Martha Stewart, Meredith Show Strong Web Growth

Following close on the heels of the demise of Teen People's print edition, Martha Stewart Living Omnimedia (MSLO) and Meredith both posted strong second-quarter results on Wednesday, with the Web divisions doing particularly well.

MSLO's overall revenue rose 47 percent in comparison with second quarter 2005, to $67.4 million. Meredith's second-quarter revenue rose 28 percent in comparison with 2005, to $428 million. Both companies attributed their strong performances to revamped print divisions and strong Internet growth.

MSLO's Internet operations showed the single greatest proportional revenue growth, posting a 107 percent gain in ad sales and 117 percent gain in page views since second quarter 2005. Between Internet ad revenues of about $2.1 million and revenue from MSLO's online flower sales franchise,, total revenue topped $4.6 million in second quarter 2006. MSLO's Web business broke even in second quarter 2006--another relative gain over 2005, when it posted a $1.1 million loss. Looking to the future, MSLO also boasted of its upcoming partnership with Kodak, which will allow digital photo sharing through MSLO Web sites.

Meredith's online operations have also been a key growth area for the company, according to Chairman and CEO Bill Kerr, who remarked after the first quarter of 2006: "The Internet has provided a rapidly growing source of advertising revenue at both our business groups. In the first nine months of fiscal '06, Internet advertising revenue grew nearly 80 percent in publishing... and more than doubled in broadcasting." Earlier in the same address, Kerr noted: "We were particularly pleased with our local advertising performance and the growth in online advertising on our stations' Web sites."

But for all the attention given to the two companies' revamped print operations and growing Internet presence, outside observers remain skeptical. George Janson, managing partner and director of print for Mediaedge:cia, concedes that it's a positive sign. It points out that magazines "are still a vibrant, influential medium." Some, he says, lend themselves to online platforms more than others. But he cautions that "the penetration of a lot of these magazine Web sites is still very low." Janson says it's best to look at the totality of the situation; "one quarter doesn't make or break a company."

Similarly, Merrill Lynch analyst Karl Choi has maintained a "neutral" rating for Meredith stock, citing concerns about the company's broadcast operations, specifically TV pacings.

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