Martha Stewart Chief Downplays 47 Percent Broadcast Revenue Drop

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Executive chairman Charles Koppelman admits the flagship Hallmark show is "challenged" but says it's up in key demos and more than 1 million viewers tuned in for a Halloween special.

UPDATED 4:52 p.m. Wednesday, Oct. 27, 2010

NEW YORK -- Martha Stewart Living Omnimedia posted a 47% third-quarter broadcast revenue decline Wednesday due in part to the end of its flagship show's syndication run and the lack of TurboChef in the quarter and timing associated with the show Whatever, Martha! !, that it had in the year-ago quarter. Management acknowledged that the slower-than-hoped start of its new programming block on the Hallmark Channel also kept broadcast revenue below expectations, but said it is encouraged by recent ratings improvements.

The block has seen a reduction in size and other tweaks, and execs reiterated they expect to benefit from the Hallmark deal over the long term.

Executive chairman Charles Koppelman said during a conference call with analysts that ratings for the flagship Martha Stewart show are up in its key 25-to-54 demo since the show's launch, and the show's 59.4 median age is down from well above 60 when it was in syndication.

"At current ratings, we're still a little bit challenged," but if things move into the right direction, the show will be profitable, Koppelman said.

Cumulative ratings for all airings of the Stewart show are up from launch week and have on some days neared the 0.4-0.5 ratings that it had late in its syndication run, executives said. Comparisons between syndication and basic cable are tricky, however.

A look at Nielsen data shows that the 10 a.m. "Martha Stewart Show" airing may have averaged more than 220,000 viewers over the past two weeks, compared to about 200,000 in its opening weeks on Hallmark Channel. However, for its first six weeks, it remains about 50% below the "Golden Girls," which during the same period a year earlier drew 425,000 viewers for the network.

However, MSLO management said with the holiday season traditionally strong for Hallmark and Stewart, there are more opportunities to grow reach. One recent key success came in the form of a Stewart Sunday primetime special tied to Halloween, which Koppelman said drew nearly 1 million viewers.

"We're certainly hopeful that the audiences are finding the Martha show and the other shows," Koppelman said, emphasizing that MSLO doesn't have to pay a distribution fee as it did in syndication, which helps the bottom line.

"Momentum is clearly in our favor," Hallmark Channels CEO Bill Abbott echoed. "It just takes time." He said Hallmark Channel will look to use its holiday season programming, which exceeds that of other cable channels, to raise further awareness for the MSLO program block.

MSLO CFO Kelli Turner also emphasized that the company's leaders are "positive about this [Hallmark] partnership's potential and are focused on making it a success."

Total MSLO revenue was about flat at $49.7 million as its loss of $8.6 million improved from a loss of $12.1 million in the year-ago period.