Martha Stewart refashions personality, business approach

By Anne D'innocenzio
The Associated Press

NEW YORK - Martha Stewart wants to be everybody's best friend, but it's a tough popularity contest.

New projects reflect a new touchy-feely business approach and friendlier persona for the diva of homemaking. She rapped with Sean "Diddy" Combs and made dough figures with Conan O'Brien on her new daytime talk show "Martha," and on her reality show "The Apprentice: Martha Stewart," she writes lovely rejection notes to canned candidates. She has even quickly incorporated her five-month prison experience into her brand, selling 13,000 copies of that famous poncho she wore when she was released in March to benefit women's charities.

Stewart is also reaching out to new viewers, with plans to develop a new home improvement reality TV show next year, as well as new books, DVDs
and a radio show in coming months.

Whether this new approach will help to turn around Martha Stewart Living Omnimedia remains to be seen. Advertisers fled and her stock plummeted as much as 50 percent while Stewart fought charges of lying to investigators about a stock sale, then shares and its business rebounded while she served time in Alderson, W.Va.

But since Stewart's two TV shows made their debut last month, the stock has fallen 26 percent to about $25 per share amid lukewarm ratings. And some fans are not quite sure what to make of the new, funnier and chattier Martha.

"I miss her old show. I walked away learning more. She was more studious," Jane Sanders said.

"Celebrities don't do it for me," said Sanders, 40, of Queens, N.Y. who was part of the live audience for Stewart's talk show featuring O'Brien last week.

But there are positive signs. Susan Lyne, president and CEO of Stewart's New York-based multimedia company, reported that sales of Martha Stewart Everyday merchandise at Kmart stores have enjoyed an increase.

The company is also seeing interest from potential suppliers and retailers about new products and continues to talk to Sears Holding Corp. about expanding Stewart's Kmart products into Sears stores, Lyne said.

Advertising revenue is getting a boost from the TV exposure, which Lyne said has created a "halo" over the brand. The number of ad pages for its flagship magazine Martha Stewart Living is expected to be up a better-than-expected 48 percent for the third quarter over a year ago, Lyne said.

"There are definitely more positive conversations happening -- with more clients," said Brenda White, director of print investment for Starcom USA, which buys advertising space for dozens of companies. "We know there is going to be a future for the company, which could have been a question before."

Still, Lyne declined to talk about when advertising revenue would return to its original levels or when the company would return to profitability after suffering a string of losses. In late July, Martha Stewart Living reported second-quarter losses of $33.5 million, compared with a loss of $17.8 million in the year-ago period while revenue rose 4.3 percent to $46 million from $44 million. But the company also said it expects to narrow its operational losses at the end of the year.

"The queen ruled once from her castle," but time will tell whether Stewart can reclaim her position, said Robert Passikoff, president of the New York-based market research company Brand Keys.

Analysts also cited intense competition from other lifestyle magazines such as Real Simple, which benefited when advertisers turned away from Stewart's publications during her legal troubles.

Ivan Feinseth, managing director for Matrix USA, a New York-based research and brokerage company, also warned that the brand could suffer from too much exposure.

"She has a chance to build back the company to where it was, but it has to be slow," he said.

Lyne acknowledged the talk show was recently tweaked to make it more instructional.