Publishing Losses Weigh on Martha Stewart Earnings

Martha Stewart Living Omnimedia announced a big third-quarter loss on Friday morning, driven largely by the poor performance of its publishing unit. The net loss was $50.8 million, or 85 cents a share, compared with $9.7 million, or 36 cents a share, in the same period the year before.

“Our performance in the quarter was in line with our expectations but not our ambitions for the company,” Lisa Gersh, the company's president and chief executive, said in a statement.

The company's three-pronged business, which depends on revenue from publishing, broadcasting and merchandising, benefited from a modest rise in revenue from its merchandising operation. But they were not enough to compensate for the losses incurred by its magazines. Revenue in the publishing division fell to $27.6 million, from $33.2 million in the same period last year, and operating losses totaled $51.3 million, including a $44.3 million noncash write-down.

The announcement capped a rou gh week for the company, which lost its power at its Manhattan offices and had to use phone and e-mail to inform the staff about layoffs and cutbacks at two of its four magazines. On Thursday afternoon, the company said it would lay off about 70 of its 600 employees. It also announced it would cut back publishing the magazine Everyday Food from 10 issues to five and no longer sell it as a standalone magazine. It is becoming a supplement that will be sold with Martha Stewart Living.

The company is also selling Whole Living Magazine. If it does not find a buyer, the company will stop printing Whole Living by the year's end.

Michael Kupinski, director of research for Noble Financial Capital Markets, said he was more optimistic because he had a clearer perspective of the company since “they've gotten rid of so many money-losing assets.”

He added: “The loss came in a little bit better that I was anticipating. To me this is probably one of the best opportun ities to take a good look at Martha Stewart.”