Ads Still Scarce at Martha's Flagship
The second-quarter advertising resurgence expected at
Martha Stewart Living's
(MSO)
flagship magazine apparently won't come in April.
The latest estimates for April ad pages reported by
Media Industry Newsletter
point to a decline of 8.3% at
Martha Stewart Living
, compared with the same month last year. The year-ago period is when advertisers staged an exodus from the title following Martha Stewart's conviction for lying to federal investigators about a stock trade.
With Stewart having recently completed her five-month prison sentence amid a storm of media fanfare, her namesake company has predicted a turnaround in ad pages at the magazine this quarter as she embarks on a comeback to restore her tarnished image.
Dennis McAlpine, analyst with McAlpine Associates, said positive trends are possible for the magazine this quarter, considering the easy comparisons to last spring. But he pointed out in a research note Monday that April ad pages were also down 59% from their 2002 high-water mark, and even when it starts posting gains, the magazine is still a long way from reclaiming its old position.
"The good news is that the comps become even easier in May and June," McAlpine said. "The bad news is that May and June last year were each lower than April so it could be harder for the quarter as a whole to show positive gains. This measurement was supposed to be the first sign of a recovery at
the company but we see no positive indication in these results. We continue to rate the stock as a sell despite its recent pullback from the mid-$30s."
Shares of Martha Stewart Living Omnimedia were recently up 7 cents, or 0.3%, to $22.75. They're down 37% from late February, when a short squeeze driven by speculation about Stewart's comeback drove the stock to close as high as $36.19, just 9% below its all-time high set after the company's IPO in 1999.
Meanwhile, competitors of
Martha Stewart Living
, such as
Real Simple
, have not shown the same declining trend in ad pages this year, suggesting the magazine is not suffering from an industrywide trend.
On a positive note, the company's other publication,
Everyday Food
, has posted a 10.5% increase in ad pages so far in 2005.
"The circulation rate base has been increased several times already so the magazine does seem to be attracting an audience, although still relatively small," said McAlpine. "It is believed the magazine will continue to lose money through this year."