Translation from English

Saturday, June 20, 2015

Fading Martha Stewart Looks to Sell Empire- WSJ


BUSINESS
 Anthem Raises Offer for Cigna to $54 Billion
 EBay Divests Craigslist Stake, Ends Litigation
 Russia Deals to East and West
 Harley-Davidson’s Hurdle: Getting Young Riders
 Brazil Probe Sweeps Up Corporate Magnates

Martha Stewart Nears Deal to Sell Fading Empire

Licensing firm Sequential Brands wants to add name to its stable

Lifestyle empire Martha Stewart Living Omnimedia is close to a deal to sell itself to retail licensing company Sequential Brands. WSJ’s Sarah Rabil reports. Photo: Getty
By   
23 COMMENTS
The empire that Martha Stewart built on fondant layer cakes, satin bows and fluffy chive-blossom flower arrangements is poised to find a new home.
Martha Stewart Living Omnimedia Inc. is close to selling itself to Sequential Brands Group Inc., an acquisitive retail-licensing company, according to people familiar with the matter. Such a move would mark the end of an independent publishing and housewares conglomerate that grew out of Ms. Stewart’s knack for decorating, cooking and gardening—a company now worth a fraction of what it once was. 
A deal would usher in the latest chapter in the remarkable career of Ms. Stewart, now 73 years old, who used TV and magazines to elevate homemaking to an aspirational level. Her ascent was interrupted in 2004 when she was convicted of obstructing a government investigation into a stock sale. She served nearly five months in jail. She ultimately returned to a company that has been buffeted by many of the same forces that others in the media industry are facing.
A deal between Sequential Brands and Martha Stewart Living could be announced in the coming days. Terms that are being discussed couldn’t be learned. As with any merger negotiation, it is possible the Martha Stewart Living talks could break down before the companies reach an agreement. 
Ms. Stewart, currently chairman and chief creative officer of her company, couldn’t be reached for comment.
Sequential Brands, far from a household name itself, has nevertheless become a major consolidator of well-known brands in recent years. The company buys brands and, like Martha Stewart Living and others, licenses them to manufacturers and retailers. In April, the company, which had a market value of $569 million, agreed to buy a 50% stake in pop star Jessica Simpson’s brand. Sequential also owns Justin Timberlake’s William Rast brand, Heely’s, Linens ’n Things, Ellen Tracy, the Franklin Mint, and others. 
Martha Stewart Living Omnimedia, which was founded in 1997 and is based in New York, had a market value of $370 million as of Thursday afternoon. Even after a 26% jump in the shares when The Wall Street Journal reported on the possible deal, the company’s value is still a far cry from the nearly $2 billion it soared to on the day of its initial public offering, at the height of the dot-com boom in 1999. Ms. Stewart served a breakfast of scones, croissants and fresh-squeezed orange juice in a tent outside the New York Stock Exchange that day. 
Her fortunes took a dive in 2004, when the former stockbroker was convicted in a case related to her sale of shares in ImClone Systems Inc. While in jail, she led yoga sessions and offered pointers to a prison weaving class. 
Though she was forced to give up her roles at the company, Ms. Stewart maintained her stake and as of last year owned nearly 49% of the company’s Class A common shares and nearly 90% of the voting control.
Ms. Stewart had been barred for several years from being a corporate officer after a regulatory settlement following her conviction. She rejoined the board in 2011 and her feisty nature and exacting style were soon on display again.
In 2012, after a long period in which the company struggled, Ms. Stewart ousted her chairman of seven years, Charles Koppelman, and reclaimed that role in a nonexecutive capacity. She assembled a new team, bringing in television veteran Lisa Gersh as chief executive. Ms. Gersh went on a cost-cutting drive, scaling back the broadcasting and publishing businesses, and pushing it more aggressively into merchandising. Ms. Gersh later left the company.
ENLARGE
The publishing operation—once the biggest source of revenue in the Martha Stewart empire—has been hurt by shifting reader tastes, as well as by its limited scale relative to that of magazine giants like Hearst Corp., which can offer advertisers access to far more consumers.
That has prompted it to scale back and in some cases close titles. In October, the company agreed to license its flagship Martha Stewart Living and Martha Stewart Weddings titles to Meredith Corp. for 10 years. Martha Stewart Living, which had about 260 full time-employees as of March, continues to provide editorial content for the magazines. 
As a result of that agreement and pressure on the business, the revenue Martha Stewart Living booked from publishing plummeted in the first quarter to $5.7 million from $19.5 million in the same period a year earlier. 
Its broadcasting segment, meanwhile, now accounts for just 2% of revenue after the company terminated its live-audience television-production operations amid underwhelming ratings. 
The broadcasting division now consists of limited TV production, licensing of the company’s content library and satellite-radio operations. 
Merchandising is now Martha Stewart Living’s biggest business, accounting for about $11 million of its $17 million in sales in the first quarter. The company collects royalties on products from cake stands to bedding and mixing bowls that carry the Martha Stewart brand name.
The brand is one of the top sellers in the home section at Macy’s Inc. department stores. It also is sold at other retailers such as PetSmart and Staples Inc.
Martha Stewart Living now refers to itself as an “asset-light company focused on designing high-quality products and creating award-winning content.”
But in a sign of its travails, Martha Stewart Living last year had revenue of $141.9 million, down 12% from 2013 and less than half what it booked in 2007. As it has in many recent years, the company reported a loss—of $5 million in this case. 
Sequential Brands has relationships with a diverse array of retailers including department stores, which it can tap when acquiring brands, much in the way a pharmaceutical company can leverage an existing sales force once it acquires new drugs.
Shares of Sequential Brands, which is based in New York, rose 12.7% on the news to $16.08 on the Nasdaq, as its investors cheered the possible deal. 
Sequential’s chief executive, Yehuda Shmidman, formerly worked for Iconix Brand Group Inc., another licensing company.
Write to Dana Mattioli at dana.mattioli@wsj.com and Jeffrey Trachtenberg at jeffrey.trachtenberg@wsj.com
Corrections & Amplifications: 
Martha Stewart Living Omnimedia Inc. reported a profit of $23.8 million in 1998. An earlier version of the graphic incorrectly labeled it as a profit for 1999. (June 18)
There are 23 comments.
NewestOldestReader Recommended
Dan Laroque
I don't know.  These deals often reveal the "sale" as nothing more than cover, like putting the company into different forms of stocks with Martha still owning a lot of power. 
Christine Davis
The conviction Martha Stewart got for insider trading was an overreach.  The result of the sanctions caused by this felony conviction made it hard for her to manage her company.
James Waters
Judging just from the cookware I have purchased over the years her line is the best at their price point.  Once she is out of the picture completely I hope her name does not stay on these resulting products because what usually happens is that the quality goes down to maximize profits and then once that is purged the company evaporates.
SHOW MORE COMMENTS
Posted by at

No comments:

Post a Comment

Please leave a comment-- or suggestions, particularly of topics and places you'd like to see covered

Subscribe to: Post Comments (Atom)