a company built around one person, her company said it wasn't planning to rely on her personal brand alone.
Chef Emeril Lagasse and Martha Stewart raise their glasses on her show.
Chef Emeril Lagasse and Martha Stewart raise their glasses on her show. Credit: Anders Krusberg

"We believe that a reduction in our dependence on Martha Stewart personally and a better balance of personality and brand will provide additional brand durability, increased growth opportunities and a broader recognition of a new generation of Martha Stewart Living experts," the company said in 1999.

But the intervening years, packed with efforts to build up other names, failed to produce the desired breakouts -- certainly no one with the earning and drawing power of Ms. Stewart.

It was only last week, at a cost of $50 million, that the company finally added a second personality of real power: Emeril Lagasse, the irrepressible TV chef known for yelling "Bam!" and obsessively kicking things up a notch. It signed him, not incidentally, to a 10-year employment contract.

The deal comes as Martha Stewart Living Omnimedia reported that it had completed a return to profitability in 2007, a key goal since Ms. Stewart served five months in jail for lying about a stock sale. She was released March 4, 2005.

The company said it collected revenue last year of $327.9 million, up 14% from $288.3 million in 2006, and said 2007 operating income was $7.7 million, compared with a $2.8 loss million the year before. Results from the fourth quarter, however, missed analysts' estimates.

The lag time between MSLO saying it wanted to expand beyond Ms. Stewart and finding someone who fills the bill suggests that diversifying beyond one famous face is harder than you might think.

Lacking personalities
"The fact is the gestation period of new personalities has been very long," said Michael Meltz, a Bear Stearns equity analyst who covers MSLO. "When they started Everyday Food magazine, which is a great growth driver, the thinking was they could develop personalities on that. And it hasn't really happened."

There are, to be fair, some smaller personal brands successfully setting up shop within MSLO. The Everyday Food team, including Sandy Gluck and Lucinda Scala Quinn, has won some fans on PBS, satellite radio and elsewhere. Mild gossip items in the New York Post give Alexis Stewart, Martha's daughter, boldface-name treatment. And the MSLO pet keeper, Marc Morrone, has built a following among animal lovers.

There are other relationships, too. The company publishes Andrew Weil's healthful-living newsletter and frequently invites him on its programs. But he remains an independent operator, a personal brand deployed at his own personal plan.

So among investors, analysts and observers, the reaction to Emeril's arrival was clearly and quickly positive. "It's an important step to broaden the company," said Michael Kupinski, a Noble Financial analyst, to management during a conference call last week. "And I congratulate you."

Speaking with Ad Age later, Bear Stearns' Mr. Meltz put things more bluntly: "It's long overdue."

Different chefs
Sarah Power, senior VP-director of strategy at media agency Initiative, said the company will benefit partly because Martha and Emeril appeal to different targets. "Although they're both in the food and cooking arena, she's a bit more upscale and conservative," Ms. Power said. "I would imagine that they're going to keep the brands quite independent."

The company, to that end, emphasized last week that Martha Stewart's personal brand remains vibrant.

"It's worth just looking at the expansion of that brand over the past three years," said Susan Lyne, president-CEO of MSLO. "We had nine new merchandising partnerships since 2006, including Macy's, Costco and the crafts line. All of these are very much in keeping with our continuing belief that there's growth in that Martha Stewart brand as well."
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