Martha Stewart Living Second-Quarter Loss Widens, But Broadcasting Loss Narrows
NEW YORK - Martha Stewart Living Omnimedia on Tuesday reported a wider second-quarter loss amid slightly lower revenue and higher expenses and costs. But the lifestyle content company's broadcasting unit reduced its quarterly loss amid lower costs for the flagship Martha Stewart Show.
Management said the company remains encouraged by the ratings and financial impact of the program, which is in reruns until its new season starts in September, since its move to the Hallmark Channel. And it said the Hallmark Channel relationship's positive effect will be visible in what it predicted would be higher adjusted operating cash flow and revenue in the third quarter.
Executive chairman Charles Koppelman on an earnings call Tuesday lauded as major positives for the firm the previously announced addition of founder Martha Stewart to the company's board this quarter and the recent addition of Lisa Gersh, a former Oxygen Media and NBC top executive, as president and COO and then also as a board member.
Gersh on the call lauded the company's "strong brands," such as Stewart and Emeril Lagasse, as well as "very loyal" customers and "best-in-class" business partners. "Martha is a rock star wherever we go," Koppelman echoed her sentiment in mentioning a recent trip he took with Stewart to Asia.
But Gersh said MSLO has "a lot of work to do" to fully realize the value of its brands, and her job will be to help with that. She also mentioned, without providing details, the opportunity to realize cost efficiencies at the company.
MSLO's total loss of $2.9 million in the second quarter compared with a year-ago loss of $1.2 million as revenue declined less than 1 percent to $54.9 million. Year-ago revenue had benefited from a payment tied to the termination of a relationship with 1-800-Flowers.com.
The company's broadcasting unit revenue of $7.8 million in the second quarter was down from $8.2 million in the year-ago period. The company said that "lower ad sales revenue and lower international license fees more than offset increases in license fees from new programming."
But the division's adjusted operating cash flow showed a loss of $400,000 compared with a year-ago loss of $1.3 million "due primarily to savings in production and distribution costs associated with The Martha Stewart Show." The broadcasting operating loss of $500,000 was an improvement over the $1.5 million recorded a year earlier.
For the third quarter, management predicted higher revenue and operating cash flow than in the year-ago period thanks to new programs.
Koppelman on the call didn't give any detailed update on its review of strategic options beyond saying the company is looking at all options. In late May, it said it has hired Blackstone Advisory Partners, an investment and advisory firm, “to review and respond to various parties that have expressed interest in potentially partnering with or investing in the company, as well as exploring other opportunities.”
Back then, it also announced that Stewart was expected to return to the company’s board in the third quarter after the end of a five-year period that was part of her settlement over insider trading charges.
"In my first weeks since joining MSLO, I have enjoyed very productive engagement with our people, our partners and our senior management," said Gersh in a statement on Tuesday. "I'm looking forward to working together with our teams as we leverage the foundation of our strong and valuable brands to produce profitable and sustainable revenue growth for MSLO."