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Martha not sweating loss

Stewart moves to house arrest next week

NEW YORK — Martha Stewart Living Omnimedia, whose namesake — and future host of “The Apprentice” — will pass from prison to house arrest next week, swung to a $7.3 million loss last quarter on softer ad revenues and TV comps compared with a $2.4 million profit a year ago.

But the stock shrugged off the red ink, surging 8.47% to close at $37.40. A headline-grabbing TV gig with reality kingpin Mark Burnett and the domestic diva’s imminent shedding of the orange jumpsuit have sparked a recent rally that’s seen the volatile stock more than quadruple from a 52-week low of $8.25 last July.

“The Martha Stewart brand has always been and remains our greatest asset,” insisted newly installed CEO Susan Lyne, despite the legal travails of the company’s eponymous founder.

Lyne took the post after ankling Walt Disney’s ABC last year.

MSO said quarterly revenue dropped 15% to $60 million.

Stewart’s mug may become even better known after her release. She’ll star in her own version of Donald Trump’s “The Apprentice,” and a new syndicated show, to be distributed by NBC Universal, starts production next quarter.

Stewart’s old syndicated show was yanked from the air in mid-September — knocking television revenue for the quarter to $1.1 million from $5.9 million the year before.

Magazine revenues fell to $26 million from $33 million on lower advertising sales at Martha Stewart Living, which makes up one-third of the company’s total revenue.

Dip also included costs for Everyday Food and losses from Body & Soul magazine, acquired in August.

Last month, MSO launched “Everyday Food” on PBS, building on the up-and-coming mag.

Martha Stewart Living magazine saw both lower ad pages and rates due to the rate base reduction effective in January. But Lyne said the current quarter will show an uptick in pages and rates — the first positive growth in nine quarters for the magazine.

Lyne rightly called 2004 “a year of significant challenge.”

“We look at the coming year with both realistic expectations and optimism for the future,” added Lyne, who replaced former chief exec Sharon Patrick at MSO in a management shakeup in November.

Stewart, who still owns 60% of the company’s shares, was convicted last March of lying to federal investigators about her sale of shares of ImClone.

Completing a five-month sentence that began Oct. 8, she’s expected to be released March 6 to serve five months of house arrest.

MSO said merchandising sales nosed higher to nearly $23 million. Revenue from Internet/direct commerce was about flat at $9.3 million.

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