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Martha Stewart, on the cusp of turning 70, has most of her wealth tied up in the stock of Martha Stewart Living Omnimedia, and so it presumably would make sense that she will eventually agree to an acquisition so she can receive a substantial cash windfall. In a new profile of Stewart published in this week’s New York magazine, writer Benjamin Wallace said, “given the straits in which the company finds itself, her board may see no alternative.”
Wallace said following Stewart’s return to the company in March 2005 after a five-month stint at a federal women’s camp in Alderson, W. Va., Wall Street had high hopes — she had a new chief executive officer in Susan Lyne; a new TV show, “a Martha-focused version of The Apprentice,” and she planned to start writing again, for her flagship magazine. There were parole restrictions placed on her extent of involvement in the company, including that she could not sit on its board for six years. That didn’t seem to bother Wall Street, though: The company’s stock rose to $36 from $11.
In “the comeback that wasn’t,” MSLO has only been profitable in one of the past eight years, losing $185 million in that time frame. These days, the stock hangs around $4 a share. The New York piece reports on the revolving door in MSLO’s executive suite, most recently led by executive chairman Charles Koppelman, who last week revealed plans to depart himself.
“Stewart has always looked outward when apportioning blame, and she seems to have settled on Koppelman, her onetime savior, as the responsible party for the company’s poor performance,” according to the New York magazine story. In a regulatory filing Friday, it was stated that Koppelman will walk away from his post by the end of the year, at the latest, and receive a severance package of $1.47 million. Many believe Stewart will most likely succeed Koppelman as chairman when she rejoins the board in September.
The new hope at MSLO these days is new chief operating officer Lisa Gersh, who will likely take over as ceo. But Wallace wonders how long Gersh will stick around. “If Gersh has been hired to make some of the tough cost cuts Stewart has long resisted, it’s an open question how long she will remain in Stewart’s good graces once she tells her that she needs to cut the budget of, say, Martha Stewart Living by 30 percent.”