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Martha Stewart Living Omnimedia (NYSE: MSO) has filed its 10-K, offering some fresh details on a few of its recent deals, as well as its org…

Martha Stewart Living Omnimedia (NYSE: MSO) has filed its 10-K, offering some fresh details on a few of its recent deals, as well as its organic efforts to boost its digital business:

WeddingWire: The company says it paid $5 million for its 40 percent stake in the wedding planning-community site WeddingWire, which was announced in February. The company has indicated that it will likely buy the rest of the company at some point, but that for now it’s holding off in order to keep the site’s owners involved. So it doesn’t necessarily follow that the remaining 60 percent will be at the same valuation as the first 40 percent.

Digital revenue: For the whole year, internet revenue accounted for 6 percent of the total, or $19.2 million of the company’s $327.8 million in revenue. Of this, $11.8 million was advertising revenue, with the rest coming from online flower sales and digital photography partnerships with Shutterfly and Kodak. Digital ad revenue in 2006 was $8.2 million, so growth was close to 50 percent for the year. In the coming year, both the flowers and the photos will be moved to the company’s merchandising segment, while the photography partnership with Shutterfly will be phased out. Meanwhile, the internet segment still isn’t profitable, having lost $6.1 million in the year. A redesign of the website, which launched in late 2007, contributed to a $3.6 million increase in internet costs.

Acquisitions: Expect more of them. Building and buying new brands are identified as key drivers of the company’s growth. Also, an interesting note about digital buys, reflecting the demand for strategic assets: “Moreover, competition for certain types of acquisitions is significant, particularly in the field of interactive media. Even if successfully negotiated, closed, and integrated, certain acquisitions may not advance our business strategy and may fall short of expected return on investment targets.”

Emeril: The basic details of the company’s deal to buy Emeril and his non-restaurant were already announced: $45 million in cash, $5 million in stock and $20 million in potential earnouts down the road. One issue with this buy: the company says it doesn’t have audited GAAP financials on it, and so there’s still a possibility that they’ll discover some valuation issues prior to closing the deal. There may not be any surprises — it’s likely that the issue is simply function of how Emeril had organized his businesses.

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By Joseph Weisenthal

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  1. brittany homitz Tuesday, March 18, 2008

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