Martha Stewart Falters on Broadcasting Segment

Martha Stewart Living Omnimedia reports a loss during the third quarter due to losses in its broadcasting segment.
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) --

Martha Stewart Living Omnimedia


reported a loss during the third quarter, driven by significant declines in its broadcasting segment.

For the quarter ended September 30, the company had a loss of $8.6 million, or 16 cents per diluted share, compared with a loss of $12.1 million, or 22 cents per diluted share, in the same period a year ago. Earnings were below analyst estimates of a loss of 14 cents a share.

Revenue dropped slightly to $49.7 million from $49.8 million a year ago.

The company cut its operating expenses by $3.9 million to $57.6 million from last year's $61.5 million.

Revenue from its broadcasting segment was down 47.5% to $5.8 million from $11 million, attributed to the absence of


and lower revenue from "The Martha Stewart Show" reruns. Lower revenue from "Whatever, Martha!" and lowered guaranteed radio revenue also brought the segment revenue down. The broadcasting segment saw an operating loss of $4.1 million, compared with an operating income of $757,000 in the third quarter of 2009.

"For the past five years, we have been focused on diversifying and expanding our merchandising business for long-term growth and we are seeing our efforts bear fruit in this quarter's results," executive chairman and principal executive officer Charles Koppelman said, "We are applying the same aggressive mindset to our broadcasting business with our slate of new programming on Hallmark Channel. Broadcasting has been challenging due largely to the remaining run-off results from syndication in the quarter."

Merchandising revenue was up 7.2% to $9.6 million from $8.9 million.

"Merchandising delivered a strong performance in the quarter. Our two newest product lines --

Martha Stewart Living


The Home Depot

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Martha Stewart Pets




-- were important contributors and we continue to expand on our offerings with these retailers," merchandising president and CEO Robin Marino said.

The company's

Martha Stewart Collection



(M) - Get Report

and its

Martha Stewart Crafts

line registered "solid results" in the quarter.

"We feel very positive about our merchandising business as we look to the fourth quarter and beyond," Marino said.

Publishing revenue was up 11% to $30 million from $27.1 million, primarily due to the timing of the

Martha Stewart Weddings

fall issue, which was recognized in the third quarter rather than the fourth quarter like it was in 2009. In addition, advertising revenue for

Martha Stewart Living

magazine was up 9%.

Revenue from the company's Internet segment was up 55% to $4.3 million from $2.8 million, reflecting strong gains in advertising. Revenue from Internet ads was up more than 50%.

Looking forward, the company plans to launch its first digital media magazine. A special issue of

Martha Stewart Living

will be available on the


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iPad in November.

In January 2011 management plans to raise the cost of 3 of its major magazines,

Martha Stewart Living


Everyday Food


Whole Living


For the nine months to date, the company reported a loss of $13.7 million, or 25 cents per share, compared with a loss of $35.3 million, or 66 cents, a year ago.

Revenue rose 0.6% to $158.2 million from $157.2 million.

Martha Stewart shares are down almost 2% today to around $4.55.

--Written by Theresa McCabe in Boston.

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