Martha Stewart Living Omnimedia widens Q3 loss to US$50.7M from US$9.3M in year-ago period, reports total revenues down 16.7% to US$43.5M due to lower revenues in publishing, broadcasting segments
November 2, 2012
– Martha Stewart Living Omnimedia, Inc. (NYSE: MSO) today announced its results for the third quarter ended September 30, 2012. The Company reported total revenues for the third quarter of $43.5 million.
Lisa Gersh, President and Chief Executive Officer, said, "Our performance in the quarter was in line with our expectations but not our ambitions for the Company. Including the Publishing segment actions announced yesterday, we have taken actions designed to significantly reduce the cost structure of our print and broadcasting operations this year, an important step toward positioning MSLO for profitable growth. We are transitioning our content operations to digital, mobile and video platforms that feature lower fixed costs and align with evolving consumer preferences for how and where they engage with our content. We are seeing some encouraging early results, particularly in video. In the meantime, our Merchandising business continues to generate attractive growth. Overall we believe we have made significant progress in executing our strategy and anticipate that we will begin to deliver the bottom-line benefits of this work in 2013."
Third Quarter 2012 Summary
Total revenues were $43.5 million in the third quarter of 2012, compared to $52.2 million in the third quarter of 2011, due to lower revenues in the publishing and broadcasting segments, partially off-set by higher merchandising revenues.
Total operating loss for the third quarter of 2012 was $(50.7) million, which included a $(44.3) million non-cash impairment charge reflecting the write-down of goodwill related to the Company's publishing segment. The write-down is the result of continued softness in the print publishing industry overall and, specifically, a decrease in the Company's advertising revenues. Total operating loss in the third quarter of 2011 was $(9.3) million, which included a $(3.8) million restructuring charge related to changes in executive management and professional fees.
Adjusted EBITDA loss for the third quarter of 2012 was $(4.0) million, compared to $(2.3) million in the prior-year period.
Basic and diluted net loss per share was $(0.76) for the third quarter of 2012, compared to $(0.18) for the third quarter of 2011. Excluding the impairment charge and restructuring charges in the third quarter of 2012, and excluding restructuring charges in the third quarter of 2011, net loss per share was $(0.09) and $(0.11), respectively.
Recent Business Highlights
The first season of Martha Stewart's Cooking School debuted on PBS the first weekend in October. The program is being aired in more than 92% of households and in all top 50 markets.
In September, MSLO announced that it has expanded its content business with new video partners Hulu and Hulu Plus, The AOL On Network and Fullscreen, Inc. The new agreements reflect MSLO's strategy to redefine its video business by providing content across multiple platforms, especially online.
According to comScore Unified data, total unique visitors across MSLO's websites increased 42% in the quarter compared to the same period in the prior year.
On October 17th -18th, MSLO introduced American Made, a two-day, multimedia celebration of American artists, artisans and entrepreneurs at Grand Central Terminal -- created in partnership with title sponsors Avery Dennison and The UPS Store, and official sponsors jcpenney and Toyota, in close collaboration with Etsy.
The Martha Stewart Home Office line with Avery launched in Staples stores in the UK and began rolling out in Officeworks stores in Australia in the quarter.
The Home Depot expanded their assortment of Martha Stewart Living holiday products, which rolled out in stores last month.
Last week, MSLO announced a new partnership with FremantleMedia Enterprises, a key player in the global content and brand space, to co-develop television and digital video programming featuring contemporary lifestyle personalities.
Revenues in the third quarter of 2012 were $27.6 million, compared to $33.2 million in the prior year's third quarter, due to lower print and digital advertising revenues.
Operating loss was $(51.3) million for the third quarter of 2012, which included a $(44.3) million non-cash impairment charge reflecting the write-down of goodwill, compared to operating loss of $(3.6) million in the prior year's quarter.
Adjusted EBITDA loss was $(6.2) million in the third quarter of 2012, compared to $(2.8) million in the prior year's quarter.
As announced on November 1, MSLO has taken a series of actions to restructure its media business placing more emphasis on digital, mobile and video platforms. The actions which reduce the number of published print titles also should result in a significantly lower cost structure, and a more sharply focused ad sales force. The Company's actions are anticipated to result in a reduction of approximately $33 to $35 million in annual operating expenses.
Revenues in the third quarter of 2012 were $2.7 million, compared to $6.6 million in the third quarter of 2011. The decline reflects the Company's strategic migration of its Broadcasting business away from the higher costs associated with daily live television production, in favor of investment in short-form video for digital formats and targeted broadcast initiatives.
Operating income was $0.3 million for the third quarter of 2012, compared to an operating loss of $(1.3) million in the third quarter of 2011.
Despite lower revenue, adjusted EBITDA was $0.4 million for the third quarter of 2012, compared to an adjusted EBITDA loss of $(0.8) million in the prior year's third quarter.
Revenues increased 7.2% to $13.2 million for the third quarter of 2012, as compared to $12.3 million in the prior year's third quarter, primarily due to revenue from the Martha Stewart Home Office line with Avery and design fees from J.C. Penney.
Operating income was $8.5 million for the third quarter of 2012, up from $7.2 million in the third quarter of 2011.
Adjusted EBITDA was $8.6 million for the third quarter of 2012, up from $7.4 million in the prior year's third quarter.
Total Corporate expenses were $(8.2) million in the third quarter of 2012 compared to $(11.6) million in the prior year's third quarter. Adjusted EBITDA loss was $(6.8) million in the third quarter of 2012 which included $0.6 million in legal and other professional fees compared to $(6.2) million in the prior year's quarter.
The Company will host a conference call with analysts and investors on November 2, 2012 at 8:30am EDT that will be broadcast live over the Internet at www.marthastewart.com/ir, and an archived version will be available through November 16, 2012.
About Martha Stewart Living Omnimedia, Inc.
Martha Stewart Living Omnimedia, Inc. (MSLO) is a leading provider of original "how-to" information, inspiring and engaging consumers with unique lifestyle content and high-quality products. MSLO is organized into the following business segments: Publishing, Broadcasting, and Merchandising. MSLO is listed on the New York Stock Exchange under the ticker symbol MSO.