Monday, June 16, 2008

The resignation of Martha Stewart Living Omnimedia CEO Susan Lyne last week has me very curious about the mood at the company. It also has me asking whether Martha Stewart should return as CEO and Chairman of the company she founded.

She can apply to the SEC to return to those positions in 2011. The SEC barred Martha from running the public company for a period of five years after her criminal sentence had been served and she is currently not allowed to direct the company. She is currently working in creative capacities as the company's founder.

It seems to me that MSLO has been in turmoil since Martha stepped down before her criminal trial, despite some very exciting and excellent new product launches, consistently excellent magazines (with high subscription levels) and a moderately-successful daytime television show.

In the last two months alone, however, the company has lost its editorial director (Margaret Roach) its CEO (Susan Lyne) and a roster of editorial talent.

Decorating editorial director Page Marchese Norman and her deputy, Shane Powers, as well as books and special projects editor Amy Conway and Weddings beauty, health, and fitness editorial director Elizabeth Graves are all leaving MSLO of their own free will, with no word about where they may be going. Debra Bishop, most recently vice president and design director at Martha Stewart Weddings, is also leaving MSLO after 11 years to be the creative director of More magazine.

Also in the last year, the company's two new publishing initiatives failed and folded: Blueprint magazine closed up shop after 8 issues and the Martha Stewart Newsletter wrapped up after only three.

What's going on?

Wall Street analysts, too, have not really been singing the praises of the company lately. In fact, they haven't been singing its praises since 2002, when Martha was on top. It's a bit disconcerting.

JP Morgan analyst Michael Meltz downgraded shares of Martha Stewart Living Omnimedia Inc. last week, citing a difficult advertising environment and the recent departure of Susan Lyne. He lowered the company to "Neutral" from "Overweight" in a client note last Wednesday because of a slump in the advertising market.

Knowing Martha, she will likely apply to run the company again when the time comes. But by then she will be 70 years old, and I'm not positive those executive roles will appeal to her as much. She has said recently that she enjoys the free time she has now to be more creative, to work on the farm, to travel and to develop new ideas. Jumping back into the frenzied roles of CEO and Chairman of a public company may not be so appealing by 2011.

I think the company is a marvelous one. It's the only company I really pay attention to, to be honest. I want it to succeed, but I'm concerned. And I wonder if it will take Martha's full-time leadership to make real changes and provide much-needed stability.

Please share your thoughts.

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