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Get Four
|  | MAY 18, 2004
Martha Fades to Black With the star likely to be serving jail time, Stewart's TV show will be on "hiatus" next season -- and perhaps beyond Martha Stewart's once-ubiquitous TV show will retreat from the airwaves next season, offering further proof that the media side of her empire may have a tough time surviving without its founder at the helm. Of course, the May 18 announcement that her syndicated daily show is going on "hiatus" for the 2004-05 season is somewhat akin to canceling a wedding because the bride is out of town. It's likely that Stewart will be behind bars for a good portion of next year's TV season. What's most surprising about the announcement is that it seemed to catch investors by surprise. Shortly after Martha Stewart Living Omnimedia (MSO ) released the news, its shares dropped 27 cents, to $9.02. Wall Street may have been reacting to the statement that MSO would "adjust staffing levels" within the TV business segment and take a restructuring charge of up to $2 million in the second quarter. CEO Sharon Patrick says the show's distributors and a number of stations are interested in "returning Martha Stewart Living, when available, to future lineups." That would depend on when Martha herself is available. Without her, how can there be a Martha Stewart Living TV show? She's the one-woman force who bakes the brioche, plants the potatoes, and fixes the furniture on the series, which is now into its 11th season. Stewart is due to be sentenced on June 17 for lying to investigators about the circumstances of her now-infamous sale of ImClone Systems (IMCL ) stock, and legal experts expect her to do time. PROMISING STRATEGY? Even when Stewart is free, a return to TV is no sure thing. Viacom (VIA ) had already pulled Martha Stewart Living Television off its CBS and UPN stations back in March. Others had pushed it to unpopular time slots. King World Productions, which will continue to distribute the show to roughly half of U.S. local TV markets through September, hadn't been hawking a new season. Not surprisingly, first-quarter TV revenues at MSO dropped 37% from the same period last year, to $4.2 million. MSO will lay off about 40 people by the end of June, retaining 35 in the TV segment. Instead of producing the usual 180 hours of original programming a year, they'll focus on developing new programming, extending the Everyday Food franchise that launched this year as part of Living and repackaging content from the previous 11 years. A more promising strategy may be for MSO to focus on its product segment and build up the brands that don't bear the founder's name. Merchandising was the only bright spot in MSO's first-quarter results, growing 4.5%, to $10.8 million in sales. It was also the only segment to post a profit -- albeit one that dropped 7.3%, to $6.7 million. Kmart (KMRT ), which saw its shares soar when racking up its second consecutive quarterly profit on May 17, has extended its licensing deal with MSO through 2009. Clearly, consumers are proving less fickle than advertisers in supporting the Martha Stewart brand. I'll BE BACK? MSO is also having some success with its Everyday Food brand, which downplays Stewart's name and doesn't even feature her signature pastel colors. That franchise has already been featured in the Living shows and could spawn its own series. MSO has said it will continue to produce a series called Petkeeping with Marc Morrone. With his nerdy manner and somewhat narrow area of expertise, Morrone is no Martha Stewart. Still, he may pump some much-needed profits into MSO. Stewart seems determined to reemerge as a force in TV. In announcing next season's cancellation, she expressed a desire to "resume our close collaboration just as soon as I am able to do so." The question is whether her production staff -- and audience -- will have moved on to other things.  By Diane Brady in New York Edited by Patricia O'Connell
BW MALL
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