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Martha Stewart's stock is sinking

She appears to be at a make-or-break point. Her company lost $14 million in 2009 and her TV ratings on the Hallmark Channel are abysmal. But she's pushing herself to try to attract younger fans.

December 05, 2010|By Melissa Maerz, Los Angeles Times

Reporting from New York — This is not an easy day for Martha Stewart. Sitting in her Manhattan office, surrounded by sparkling walls of ribbons, puff-paints, glitters and decorative hole punches, all carefully arranged by color and size, she has a very serious look on her face, which has been freshly repowdered after a midday yoga session.

Martha Stewart: A Dec. 5 Calendar article about Martha Stewart reported that her jail time cost her company $1 billion. That figure is not an annual financial loss for the publicly traded Martha Stewart Living Omnimedia Inc. but an estimate from Stewart based on possible damage to her brand name and loss of future business deals. The company's actual losses from 2004, when Stewart served her sentence, through 2009 totaled $172.3 million. —

"It's the third anniversary of my mother's death," she explains, her eyes downcast. At first, it seems like she might get emotional — until you realize she's just looking down at her laptop, reading a post on "The Martha Blog" about her mother's death. "We got 400,000 page views on this already," Stewart says, clearly pleased. "Of course, when my mother died, we got 5 million page views."

Martha Stewart is not a sentimentalist. True, she became this country's first female self-made billionaire by pinpointing the very things many people feel most sentimental about: home-cooked meals, handmade Christmas wreaths, a warm bed with tightly tucked sheets. But she's always used those ideas to promote a lifestyle — one that can be achieved with Martha Stewart-brand products. After a reputation-damaging jail stint and a subsequent billion-dollar loss to her company, that lifestyle has become a tougher sell. Her company, Martha Stewart Living Omnimedia, reported a $14-million loss in 2009.

On the eve of her annual Christmas special bonanza — "Martha Stewart's Holiday Open House," guest-starring Jennifer Garner and Claire Danes, airs Monday on the Hallmark Channel — America's No. 1 Working Mom knows she's facing a do-or-die moment. In order to promote her merchandise, which is sold at Macy's, Home Depot and PetSmart, she needs television. And unlike her flawless croquembouche recipe, her TV ratings haven't been the very best they could be.

In September, looking to find a permanent home base for "The Martha Stewart Show" outside of syndication on NBC-owned stations, she launched an ambitious eight-hour programming block on the Hallmark Channel. But in the first month, "The Martha Stewart Show" averaged fewer than 200,000 viewers — less than half the audience of reruns of "The Golden Girls," which ran in the same time slot on Hallmark a year ago. A talk show co-hosted by Stewart's daughter, Alexis, attracted even fewer viewers, and a cooking show starring Martha Stewart Living's executive food editor Lucinda Scala Quinn didn't fare much better. In its annual report, filed in March, Martha Stewart Living Omnimedia suggested that reduced ratings could make it "economically inefficient" to continue to produce "The Martha Stewart Show."

So Hallmark's 69-year-old queen bee is pushing herself to be a smarter, faster, stronger Martha Stewart. Working on four hours of sleep per night, she's expanded her merchandising empire with items as varied as dog sweaters and kitchen cabinets. Her company now makes most of its money from merchandising, and revenue in that area is up from last year. She's attracting younger fans with iPhone apps such as Martha Stewart Makes Cookies, an e-book club for the Sony Reader, and an iPad version of her magazine Martha Stewart Living. Over the last year, she's been bucking her ice queen reputation by Tweeting about attending Diddy's birthday party, playing herself on "The Simpsons," even pole-dancing on a very special episode of "The Martha Stewart Show." ("I want to do the upside-down things!" she told the crowd.)

Martha Stewart Living Omnimedia Chairman Charles Koppelman says he can't imagine the company pulling the plug on "The Martha Stewart Show." "Quite honestly, that's a show that has never really made all that much money, but it's important because it drives our products," he explains. "Someone else would have to pay $20 million a year for the kind of branding and awareness that our show has."

But if America's back to buying Martha Stewart the brand, why aren't they embracing Martha Stewart the TV personality?

Such questions tend to exasperate Stewart. "For heaven's sake!" she says, visibly annoyed, when asked if she was disappointed by her ratings. "You're not going to be discovered on Day 1 on a foreign station. If you read my blog and my Twitter that first week, it was all, 'Where are you? I can't find Hallmark!' or 'I can't afford to subscribe!'"

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