Updated from 7:51 a.m.

Martha Stewart Living ( MSO) surged 11% Wednesday as the home and hearth publisher waxed optimistic about its growth prospects.

The company posted a narrower second-quarter loss and declared a special 50-cent dividend. It also said it will try to push into broadband video with Martha Stewart broadcasts.

The New York-based publisher lost $1.2 million, or 2 cents a share, for the quarter ended June 30, against a year-ago loss of $33.5 million, or 65 cents a share. Results for the latest quarter included a one-time newsstand expense reduction adjustment that reduced losses by 6 cents a share. Revenue rose 47% from a year ago to $67.4 million.

Analysts surveyed by Thomson Financial were looking for a 15-cent loss on sales of $60 million.

"Publishing and Internet delivered significant increases in advertising revenue, while Broadcasting performed well and was a strong driver of demand for our brand," said CEO Susan Lyne. "With the health and vigor of the company renewed, we are in a position to return value to our shareholders with this special dividend, while continuing to invest in our business."

Publishing revenue rose 29% to $40.9 million, driven by higher advertising pages and rates, led by a 47 % increase in ad pages at Martha Stewart Living, and a 22% increase in pages at Everyday Food.

Broadcast revenue rose to $11.8 million from $1.8 million in the second quarter of 2005. The quarter included revenue from Martha, the nationally syndicated daily show, and the Martha Stewart Living Radio channel on Sirius Satellite Radio ( SIRI), neither of which existed in the prior year.

Merchandising revenue was flat with a year ago at $10.2 million, while Internet revenue rose 107% to $4.6 million, driven chiefly by higher ad sales resulting from increases in both Web traffic and ad rates.

The company guided revenue down for the third quarter, at around $56 million against the $67-million Thomson Financial target, but said it remains comfortable with full-year revenue guidance of around $275 million. The company said it will invest some second-quarter gains into the rollout of new merchandising efforts and Blueprint magazine. But Martha Stewart Living said it expects to post adjusted earnings before interest, taxes, depreciation and amortization of $12 million to $14 million for the year, vs. previous guidance of $10 million to $12 million.

Speaking on the company's earnings call Wednesday, Lyne mentioned that the company is looking into a "broadband play" for Martha Stewart's show. Lyne said the company is "selling out inventory for video online very quickly. We know there's an appetite for video among advertisers."

She said she is considering a plan that "might include more sites than just our own."

The company also said it is "active in seeking prudent acquisitions." Internet content providers and possibilities in the merchandising arena were mentioned without further detail.