CNN/Money 
News > Midsized Companies
graphic

Time to cut Martha loose?
Martha Stewart TV show is suspended as sentencing date nears. Can other Martha brands survive?
May 21, 2004: 8:20 AM EDT
By Krysten Crawford, CNN/Money staff writer

NEW YORK (CNN/Money) - There goes the television show. How long before the name follows?

Martha Stewart Living Omnimedia, Inc. announced this week that the domestic diva's syndicated home decorating and cooking show would be pulled off the air next season.

The news follows several other recent moves that indicate the company is moving fast to distance itself from its namesake, who is scheduled to be sentenced June 17 for lying during an insider trading investigation of some personal stock sales.

Among the recent announcements: The company plans to downplay the "Martha Stewart" on the cover of its flagship Martha Stewart Living magazine. It will strip the tag line "From the Kitchens of Martha Stewart Living" from the company's year-old Everyday Foods magazine. And the askMartha syndicated newspaper column is now called "Living," and no longer carries Martha Stewart's byline.

The recent pruning leaves the Martha Stewart's name still attached to dizzying array of company products, among them Martha Stewart Signature furniture, marthastewart.com, Marthasflowers, and Martha Stewart cookbooks.

More on Martha
graphic
Martha plays the layoff card
Martha Stewart TV No More
Martha Stewart earnings

But given the company's mounting financial problems, media observers say it's only a matter of time before the retail and media giant strips the Martha Stewart moniker entirely from company products.

"Of course they are going to abandon the name," said Robert Passikoff, a New York brand consultant. "They have to."

Got to do something...

There's no denying that the company's business has suffered since news first broke two years ago of a government probe into Martha Stewart's late 2001 stock sales.

Correction
graphic
An earlier version of this story incorrectly reported that Martha Stewart Living had reported a 22 percent decline in subscribers. It instead reported a 22 percent decline in the magazine's circulation. CNN/Money regrets the error.

The company is losing money as skittish advertisers and subscribers defect from the brand. Ad pages are down 35 percent so far this year. The company recently lowered Martha Stewart Living's advertising rate base, or the circulation guaranteed to advertisers, to 1.8 million from 2.3 million. Shares of Martha Stewart Living Omnimedia (MSO: unchanged at $8.55, Research, Estimates) stock are trading down 50 percent since mid-2002.

"The business is getting smaller -- the advertising, the TV, the magazine -- everything is going down," says Howard Davidowitz, a New York retail consultant and investment banker. "This company is not going to go away tomorrow. However, the losses are getting scary."

Still, a spokeswoman for Martha Stewart Living Omnimedia said the company does not plan to drop the Martha Stewart moniker. Citing new market research, the spokeswoman said subscribers and customers buy Martha Stewart towels and read Martha Stewart Living for product quality, not for the face behind the name.

Seventy percent of Martha Stewart Living subscribers said it's a "bad idea" to remove the Martha Stewart name from the cover "at this time," CEO Sharon Patrick told analysts earlier this month.

"There's a lot of equity built into [the name]," the spokeswoman said. "The plan has always been to evolve from expert personality to trusted brand labels and high-quality products."

YOUR E-MAIL ALERTS
Martha Stewart
Steven Madden
Martha Stewart Living Omnimedia Incorporated

Two factors weighing in the company's favor: $170 million in cash and short-term securities and a newly-inked deal with Kmart to sell Martha Stewart products through 2009. A Kmart spokesman declined to discuss deal terms other than to say Kmart, which emerged from bankruptcy last year, values the partnership.

However, just as it takes years to cultivate a Martha Stewart persona, unwinding the incestuous relationship can take a long time. Ideally, said Passikoff, Martha Stewart Omnimedia should have started the process more than two years ago. Now Passikoff expects the final split to happen as early as summer, especially if she's in jail.

It's not unprecedented for a company to survive the inprisonment of its namesake. Take Steve Madden, the women's shoe designer who is currently serving a 41-month sentence in a Florida jail for securities fraud and money laundering. His eponymous company, Steve Madden Ltd., is prospering. Shares at Steve Madden are up 66 percent since the day after its founder was indicted in June 2000. Net income has jumped 69 percent since 2001.

But Martha Stewart is no Steve Madden. "Teenagers ran into the store and bought a clunky [Steve Madden] shoe but they didn't know who the hell he was," said Davidowitz. "For Martha, it's personal and she designed it that way. She was on TV, she was on the ads, and she was on the recipes. She can't escape that and the whole company can't escape that."  Top of page




  More on NEWS
JPMorgan dramatically slashes Tesla's stock price forecast
Greece is finally done with its epic bailout binge
Europe is preparing another crackdown on Big Tech
  TODAY'S TOP STORIES
7 things to know before the bell
SoftBank and Toyota want driverless cars to change the world
Aston Martin falls 5% in its London IPO




graphic graphic

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.