Business Profile of Martha Stewart Living Omnimedia

Martha Stewart Living Omnimedia is, as its name suggests, an all-inclusive media-related corporation that has diversified products in print and electronic media, including, but not limited to, more than six magazines, a television series, a radio broadcast, and websites. Martha Stewart Living Omnimedia is branded almost exclusively by relying upon the image of its founder, Martha Stewart, who has built her multi-media empire around the ever-increasingly popular subjects of how-to and home improvement projects that suggest a particular vision of the good life. The inseparability of Stewart from the Omnimedia brand has been both a bane and a blessing. Given Stewart's conviction and served sentence for participating in an insider trading scheme, the company lost some face over the past several years; however, the company's 2005 annual report insinuates that Stewart's release from prison and her reappearance in association with her variety of products has resulted in a rebound in the company's profits and market presence. Stewart, then, has been Omnimedia's strength and weakness.

Another strength of Martha Stewart Living Omnimedia is that it has spent time allying the Martha Stewart name with other well-respected business partners who could conceivably compensate for any loss of trust in Stewart by backing her and her company. These partners represent a vast swath of home-related markets. In 2006, Stewart's brand expanded into previously untested markets, including homebuilding and a whole array of products ranging from flooring to light fixtures that would carry Martha Stewart's name, thereby increasing her brand visibility and presenting her own products in front of new and diversified markets. The CEO and Chairman of Martha Stewart Living Omnimedia observe that the opportunities for their company to make inroads into new markets is virtually limitless; anything related to the home, they contend, is fair game for Omnimedia to tackle and incorporate into its short- and long-term business plans.
During Stewart's incarceration, there was concern about the loyalty of Martha Stewart Living Omnimedia customers. However, the continued interest in the company's products, its ever-expanding movements into new sectors, and its financial performance in 2005, considered the company's turn-around year, all suggest that Stewart's breach of ethics and the law were not considered serious enough to separate her loyal followers from her company and its range of products. Nonetheless, the company remains concerned about how dependent it is upon the maintenance of Stewart's image, noting that 2004, the year of Stewart's conviction and incarceration, was the year of lowest profits so far this decade. While Martha Stewart Living Omnimedia has a number of competitors, the diversity of the company's market penetration ensures that the company's holdings are sufficiently spread out so that it is not dependent upon a single segment in order to keep the company financially robust. In fact, the remarkable loyalty of Martha Stewart Living Omnimedia customers tends to bring cross-over clients from one sector, such as the company's magazines, to another, such as the company's TV shows or DVD products. Advertisers are aware of this unusual degree of brand loyalty, and as a result, advertising capital has increased substantially in the past two years, according to the 2005 annual report.

Martha Stewart Living Omnimedia is engaged in constant environmental scanning and predictive practices, as evidenced by their consistent addition of new holdings and their expansions. Martha Stewart Living Omnimedia believes that it must continue to identify and then respond to trends in home-related subjects and industries in order to continue to build what is essentially an empire that is so strong and diversified that it can withstand most external threats. It is important, however, that Martha Stewart Living Omnimedia evaluates some of the latent threats of diversification. Because the industry represented by Martha Stewart Living Omnimedia is primarily creative in nature, the intellectual property created by the company must be protected or it will likely be threatened by copy-cat manufacturers who can produce a reasonable facsimile of the MSLO products at a lower price point.

In sum, Martha Stewart Living Omnimedia has been able to withstand some of the anticipated threats to its market dominance which were perceived as possible consequences of Stewart's incarceration. While profits and loyalty dipped, this was a temporary condition, and the company remains financially robust and continues to expand into new arenas. As it does so, it must avoid becoming too diffuse and it must continue to refine its scanning and predictive processes to assess its external and internal environments adequately.