J.C. Penney Takes Stake in Martha Stewart Living Omnimedia

MarthaStewart The landscape of the magazine publishing business continues to evolve, with magazine publishers creating or acquiring new businesses, including marketing agencies and private ad exchanges.

But publishers are also on the receiving end of investments: J.C. Penney is buying a stake in Martha Stewart Living Omnimedia, which will create pop-up stores in J.C. Penney locations nationwide.

The deal puts to rest earlier rumors, which began circulating in July, that MSLO might be for sale, following the company’s announcement of plans for a major strategic realignment, which included retaining Blackstone Advisory Partners to help review potential strategic partners.

Under the terms of the deal with J.C. Penney, the national retail chain is investing $38.5 million in MSLO, securing a 16.6% stake in the multiplatform magazine publisher; it will also get a seat on MSLO’s board of directors.



In addition to the pop-up stores, J.C. Penney and MSLO will create an MSLO-branded e-commerce site that will carry J.C. Penney merchandise, as well as other merchandise designed or selected by Stewart. The deal should generate around $200 million in revenue for MSLO over a 10-year period, according to the companies.

Lisa Gersh, who was appointed president and COO of MSLO in July at the beginning of the strategic realignment, hinted at extensive promotional tie-ins for the J.C. Penney alliance, using MSLO’s media properties. She pointed to “the powerful cross-promotional value and reach this alliance represents in light of our magazine, digital and broadcast properties.”

The deal may not be entirely without complications for MSLO, however, as it may drive competing retail chains to reevaluate their deals with MSLO, including licensed product lines at Macy’s and Home Depot. MSLO terminated a longstanding partnership to sell licensed goods with Kmart in October 2009.

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