Martha Stewart Explains It All For You

April 28, 2011 by Thad McIlroy

While reading the latest financials from Martha Stewart I realized that her template could be applied to most long-time publishing organizations today. Revenue up, profit down. The only thing unusual about Ms. Stewart’s story is the “revenue up” portion. More often I read “revenue down, profit down.” Digital widgets generally sell for less than their analog predecessors.

Digital ad sales at MS rose 55% (print advertising squeezed out a 2% increase). Unique website visitors were up 42%. Pageviews up 29%. The result? A net operating loss of 5% of publishing revenues (admittedly an improvement from 8% last year).

I’ll take a two-page spread, please

Charles Koppelman, Executive Chairman and Principal Executive Officer of Martha Stewart Living Omnimedia, offers an excellent stock phrase: “We believe the transformation of the company is beginning to take hold as we seek to broaden our portfolio…We feel we’re positioned to deliver profitable growth as we execute on our business plan in 2011 and beyond.” Good, no?

Meanwhile Jeff Jarvis has an excellent post this week called “Hard economic lessons for news.” He’s got rules, reality checks and more rules. And then something called “Opportunities.” If you’re in the newspaper business. you might want to take a Valium before reading it – you wont feel encouraged. Jeff talks only about the squishy stuff: “engagement,” “networks,” “value added,” “other revenue streams worth exploring” and “collaboration.” OK, there’s one notation on good old “infrastructure.”

Jeez, Jeff. I thought you were going to tell us about opportunities.

But, keep in mind, today Microsoft announced that it had a $726 million loss from online operations in Q3, staying on track to losing $3.5b (yep, billion) in the full fiscal year. Only Apple makes online look easy.

(Can’t resist: Yahoo previously demonstrated how to lose $3.5 billion in a single acquisition, Geocities.)

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