Summary:

In the middle of Martha Stewart Living Omnimedia’s announcement that it is exploring a possible sale of the company, it released its latest…

Martha Stewart
photo: Getty Images / Donna Ward

In the middle of Martha Stewart Living Omnimedia’s announcement that it is exploring a possible sale of the company, it released its latest paid app as a sign that on the digital side, it was business as usual. For the most part, MSLO’s website and mobile app revenues are small relative to the size of the rest of MSLO, but over the last year, digital revenues have risen significantly. The company will be highlighting that aspect to potential buyers as it continues to try to salvage its struggling publishing and broadcast segments.

A Bloomberg piece put MSLO’s problems in context: the company has lost money for seven of the past eight years and seen its stock price drop 88 percent as the founder served time in prison. Publishing revenues are small at $2.7 million, though print ad revenue did inch up in Q1, broadcasting lost lost $1.6 million last year.

One of the things investors feel is that Martha Stewart’s personal absence from the board has hurt the business. Along with the possible sale, the company said that Stewart would return to the board by Q3, something that did cheer investors at least initially.

Additionally, the company has hired Oxygen co-founder Lisa Gersh as president and COO, while president and CEO of merchandising Robin Marino is stepping down. Most importantly, Gersh will assume the CEO role sometime within the next 12-20 months. By preparing a digital veteran like Gersh for the top, the company is fully signaling that the future of its media business rests in interactive.

MSLO has been particularly aggressive in driving premium ad dollars to its digital creations, as well as charging consumers for its related apps. Both Martha Stewart Living and Everyday Food magazine apps for the iPad launched in Q1; both titles are now available in print and digitized formats each month.

In the meantime, MSLO is releasing a succession of paid apps, in contrast to many other publishers, who tend to view apps as promotional extensions to their main titles. So far, the strategy has been working, as it its “Egg Dyeing 101 from Martha Stewart Living,” an egg-decorating app for the iPhone and iPod Touch, had been a top-seller in the lifestyle category even after the Easter holiday that it was tied to passed.

The latest app is Martha Stewart Cocktails, which is only available on Apple’s iPad for $0.99. Similar to its Cookies app that was released last November for a $4.99 download ($2.99 on the iPhone/iPod touch), it was created with the MSLO-backed app developer Callaway Digital Arts.

In addition to the usual “how-tos,” the latest app also emphasizes MSLO’s merchandising agreement with Macy’s, as the app contains an e-commerce function that lets users click and buy barware items from the department store’s Martha Stewart Collection.

“With our latest app, Martha Stewart Cocktails, we’re playing with a new payment model, allowing users to customize their experience by selecting from themed bundles of cocktail and bar snack recipes, said Gael Towey, MSLO’s chief creative and editorial director, in an e-mail. “The ultimate goal is to create a social and interactive experience, where users are encouraged to return to our apps over time to share their favorite recipes with friends via multiple channels, use our search functionalities to discover recipes that complement their entertaining plans year-round, and download updates as our editors develop new content.”

Given the truly cross-platform nature of MSLO, it’s hard to see where the company will fit within a potential buyer. Bloomberg cited PE firm Apollo, merchandiser Jarden and brand licensing company Iconix — which nearly bought Playboy Enterprises before Hugh Hefner moved to take it private.

In any case, emphasizing the digital strategy amid a growing sea of competition for women’s online time, is key for MSLO’s image and for its future. Essentially, the app strategy is central to building up digital revenues and tie together all the “omnimedia” pieces of MSLO, including broadcasting, publishing and merchandising. Whether part of the business will help convince potential acquirers to pay $10 a share — almost double where the stock is now — is more uncertain at the moment.

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