Martha Stewart Going the Way of Playboy?
12:27 pm, April 26th | by Hillary Reinsberg
Martha Stewart might be set to go the way of Playboy, according to The Deal. No, she’s not going nude (get your mind out of the gutter!) – the magazine maven, kitchen confidante and previously convicted felon may be looking to take the publicly traded company that bears her name back into her own control. Though nothing’s set in stone, rumors are surfacing that the lady who knitted her way through prison might want to take Martha Stewart Living Omnimedia (MSO) private again for a couple of reasons.
If you look at both the situation MSO is in and the situation Stewart herself is in, it makes a lot of sense that Stewart would, and should, take her company private again, The Deal explains. Stewart took MSO public in October 19, 1999, and the stock price blew up instantly on its first day, but never again reached that day’s high of $49.50 a share. How are things going now? Not so hot. MSO stock opened this morning at a measly $3.97, and it’s been worse. At the current rate, the company is worth an estimated $200 million.
The Deal argues that MSO should (and may well) go the way of Hugh Hefner’s empire, which he announced he was taking private in January. Though Hefner peddles naked women while Stewart deals in the business of cupcakes and tupperware, both have TV channels, magazines, major merchandising lines and so on. For both companies, their iconic brands – the TV channels and magazines – are no longer the money makers, but they still cost a lot to produce. Instead, today’s profits (to the degree that there are profits) come largely from merchandising, which in Stewart’s case means lines at places like Home Depot and Macy’s. Playboy (PEI) is also worth about the same amount – valued at $207 million.
Don’t point a finger at Stewart’s sordid past – the plummeting prices of MSO don’t coincide with Stewart’s jail time, shockingly. The stock actually shot up during that period. Instead, investors are likely put off by the company’s vague business plan, which involves lots of spending on things like magazines, which don’t turn much profit.
Why else would Stewart want to bring the company fully back into her own hands? Well, remember that whole insider trading scandal thing? Turns out the five-year restriction placed on Stewart by the SEC, which barred her from heading a publicly traded company, is set to be lifted in August, putting her in the hot seat to take back the reins – and possibly the whole company.
On a side note, did you know she also turns 70 that month? (We can’t believe it either!)