Updated 12:25 p.m., 11/11/04
Originally published: 11:20 a.m., 11/11/04
Battered by poor stock performance, a magazine in freefall, and a television empire that is greatly in peril, sources said at press time that Martha Stewart Living Omnimedia is expected to name former ABC entertainment president (and current MSLO board member) Susan Lyne as its new CEO. A resignation from outgoing CEO Sharon Patrick should come later today. The board met before lunch today and voted in Lyne, according to a person briefed on the situation.
It is not entirely clear whether Patrick is leaving the company altogether, although she is certainly being replaced as CEO. This confirms a report from earlier today on New York Magazine's website naming Lyne as the likely contender.
Lyne has become the comeback everyone is waiting for in media circles. She was fired by Michael Eisner and Bob Iger at ABC right after the greenlighting of Desperate Housewives and Lost, which have both become massive hits in the first part of this season. ABC had been mired in ratings hell for the last several years, and was frequently cited as one of the factors contributing to the downfall of the parent company's outgoing chief executive. Desperate Housewives has been the top show in the country over the last month, with ratings that have at times equalled Friends at the height of its popularity.
Taking over Omnimedia is a big task that involves reinventing its brands at a time when advertisers are fleeing because its namesake founder is in jail for allegedly covering up sale of nearly 4,000 shares of ImClone stock based on insider information. Stewart's CBS show has already been taken off the air and the company has begun introducing brand extensions that do not bear Stewart's name.
Moreover, the timing of Stewart's legal troubles coincided with the advent of Real Simple, the Time Inc shelter/lifestyle magazine that has quickly grown to a circulation of 1.4 million. In August, Real Simple reported to the Audit Bureau of Circulations that newsstand sales -- the best barometer for measuring a magazine's "heat" with readers -- had ticked up 10 per cent to nearly 400,000 copies per month, a level almost unheard of for a magazine that does not feature celebrities on its cover. By contrast, Living has been in a tailspin since its namesake founder wound up in legal trouble. Circulation sank 18.9 per cent at the end of the first half, with a 9 per cent drop coming from newsstand. Advertising numbers have been similarly disappointing.
Employees at the company have watched their stock options deteriorate. Earlier in the fall, New York Magazine reported that the company had begun offering stay bonuses to important employees in order to prevent a mass exodus prior to Stewart's imprisonment. Nevertheless, there have been some successes. A new magazine called Everyday Food has sold well. Patrick herself has garnered mixed reveiws within the company. Some say she's way too close to Stewart and did not exert enough independence during its founder's troubles.