This is an archived article that was published on sltrib.com in 2014, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.
New York • Martha Stewart Living Omnimedia Inc. will farm out most of its magazine operations to Better Homes and Gardens publisher Meredith Corp., cutting costs as it focuses on brand-licensing deals. Its shares surged.
Meredith will take over advertising sales, circulation and production of the publications Martha Stewart Living and Martha Stewart Weddings, according to statements Wednesday. Martha Stewart Living Omnimedia's staff will continue to handle the magazines' editorial content.
The 10-year arrangement will boost operating income by as much as $10 million to $15 million annually, Martha Stewart Living Omnimedia said. That's a big swing for the company, considering it reported an operating loss of $1.9 million last year and is projected to post operating income of $1.4 million for 2014, according to data compiled by Bloomberg.
The deal helps the New York-based company lower the burden of a publishing unit that's seen revenue fall more than a third in the past four years, hit hard by competition from the Internet.
The stock leapt 25 percent to $4.64 in late trading after the deal was announced. Through the official close of trading earlier today, the shares had fallen 12 percent so far this year.
Meredith shares, which had dropped 14 percent this year, was little changed in late trading. With the agreement, the company gains access to a broader network of publications after its attempt to acquire Time Inc.'s lifestyle and entertainment magazines fell through last year.
Martha Stewart Living Omnimedia will take a fourth-quarter restructuring charge of $2 million to $3 million for severance payments for an unspecified number of jobs. —