Martha Stewart Living's


stock has more than doubled in three months amid expectations that the media company's fortunes will soon turn around. But an advertising rebound at the company's flagship magazine title may take longer than expected.

Company officials have predicted that advertisers will start flocking back to the company's media products soon after founder Martha Stewart is released from federal prison in March. But media experts say the company may have to wait until 2006 to see a sizable uptick in its advertising revenue.

"Does an advertiser really want to be associated with someone that's in a jail cell right now?" asked Robin Steinberg, vice president of MediaVest, which buys ad space on behalf of corporate advertisers. "It's going to be a challenge. I do think they will make the recovery, but it may not be within one year's time."

Advertisers have abandoned the media company's products en masse since allegations first came to light two years ago that Stewart had made a questionable stock trade. Through October, the company's

Martha Stewart Living

title had raked in $59.7 million in advertising revenue this year, down 55% from a year ago, according to Magazine Publishers of America. That followed a 45% drop in advertising revenue at the magazine last year.

Advertisers and analysts have focused in particular on Stewart's namesake magazine because the title is the most important one in the company's portfolio. And despite its recent woes, Martha Stewart Living's publishing division is its biggest revenue generator, accounting for 55% of overall sales in the first nine months of this year.

But it's not just the magazine that has suffered. With revenue at its television division plunging too, Martha Stewart Living earlier this year canceled production of new episodes of its syndicated program "Martha Stewart Living." Meanwhile, sales of Stewart-branded products through the company's Web site and catalogs have also dropped.

As a result, the company's revenue, bottom line and cash balance all have headed south in recent quarters. In the first nine months of this year, the company's loss widened to $52.2 million from just $5.1 million a year earlier.

Stewart was convicted on obstruction of justice charges earlier this year and is currently serving a five-month federal prison sentence in West Virginia. Despite her embarrassment, investors, analysts and company officials have been predicting that advertisers will return to the company soon after Stewart is released from federal prison in March.

In October, for instance, then-CEO Sharon Patrick projected that Martha Stewart Living's advertising revenue will pick up in the second quarter next year.

Investors seem to have similar expectations. In September, Stewart announced she would serve her prison sentence early, before her appeal is heard, and the company announced that it had signed a deal with star television producer Mark Burnett. Those announcements seemed to jump-start the stock, which fell into the single-digits following Stewart's conviction, while also catching the fancy of momentum traders.

On Friday, the stock closed at $23.13, only about $2 below its 52-week high set last Monday.

The company's prospects seemingly got another boost last week with two reports on subscriber attitudes toward its

Martha Stewart Living

magazine. In a study commissioned by some of its advertising clients, media purchasing firm Mediaedge:cia reported that 80% of the magazine's subscribers surveyed in September said they were "very satisfied" with it, and 67% said they planned to renew their subscriptions.

Mediaedge:cia did not have any historical data on subscriber intentions or attitudes, nor any specific data on actual renewal rates with which to compare its survey results. But George Janson, managing director and director of print at the firm, said subscribers' attitudes were "more positive than we would have thought."

"The bottom line is that people are happy and satisfied with the magazine," Janson said.

Separately, in a study commissioned by Martha Stewart Living itself and using data provided by the company, Capell & Associates found that in the nine months ending in May -- a period that included Stewart's trial and conviction -- actual subscriber renewal rates at

Martha Stewart Living

were 19% above the industry average. Despite Stewart's legal woes, renewal rates at the magazine relative to industry norms were higher after her conviction than before, said Don Capell, president of the firm, which monitors circulation trends among publications.

Of course, regardless of how loyal current subscribers are, circulation at the publication has tailed off. In the first six months of this year, total circulation for the magazine was 1.92 million copies per issue, compared with 2.37 million in the same period last year, according to the MPA.

Even if Martha Stewart Living is able to hold on to its subscriber base, advertisers may not return to the magazine anytime soon.

Many advertisers simply don't want their brands linked to Stewart or her legal problems. "Desperate Housewives" may be the top-rated television show in the country, but some advertisers have refused to support the show because of its racy nature, noted Brett Stewart, senior vice president and managing director at Universal McCann, another media purchasing firm.

"Some clients don't like to be associated whatsoever with any controversy," said Brett Stewart, who is unrelated to Martha Stewart.

And just because Stewart is going to be released from prison in March doesn't mean her legal problems are over. The doyenne of domesticity still faces civil insider trading charges and the appeal of her criminal conviction is still pending.

In the meantime, advertisers have discovered other options.

Time Warner's


Real Simple

, for instance, surpassed

Martha Stewart Living

in advertising revenue this year. Other competitors include

O, the Oprah Magazine

, which has taken in $100 million more dollars in advertising revenue than


in the year to date through October, and

Budget Living

, which has started to gain on



Martha Stewart Living

"has much stiffer competition than when it first launched," said Brett Stewart.

The increasingly crowded field means Martha Stewart Living is going to need to improve the editorial content and work hard to convince advertisers to return, advertising experts say.

"They are going to put a lot of effort into bringing back the magazine to the strength it was in," said Steinberg. "It's going to be a challenge."

And even if advertisers are interested in returning to

Martha Stewart Living

budgetary constraints may hold them back, marketing executives say. To a large degree, advertisers already have determined their budgets for 2005, experts say. With the legal woes and uncertainty surrounding Stewart's company, many likely were reluctant to commit to its flagship title.

However, regardless of Stewart's legal problems, budgetary challenges or rival publications, many advertisers are excited about getting back into

Martha Stewart Living

, brightening its longer-term prospects, marketing executives say.

Americans seem to be tiring of all the coverage of Stewart's legal problems, marketing experts say. And while


now has important rivals, that doesn't prevent advertisers from buying advertising space in all of them, they say.

And, of course, advertisers might well find a place in their budgets for buying spots in

Martha Stewart Living

if they think they'll be worth it.

"I think advertisers are itching to get back in the book," Steinberg said. "Her readers are very loyal, very engaged. They take action.

"We as print planners and buyers look for that."