Acct 4620: Martha Stewart Case
Martha Stewart Living Omnimedia is primarily comprised of a magazine publication and a television show created by home décor aficionado, Martha Stewart. Both sources of media primarily feature home renovating and decorating products. Also, having an emphasis on do it yourself (DIY) projects for a more stylish and satisfying home. Stewart herself, described Martha Stewart Living as, “the most trusted guide to stylish living.” While MSLO brings in revenues from those looking to decorate their homes and a significant portion of revenues comes from air time and in-show brand/product mentions, the majority of revenues for Martha Stewart Living Omnimedia comes from their publishing branch.
As a company named after the founder, a risk for Martha Stewart Living Omnimedia is the name. After all, Martha Stewart is a convicted felon who was put away by jury. In addition, with an ongoing insider trading investigation being conducted by the Securities and Exchange Commission, public relations and brand loyalty are likely to be negatively impacted. As one of the major branches of the company, MSLO’s broadcasting revenues have been steadily decreasing. Her television program, Martha, is not producing the ratings that were expected with Martha’s comeback. Therefore, MSLO will have to give away advertising time away for free for compensation. If MSLO fails to draw an audience and better ratings, investors will react and the value of stock will decrease. Another potential risk is for Martha Stewart to split up her company or to establish a new entity. This would stem from the Securities and Exchange Commission’s rule that she will not be able to return as CEO for her insider trading case. If Martha becomes unsatisfied with the operations of her management team currently running MSLO, there is always the chance that Martha would sell her 50% control of the company and venture off.
Based upon analysis of Martha Stewart Living...
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