Martha Stewart Living Omnimedia ( MSO) has signed a wide-ranging cable TV-distribution deal with Discovery Communications ( DISCA).

Martha, the company's new syndicated television show, will be rebroadcast on Discovery-owned TLC. Martha will air on TLC in the early evening on the same day as the syndicated broadcast and reach nearly 90 million homes on TLC.

The companies also said Martha Stewart Living will develop a 13-part original home improvement series to air on one of Discovery's 16 U.S. networks. The partnership includes distribution of selections from Martha Stewart Living's existing library.

The deal with Discovery, which was just spun off from half-owner Liberty ( L), marks the latest in a string of high-profile linkups under chief executive Susan Lyne.

"We're thrilled that Martha will be available to television viewers in a later time period," said Lyne. "Our partnership with Discovery Communications also will give us a platform to create new lifestyle programming, while expanding the audience for our evergreen library product."

But before America gets a look at her daytime show or NBC's launch this fall of The Apprentice: Martha Stewart, Wall Street will pay close attention to second-quarter earnings at the New York media company Wednesday morning.

The bad news is that while a remarkable recovery appears on track thanks to a host of new deals, the company appears certain to post some rocky quarters in the meantime.

Last week, Standard & Poor's downgraded the stock to strong sell from sell, citing the stock's strong appreciation in the past year in spite of weak numbers at the entertainment company.

"We believe MSO's share price is unsustainably high and based on unrealistic investor expectations," said S&P media analyst Gary McDaniel in a research note. "We believe the July 27 earnings release will lead investors to a more appropriate evaluation of the company's prospects."

Indeed, though Martha Stewart's name remains ever in the headlines, profitability is barely in sight at her company, belying a $1.4 billion market capitalization. S&P sees a loss of 75 cents a share this year, even as its forecasts a 12-cent-a-share profit in the fourth quarter. "We believe MSO's fundamentals are improving, but expect EPS of just $0.01 in '06, rising to $0.58 in '07," the note reads.

The good news is how well the company has performed since its founder came back. The question now is, given the attention given Martha's reintegration into society, whether she will be able to ingratiate herself to audiences and marketers.

Shining
Martha Stewart shares jump

The Martha brand is as strong as ever, with new product pouring out of the company quicker than you can spell bundt cake. And lest we forget, this is a company that produces content and has largely stayed out of the distribution game. As long as people want to watch, read listen and buy Martha, this company should prosper under the stewardship of executives like Lyne and Cyndi Stivers. Stivers' largest responsibility is for the launch of MSO's satellite radio channel through Sirius ( SIRI) later in the fall.

On Tuesday, Martha rose 6 cents to $27.82, while Discovery rose $1.11 to $16.61.

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