Martha Stewart Living Omnimedia, Inc. (MSO)

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Martha Stewart Living Omnimedia Inc. (MSO)

Q3 2010 Earnings Call

October 27, 2010 11:00 am ET

Executives

Katherine Nash - AVP IR & Corporate Communications

Charles Koppelman - Executive Chairman

Robin Marino - President & CEO, Merchandising

Kelli Turner - EVP & CFO

Analysts

Michael Kupinski - Noble Financial

David Bank - RBC Capital Markets

David Kestenbaum - Morgan Joseph

Michael Meltz - JPMorgan

Michael Kupinski - Noble Financial

Presentation

Operator

Good morning and welcome to the Martha Stewart Living Omnimedia third quarter 2010 earnings conference call and webcast. All participants will be in a listen-only mode until the question-and-answer session of the call. At the request of Martha Stewart Living Omnimedia, this call is being recorded; anyone with objections should disconnect at this time.

It is now my pleasure to introduce Katherine Nash, AVP Investor Relations and Corporate Communications of Martha Stewart Living Omnimedia. Katherine, you may begin when ready.

Katherine Nash

Thank you and good morning everyone. Welcome to Martha Stewart Living Omnimedia's 2010 third quarter earnings conference call.

Before we begin, let me remind you that our discussions will contain forward-looking statements, which are made pursuant to the Private Securities Litigation Reform Act of 1995 as amended. These statements are not guarantees of future performance and involve certain risks and uncertainties that are difficult to predict.

Actual future results and trends may differ materially from what is forecast in forward-looking statements, due to a variety of factors, many of which are described in our SEC filings.

Also, non-GAAP numbers are reconciled to GAAP in an attachment to our press release, which appears on our website at marthastewart.com.

Thank you, and now I'll turn the call over to Charles.

Charles Koppelman

Thank you and good morning. In the second half of 2010, we are seeing some terrific results in merchandizing with the expansion of our offerings at the Home Depot and our new initiative at PetSmart. On the media front, our internet business continues to register robust growth and we had a solid quarter in publishing compared to the prior year’s period. And as we announced just yesterday in an effort to drive stronger results, we are streamlining our sales and marketing teams.

Going forward, each member of the team will sell across all of our media platforms. This new organizational structure provides increased efficiency for our clients more at a single point of contact at MSLO. It also represents a considerable cost savings around $4 million for us. Broadcasting has been challenging as we continue to be effected by the remaining runoff results from the syndication in the quarter.

We launched our programming block on Hallmark in mid-September and are focused on building our audience. We continue to see the move from broadcast to Hallmark on cable as a great opportunity for our company.

It takes time to build an audience on cable, even for someone of Martha's stature. We are working closely with Hallmark to compensate that and to raise awareness about our move. We’ve also been adjusting the programming mix and schedule in fact, we already started to see some positive results with steady growth in women viewers age is 25 to 54, with an 81% increase in net demo since we have won.

We are also getting some nice feed back from viewers who have already made the move with us and we have had good response to our primetime specials on Hallmark including the latest special Tricking and Treating with Martha Stewart which attracted nearly 1 million viewers. We will be following up with another hour long holiday special with Martha Stewart’s Holiday Open House would premier in December.

We are seeing early interest in Lucinda Scala Quinn's Mad Hungry Show and Hallmark has ordered a Christmas special with Lucinda since late June. Hallmark Channel was the fifth most watched cable network during the holiday season in 2009 which bodes well for our content and already is in the coming months.

Additionally, in broadcasting, Emeril's new Fresh Food Fast Show debuted on July 10, to great reviews on the food networks Scotland Channel. We continue to see a lot of opportunity for Emeril in broadcasting and merchandising and look forward to updating you in the months ahead.

Now, onto the publishing, we’ve showed continued stabilization recorded in fact when increasing the rate base for magazines affected to the January 2011 issues. Martha Stewart Living will increase 2.025 million from 2 million readers. Everyday Food will increase 1 million from 900,000 readers. And Whole Living will increase 650,000 from 600,000 readers.

This will be Whole Living sixth consecutive year of rate base growth. The rate base increase speak to the enduring appeal of our content and consumers notwithstanding a challenging environment footprints, in mid-November we will launch our first ever special digital issue of Martha Stewart Living Magazine for the iPad.

As an Omnimedia company our strategy has always to be wherever consumers are in Print, on TV and on the web. And now we are mobile too, we're happy to be working with Adobe to bring our magazines to the iPad. It's fitting that the launch of our first digital magazine will coincide with a 20 anniversary of Martha Stewart Living Magazine.

Martha changed the magazine industry with Living. And now, as we enter a new media era, our company is continuing a tradition of inspiration, innovation and excellence.

We think our readers will love it and we hope it expands our audience by attracting new readers to our creative concept. That’s a good transition into our internet business we tried a terrific order with total advertising revenue of 56% over last year. According to comScore panel data unique visitors across MSLO's websites grew 31% with page views up 37% over the prior year's period.

Read the rest of this transcript for free on seekingalpha.com