May 5, 2015 Last Updated 1:14 pm

MSLO releases first earnings statement since publishing partnership with Meredith Corp.

Wwith Meredith taking over the publishing responsibilities for the Martha Stewart Living magazines, one will want to watch for two things: does MSLO become more profitable partnering with a third party publisher, and do the magazines grow circulation and ad revenue.

It is far too early to know anything about circulation as any changes won’t be seen until the June Publisher’s Statement not due until late summer.

As for MSLO, it reported Q1 earnings this morning, and while revenue naturally dropped (as Meredith picked up most of the ad dollars) profitably really was unchanged. But… it is still early on.

Here is the earnings announcement:


NEW YORK, NY – May 5, 2015 — Martha Stewart Living Omnimedia, Inc. today announced its results for the first quarter ended March 31, 2015.

MSL-May2015“MSLO begins a new era in 2015, marked by a more efficient, asset-light company focused on designing high-quality products and creating award-winning content. We saw the benefits of the partnership with Meredith Corporation begin to take hold in the first quarter as reflected in a 65% reduction in Publishing segment operating expenses over the prior-year period,” said CEO Dan Dienst. “We are fully focused on top-line growth by continuing to create our highly monetizable licensed content, and as evidenced by our new relationship with Staples and the expansion of our product line at PetSmart, Inc. Our efforts on the international front continue to move ahead as we shape plans to launch partnerships in multiple geographies abroad, consistent with our update on the fourth quarter earnings call.”

First Quarter 2015 Summary

Revenues totaled $17.1 million in the first quarter of 2015, compared to $33.3 million in the first quarter of 2014 reflecting a full quarter of print and digital media operations with Meredith.

Total operating loss for the first quarter of 2015 was $(2.4) million compared to a loss of $(2.2) million in the prior-year period.

Basic and diluted net loss per share was $(0.05) for the first quarter of both 2015 and 2014. Included in the first quarter 2014 was a $2 million non-cash charge to depreciation and amortization related to consolidating space in the Company’s headquarters.

MSLO-Q12015

Recent Business Highlights

  • Martha Stewart’s Cooking School on PBS was recently awarded the 2015 James Beard Foundation Broadcast and New Media Award for Television Program, in Studio or Fixed Location.
  • We announced a new, multi-year strategic direct retail collaboration with Staples, Inc. for the manufacture and distribution of Martha Stewart Home Office ™ products. The assortment will be available at more than 1,100 Staples retail stores and online, and will include a wide array of home organizing and home office products across multiple categories, including: stationery and paper products, office essentials and tools, personal technology accessories, and storage and organization products.
  • MSLO and PetSmart announced the launch of Martha Stewart Pets™ Treat Shop, a line of oven-baked natural dog treats sold only at PetSmart.
  • The first Martha Stewart Café was launched in the historic Starrett-Lehigh building, home to Martha Stewart Living Omnimedia’s corporate headquarters in New York City, and offers handcrafted espresso beverages and teas and pastries from Martha’s favorite local bakeries.
  • The Society of Publication Designers Awards took place last week and Martha Stewart Weddings and Martha Stewart Living took home top honors. Martha Stewart Weddings won the Gold medal in the photo story/women’s interest category while Martha Stewart Living won the silver medal for the photo story/women’s interest category and the merit award for photography.

Publishing

Revenues in the first quarter of 2015 were $5.7 million, compared to $19.5 million in the prior year’s first quarter. Results for the first quarter 2015 reflect the first full quarter of print and digital media operations with Meredith. The decline in revenue over the prior year’s quarter was anticipated as a result of the Company’s partnership with Meredith which resulted in MSLO’s elimination of advertising and circulation revenue from Martha Stewart Living and a digital advertising revenue share arrangement.

Operating loss was $(2.1) million for the first quarter of 2015, compared to $(2.8) million in the prior year’s first quarter as a result of the significant cost reductions from our partnership with Meredith.

Merchandising

Revenues were $11.0 million for the first quarter of 2015 compared to $13.1 million in the prior year’s first quarter due to the expiration of certain partnerships and lower sales at The Home Depot. The decline in revenue was partially offset by increased revenue from our new direct, license partnership with PetSmart.

Operating income was $7.5 million for the first quarter of 2015 as compared to $9.3 million in the first quarter of 2014.

Broadcasting

Revenue in the first quarter of 2015 was $0.4 million, compared to $0.7 million in the first quarter of 2014 primarily due to lower sponsorship revenue compared to the prior year.

Operating loss was $(0.01) million for the first quarter of 2015 compared to operating income of $0.2 million in the first quarter of 2014.

Corporate

Corporate expenses were $(7.7) million in the first quarter of 2015 compared to $(8.9) million in the prior year’s quarter. The prior year’s first quarter included a $2 million non-cash charge to depreciation and amortization related to consolidating space in the Company’s headquarters. The decrease in corporate expenses was partially offset by higher professional fees in the quarter.

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