Martha Stewart Living Posts a Loss

Martha Stewart Living Omnimedia posted troubling third-quarter results on Tuesday, a day after announcing that it had hired a new chief executive after a 10-month search.

The company, which has been trying to stem losses in its publishing and broadcasting divisions, reported total

revenue for the quarter of $33.8 million, compared with $43.5 million in the same period a year earlier. While the company's merchandising revenue grew to $14.2 million, from $13.2 million, its publishing revenue dipped to $19.4 million, from $27.6 million. Broadcasting revenue was a fraction of what it was in 2012, falling to $294,000 from $2.7 million.

The drop-offs in publishing and broadcast revenue were partly driven by the budget-cutting that Martha Stewart Living introduced to get its costs under control. Last November, the company said it was de-emphasizing two of its four magazines. Earlier in 2012, the company trimmed $12.5 million in broadcasting costs by not renewing its daily programming deal with the Hallmark Channel, breaking its lease on its television production studio and ending its live audience for “The Martha Stewart Show.”

Last December Lisa Gersh, the former chief executive, announced that she would resign and the company said it would start to look for a replacement who could build its more profitable merchandising business.

But even as the company tried to find profits in merchandising, it suffered further setbacks. Last week, Martha Stewart Living announced that it had trimmed back the merchandising agreement it had with J. C. Penney, days before a court was expected to rule in the long-running dispute between Macy's and J. C. Penney over selling Martha Stewart housewares. Under the agreement, J. C. Penney announced it would not sell Martha Stewart kitchen, bed and bath products.

Over all, the company suffered an operating loss of $4.1 million in the quarter, compared with $50.7 million in the same quarter last year. The loss last year included a $44.3 million write-down related to the publishing division.

David Bank, an equity research analyst with RBC Capital Markets, noted that Tuesday's results revealed just how dependent the company had become on J. C. Penney. Much of the advertising declines for its publishing division occurred because J. C. Penney cut back on ads in Martha Stewart publications.

“That seemed to be the biggest driver of the shortfall for advertising revenues,” said Mr. Bank.

The company announced on Monday that Martha Stewart Living had hired Daniel W. Dienst as its new chief executive. Mr. Dienst most recently worked as chief executive of Sims Metal Management, which processes the plastic, metal and glass collected by New York City's Sanitation Department. Mr. Bank said it remained unclear how Mr. Dienst would apply his background, which does not include merchandising, to Martha Stewart Living.

“There was a clear message that the company should be performing better and there was no use in blaming a past administration,” said Mr. Bank, referring to Mr. Dienst's comments in a conference call after the earnings were released Tuesday. “It's just unclear how that will be executed.”