Martha Stewart Living Omnimedia Reports First Quarter 2009 Results

Thursday, April 30, 2009 8:42 AM

Internet Advertising Growth, Stability in Broadcasting, Solid Performance in New Merchandising Offerings Underscore Brand Strength, Lend Support in Challenging Print Advertising Market

NEW YORK, April 30 /PRNewswire-FirstCall/ -- Martha Stewart Living Omnimedia, Inc. (NYSE: MSO) today announced its results for the first quarter ended March 31, 2009. The Company reported revenue for the first quarter of $50.4 million, reflecting continued growth in Internet advertising revenue, stability in the Broadcasting segment, and new Merchandising initiatives, somewhat offset by a challenging magazine advertising market and expected lower guarantees and sales from Kmart as the relationship winds down.

Charles Koppelman, Executive Chairman and Principal Executive Officer, said, 'MSLO's first quarter was consistent with our expectations. We believe our strong brands and broad visibility across media platforms and the nation's retail store shelves are helping the Company hold its own in this recessionary environment. The Company also continues to balance investments in key growth initiatives with careful management of its healthy balance sheet.'

Mr. Koppelman added, 'In our Media businesses, Publishing continues to feel the impact of the challenging print ad market, but we were encouraged by overall growth in subscriptions to our magazines, which underscores what we see as the inherent value in our print brands and their connection with readers. Our other media platforms are performing solidly as Internet advertising continues to grow and Broadcasting benefits from continued strength in The Martha Stewart Show's core demographic and the addition of Emeril's programming. Our cross-platform or 'omni' programs are also gaining increasing traction and visibility in the marketing community.'

Addressing Merchandising performance, Robin Marino, President and Chief Executive Officer of Merchandising, said, 'We continue to execute on our diversification strategy for our Merchandising business. First quarter performance was aided by our Emeril business and our program with 1-800-FLOWERS.COM. We continue to expand distribution of our popular crafts line as consumers look for affordable activities to engage in at home. Our Martha Stewart Collection at Macy's continues to perform, and we're excited to learn that we are Macy's largest volume brand in their home business.'

First Quarter 2009 Summary

Revenues were $50.4 million in the first quarter of 2009, compared to $67.8 million in the first quarter of 2008. Lower revenues primarily reflect declines in print advertising revenue during a challenging period for the magazine industry, as well as the expected decrease in the minimum royalty guarantees and sales from Kmart compared with a year ago. The Company's Broadcasting and Internet segments performed solidly, as did new Merchandising initiatives.

Operating loss for the first quarter of 2009 was $(15.5) million, compared to $(4.5) million for the first quarter of 2008. Included in the results is an impairment charge of $(7.1) million related to an equity investment. When excluding the impairment charge recorded in the quarter, operating loss was $(8.4) million for the quarter.

Adjusted EBITDA loss for the first quarter of 2009 was $(5.0) million, compared to $(1.2) million in the prior year period. The negative impact to Adjusted EBITDA from revenue declines was partially offset by cost savings in the Publishing and Merchandising segments as well as the reduction of the compensation accrual and lower compensation costs across the businesses.

Net loss per share was $(0.31) for the first quarter of 2009, compared to $(0.08) for the first quarter of 2008. Included in the results is an impairment charge of $(7.1) million or $(0.13) per share for the quarter related to an equity investment. When excluding the impairment charge recorded in the quarter, net loss per share was $(0.18) for the quarter.


    First Quarter 2009 Results by Segment
                                               Three Months Ended, March 31
                                                 (unaudited, in thousands)
                                                    2009           2008
     REVENUES
       Publishing                                  $28,361       $40,792
       Broadcasting                                 10,514        10,562
       Internet                                      2,622         3,414
       Merchandising                                 8,933        13,066
       Total Revenues                              $50,430       $67,834
     ADJUSTED EBITDA
       Publishing                                  $(1,363)       $2,406
       Broadcasting                                  1,031           522
       Internet                                     (1,539)       (1,810)
       Merchandising                                 5,499         6,982
       Corporate                                    (8,630)       (9,344)
       Total Adjusted EBITDA                       $(5,002)      $(1,244)
     OPERATING (LOSS)/INCOME
       Publishing                                  $(1,872)       $1,656
       Broadcasting                                    834           175
       Internet                                     (2,032)       (2,247)
       Merchandising                                (1,776)        6,596
       Corporate                                   (10,639)      (10,715)
       Total Operating Loss                       $(15,485)      $(4,535)

Publishing

Revenues in the first quarter of 2009 were $28.4 million, compared to $40.8 million in the prior year's first quarter, due to lower advertising pages, timing of special issues and softness in newsstand revenue.

Operating loss was $(1.9) million for the first quarter of 2009, compared to operating income of $1.7 million in the first quarter of 2008.

Adjusted EBITDA loss was $(1.4) million in the first quarter of 2009, compared to adjusted EBITDA of $2.4 million in the prior year's quarter. The decreases in advertising and circulation revenues were partially offset by savings in production and consumer marketing costs, as well as lower compensation costs and the reduction of the compensation accrual.

Highlights

Subscribers increased in the quarter across all of our titles.
Martha Stewart's Encyclopedia of Crafts debuted at #2 on The New York Times Best Seller List. It has also appeared on the best-seller lists in The Wall Street Journal and Publishers Weekly.
Emeril Lagasse's new book, Emeril at the Grill: A Cookbook for All Seasons, hit bookstores nationwide on April 28th.

Broadcasting

Revenues in the first quarter of 2009 were $10.5 million, compared to $10.6 million in the first quarter of 2008.

Operating income was $0.8 million for the first quarter of 2009, compared to operating income of $0.2 million in the first quarter of 2008.

Adjusted EBITDA was $1.0 million for the first quarter of 2009, up from $0.5 million in the prior year's first quarter due to the addition of Emeril programming and the reduction of the compensation accrual.

Highlights

The Martha Stewart Show continues to resonate with its core demographic of women ages 25 to 49.
Fine Living Network has renewed Whatever, Martha!, the critically-acclaimed series featuring co-hosts Alexis Stewart and Jennifer Koppelman Hutt, for a second season.
Production for the second season of Emeril Green on Discovery's Planet Green network is underway.

Internet

Revenues were $2.6 million in the first quarter of 2009, compared to $3.4 million in the first quarter of 2008.

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