- The Washington Times - Tuesday, October 4, 2005

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 late-night host 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. (While Mr. Trump says “You’re fired,” Mrs. Stewart explains, “You just don’t fit in.”)

She has even quickly incorporated her five-month prison experience into her brand, selling 13,000 copies of that famous poncho that she wore when she was released in March to benefit women’s charities.

Mrs. Stewart is also reaching out to new viewers, with plans to develop a 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 Inc. remains to be seen. Advertisers fled and her stock plummeted as much as 50 percent while Mrs. 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 Mrs. Stewart’s two TV shows made their debut last month, the stock has fallen more than 27 percent to about $24 per share amid lukewarm ratings. And some fans are not quite sure what to make of the new, funnier and chattier Martha.

“Celebrities don’t do it for me,” said Ms. Sanders, 40, from Queens, N.Y., who was part of the live studio audience for Mrs. Stewart’s talk show featuring Mr. O’Brien last week.

But there are also positive signs. Susan Lyne, president and chief executive officer of Mrs. Stewart’s New York multimedia company, reported that sales of Martha Stewart Everyday merchandise — from pots to towels — at Kmart stores have recorded an uptick.

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

Advertising revenue is also getting a boost from the TV exposure, which Ms. 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 compared with a year ago, Ms. 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.

Still, Ms. Lyne declined to talk about when advertising revenue would return to its original levels or when the company would return to profitability, after absorbing 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 4.5 percent to $46 million from $44 million. But the company also said that 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 Mrs. Stewart can reclaim her position, said Robert Passikoff, president of Brand Keys Inc., a New York market research company.

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

Ivan Feinseth, managing director for Matrix USA LLC, a New York 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.

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