misterpee
23.02.05, 15:50
Associated Press
Update 2: Martha Stewart Living Reports 4Q Loss
02.23.2005, 09:11 AM
Martha Stewart Living Omnimedia Inc., whose founder will be released from
prison next week, turned in a loss during its fourth quarter, compared with a
profit a year ago, as it continues to be dragged down by declining magazine
advertising revenues, and softness in its television division.
The New York-based multimedia company, which stamps the namesake domestic
diva's name on an array of products from magazines to pots, also warned
Wednesday that losses for the first quarter will be larger than what analysts
expected.
Martha Stewart Living said it lost $7.33 million, or 15 cents per share, in
the three months ended Dec. 31, 2004, compared with a profit of $2.37
million, or 5 cents per share, in the year-ago period.
Analysts surveyed by Thomson First Call expected a loss of 17 cents.
Total revenues fell 15 percent to $60.21 million, from $70.86 million a year
ago.
Stewart, the founding editorial director who was convicted last March of
lying to investigators about her sale of ImClone Systems Inc. shares, is
completing a five-month sentence that began Oct. 8. She is expected to be
released March 6. After her release, Stewart, who owns about 60 percent of
the company's shares, will be serving another five months of house arrest.
"2004 was a year of significant challenge for MSO, and we look at the coming
year with both realistic expectations and optimism for the future," said
Susan Lyne, president and chief executive, who replaced Sharon Patrick in a
management shakeup in November.
"We will focus our efforts on our greatest assets: the Martha Stewart brand,
our content and our creative capabilities," she added in a statement.
Still, the future looks a bit brighter than when Stewart was convicted a year
ago. The company's shares are now trading at the high end of its 52-week
range of $8.25 to $36.53 per share. And advertising executives have said they
have become more upbeat since Stewart began her prison term.
Stewart's TV career is also being revived through two deals struck with
reality TV guru Mark Burnett. One is a revision of her daily homemaking show,
which will air in September; the other will have Stewart star in her own
version of Donald Trump's "The Apprentice."
Martha Stewart Living also pulled off the January launch of "Everyday Food"
television program on PBS, building on the success of its magazine that bears
the same title.
Still, there's plenty of rebuilding to do.
In the company's fourth quarter, magazine revenues were $26.1 million,
compared with $33.1 million in the year-ago period. The results primarily
reflect a decline in advertising revenue in Martha Stewart Living, as well as
subscription acquisition spending For Everyday Food magazine, and losses
related to Body & Soul magazine, which was acquired in August 2004.
The decline in advertising revenue from Martha Stewart Living magazine was
due to both a reduction in advertising pages as well as lower advertising
rates due to the rate base reduction effective with the January 2004 issue.
Circulation revenue declined in the quarter due primarily to lower
subscription revenues from Martha Stewart Living, as fewer subscription
copies sold.
Television revenues were $1.1 million, compared with $5.9 million in the year-
ago period. The decline in revenue was due principally to the absence of the
company's daily syndicated show, which stopped airing in mid-September, as
well as the expiration of certain cable television agreements.
The company said it will begin production of the newly revised syndicated
show, to be distributed by NBC Universal Domestic Television Distribution, in
the second quarter of 2005.
Merchandising revenues were $23.7 million, compared with $22.5 million in the
year-ago period. The higher revenue is due in part to an increase in revenue
from Kmart Holding Corp. resulting from contractual minimum royalty
guarantees.
Revenues at the Internet/Direct Commerce division were $9.3 million, compared
with $9.4 million in the year-ago period. The results reflect the company's
efforts at selling its remaining catalog-related inventory, while continuing
to expand its profitable flowers business.
Overall, Martha Stewart Living expects to post a loss of 35 cents in the
first quarter.
Analysts polled projected a 20-cent loss.
In the year ended Dec. 31, the company lost $59.60 million, or $1.20 per
share, compared with a loss of $2.77 million, or 6 cents per share, a year
ago. Total revenues reached $187.44 million, down 24 percent from $245.85
million in 2003. The company lost $59.60 million, or $1.20 per share,
compared with a loss of $2.77 million, or 6 cents per share, a year ago.
Total revenues reached $187.44 million, down 24 percent from $245.85 million
in 2003.
