MSLO Digital Growth Slows

After watching digital revenues surge regularly by double digits over the past year, Martha Stewart Living Omnimedia (NYSE: MSO) saw internet dollars slow to a 5 percent gain in Q2. The company, which is in still in the midst of a major reorg and is exploring a possible sale, needs to prove to possible buyers and current investors that its strengths are solid and that its media side can match its stronger merchandising offerings.

Merchandising was the most positive part of MSLO’s Q2 story, as revenues in that segment rose 34 percent.

Publishing and broadcasting, meanwhile, slipped 3 and 3.7 percent, respectively. Not terrible, considering the wider economic weakness afflicting companies industrywide, but it doesn’t necessarily evoke “turnaround” either. Print ad spending on MSLO’s magazines had been gaining earlier this year, but those hopes faded a bit in Q2, though that could reflect the seasonality of ad spending.

The slowing revenues on digital — “internet” results are now completely folded into the Publishing segment — offer a stark contrast between the 55 percent jump in online dollars in Q1 and the 12 percent rise in Q210.

In June, Blackstone was retained as an adviser to help MSLO see if it should sell the company completely or simply seek investment capital. In addition, Martha Stewart is preparing to rejoin the board by Q3, years after her conviction in charges related to a 2004 insider trading case. Lastly, the company hired Oxygen co-founder Lisa Gersh as president and COO, as president and CEO of merchandising Robin Marino stepped down.

The company also said that Gersh will become CEO within 12-20 months, and it is expected that she will join the Company’s board.

Even before June’s big announcement, MSLO had restructured its ad sales team last fall, making one person the focal point across all print, broadcast and online marketing efforts. In terms of its ad efforts, MSLO has concentrated on making the most out of its natural cross-platform value, but at a time when marketers are looking to pull back a little, the problem there is that different media are often being pitted against the other as dollars are shifted from print to digital, instead of being added on. That’s the major challenge as MSLO moves forward with its deal plans.