NEW YORK – In a sign that many consumers aren't concerned by Martha Stewart's (search) personal legal travails, readers of her flagship magazine are renewing their subscriptions at a pace well ahead of industry norms.
That faithful readership may help encourage the return of advertisers who haven't demonstrated the same loyalty since the magazine's eponymous founder became tainted by a stock-trading scandal in June 2002.
Nearly 70 percent of Martha Stewart Living subscribers said they planned to renew their subscriptions, according to a September survey conducted for WPP Group PLC's (search) Mediaedge:cia.
The renewal rate is 19 percent better than the magazine industry average, an analysis by circulation consultancy Capell & Associates (search) found.
It also marks a considerable recovery from the height of Stewart's stock-trading scandal, when subscriber renewals at the magazine fell 10 percent below the industry average, according to Capell & Associates. Before the scandal, the magazine's subscription renewals were ahead of the industry by 24 percent.
"Subscriber renewals are really bouncing back," said George Janson, director of print at Mediaedge:cia, which buys ads on behalf of Chanel SA and Xerox Corp., among others.
His firm commissioned the survey of Martha Stewart Living subscribers for clients who had doubts about the magazine's vitality in light of Stewart's personal legal woes. She is serving a five-month prison sentence for lying to government investigators who were probing her December 2001 sale of ImClone Systems Inc. (IMCL) stock.
"For people who said they wouldn't renew, it had more to do with monetary issues, not because of concerns about Martha being convicted and going to jail," Janson said.
Hurt by negative publicity surrounding Stewart, along with increased competition and industrywide softness in newsstand sales, Martha Stewart Living Omnimedia Inc. (MSO) cut the guaranteed circulation, or rate base, for its flagship magazine to 1.8 million from 2.3 million, effective with the January 2004 issue.
Since then, circulation has held up.
Suzanne Sobel, Martha Stewart Living's publisher and executive vice president of advertising sales, said the magazine is delivering a healthy bonus circulation.
Newsstand sales have fallen since the scandal, but the decline has been in concert with the rest of the magazine industry. Longer term, Martha Stewart Living has been a top performer at the newsstand.
In a study of newsstand sales over a 10-year period through 2003, the magazine was the fifth best in terms of increased sales, an analysis by Capell & Associates found.
"Given the falloff with the scandal, this is incredible," says Dan Capell, editor of Capell's Circulation Report, an industry trade publication.
Advertisers have been another matter. Many have abandoned the magazine for less controversial titles.
The number of ad pages in this December's edition of Martha Stewart Living is half what it was a year ago, while other monthly consumer titles have seen a nearly 5 percent increase in ad pages, according to new data from the Media Industry Newsletter.
Martha Stewart Living's ad pages for the full year have fallen 47 percent, compared with a more than 3 percent increase in ad pages at consumer monthlies during the same period. This year's steep decline at Martha Stewart Living comes on top of a nearly 35 percent drop in ad pages in 2003, MIN data found.
There's still a question mark as far as what degree advertisers will return.
Sobel, Martha Stewart Living's publisher, said the New York-based media and merchandising company continues to be optimistic about an ad recovery beginning in 2005, with increasing momentum throughout the year.
Janson said some advertisers that had pulled out have come back, including one big packaged goods company that he declined to name. "But some are waiting until Martha gets out of jail," he added.
Even if advertisers do decide to return when Stewart gets out of prison in March, the long lead times for advertising mean the magazine may not see much of that revenue until 2006. The December 2004 issue, for example, showed a big drop in ad pages because many bookings were made in June or July, when it was still uncertain whether Stewart would serve her jail sentence.
The pioneering lifestyles magazine also has new rivals for ad dollars, such as Time Warner Inc.'s Real Simple.
"A lot more competition has come into the marketplace, so I don't think ad pages will reach pre-scandal levels," Janson says.