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Online Extra: "People Want Her to Succeed"


On Mar. 6, Martha Stewart will complete five months of prison time for lying to government officials about the circumstances surrounding a stock sale. While Stewart must now do another five months of house arrest, she has an active schedule lined up, including preparing two new TV shows.

The woman now running Martha Stewart Living Omnimedia (MSO) is Susan Lyne, who took over from former President and CEO Sharon Patrick in November. BusinessWeek Senior Writer Diane Brady recently spoke with Lyne -- whose career includes stints as editor of Premier magazine and president of ABC Entertainment (DIS) -- about the opportunities and challenges of welcoming Stewart back into the fold. Here are edited excerpts of their conversation:

Q: You came to this job after Martha began her prison stint. You share her reputation for being strong on creativity. How do you think the two of you will work together?

A: Martha and I do have more similar backgrounds. But I've worked in partnerships in every job I've ever had, and I like working that way. I like having someone who understands the same playing field [as] I do. I don't anticipate issues there.

I also know there are very specific things that Martha wants to focus on, such as the syndicated television show and some other big ideas that she has. She's excited about creating again. That's a different job from running a company. There will probably be less crossover than some people think.

Q: What do you see as your biggest challenges?

A: The challenge is how to grow this for the next decade. There are some key issues for us. One is being able to demonstrate a healthy advertiser relationship. We're a company that relies on multiple revenue lines. One that suffered the most in recent years was advertising revenues. I'm optimistic about that. We're able to cross-pollinate a lot of marketing opportunities.

Another challenge is demonstrating our merchandising has legs beyond the Kmart KMRT

relationship. You want to be relying on more than a single source. I think we can grow that part of the business again with the television segment.

Q: Do you think the company has suffered because of Martha's conviction and prison time?

A: A challenging time like the one this company has been through forces you to reassess what you're doing, as well as what you could be. In some ways, it has forced us to become nimbler and more relevant. The opportunities lie in new platforms and new media that may not have existed before.

There's also more opportunity now to explain the "why" of what we do. Yes, we're teaching people "how to," but the reason we're doing it is so that the rare moments they spend away from work can be better and more memorable.

Q: What about Martha herself?

A: Martha is a self-made entrepreneurial woman who created an empire and was visionary in understanding what the market wanted. She handled her decision to go to jail with enormous grace.

Now, Americans are waiting for the second act. People want her to succeed. There's an enormous rooting interest for her and for this company. We want to make sure we deliver for all those people.

Q: How important is her release to the company?

A: It will be transformational. We have had to make decisions without her active participation. There are a number of decisions that are just on hold right now. To have her a phone call away or in the building will make everybody's lives easier. In terms of planning anything around her exit, my instinct is to let that pass.

Q: One of the things that has made investors nervous over the years is the idea that this is a personality-centric brand that relies too much on the physical presence of Martha herself.

A: Martha is extremely valuable to the company. She is a phenomenal creative force and a great presence. We will build on that as much as we can.

At the same time, we're building secondary brands and giving them more visibility. We have done that with Everyday Food. That's a new brand that was incubated both within the parent magazine and the parent TV show.

There will be many more opportunities like that. I think acquisitions will always be a factor, but this is a creative company, which means that we will be using the talent here to create new products and ideas.

Q: What do you want this brand to embody?

A: The challenge is how to position this brand in a way that allows us to reach out and touch a broader group of American women. Some of that is in messaging. Some of it is in the magazine's new products. This is a company that's all about making people's lives better, easier, more memorable. How do we become the preeminent brand for women? That's the challenge.

Q: Are there opportunities that haven't yet been tapped?

A: Sure. We want to do things like understand how to turn our library into an annuity that will last a long time. There's no question that the content here has great potential.

We have an extraordinarily good group of people managing the merchandising business, but the lack of a chief merchant is a hole, and it's one we will be filling. We do not have a real Internet strategy right now, and that's an opportunity. It was always about direct sales, and we have a lovely informational site. But it could be much more.

Q: You have worked in a lot of different roles over your career. How do you think the media has changed?

A: There's a higher premium being put on business skills, but you do need to understand the creative side. I think of people like Rupert Murdoch. He understands creative people. He understands all the processes in his operations. That probably makes him a more supple manager. In this business, you can't just have the MBA-educated manager who understands how to build by the numbers.

My view of what constitutes a media company has expanded. eBay (EBAY) is a beautifully envisioned and constructed company. It has a very clear and simple mission. The founder's mission and [CEO] Meg Whitman's ability to go back to the core vision in growing the company have been crucial. A brand becomes valuable when anybody hearing that name automatically has a feeling about it and knows what that brand is about. It's a great role model for me.

Google (GOOG) is another company that clearly understands what it is and is building from that. ESPN has also done an extraordinary job of growing across different platforms. They just get in there and play with different delivery systems.

Q: Tell me about what's happening on the TV front. You're resurrecting the syndicated daily show with Mark Burnett, and he's doing a separate version of The Apprentice with Martha that has nothing to do with your company.

A: The prime-time show is an idea that Mark spoke to Martha about. It's not a show that we own, but the setting is this company. It will showcase many of the different projects -- not just Martha Stewart Living or the Kmart products. It's exposing the company and where we're going to an audience that would not be watching daytime TV.

Q: What about the daily show?

A: When Martha did the show originally, it was beautifully produced -- a quiet show that showed people how to do a number of things and take them to places they might not otherwise go. At this moment, we have an opportunity to give them something that's different. We know what it is people love about the show -- the information, the road trips -- so that part won't change.

But what's different here is that there will be more interaction. By letting Martha's audience be a part of the show, we'll certainly raise the energy level and a different sense of investment on the part of the audience.


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