Martha Stewart Living Omnimedia Dumps CEO
Martha Stewart Living Omnimedia, the domestic queen's massive publishing and television conglomerate, has just announced that its CEO, Susan Lyne, has (ahem) "stepped down." Replacing Lyne will be two co-CEOs—an equivocation that often signals that a company was not well prepared for an executive transition. Lyne came on as head of the company when Martha Stewart went to jail in 2004, and has presided over a big drop in MSLO's stock price. But while her departure may have been inevitable, it's not necessarily a productive move. The magazine industry is in an irreversible decline, and no number of firings will change that fact. Sorry!
The company's stock price since 2004:
So yes, Lyne oversaw a decline of more than 75% from the stock's February, 2005 high point. Was that due to her incompetence? Keep in mind that that high point came in anticipation of the company's resurgence when Stewart got out of jail. And Wall Street didn't seem to react ecstatically to Lyne's departure; the stock fell another 3% in the wake of the news this morning.
Magazines are on a longer, slower decline than the newspaper industry is, but an inevitable decline all the same. Public publishing companies with a big stake in magazines are going to see their revenues decline, their stock prices fall, and their investors get angry. They can fire people left and right, doing their best to momentarily assign blame for what is, in reality, a tectonic shift in the media marketplace. But they won't start seeing a real turnaround until the Internet has been fully monetized by old-guard media interests. And that day is a long way off.
Maybe Lyne's successors with do a better job; maybe they won't. Either way, magazine company stocks are a dangerous bet—for investors and CEOs alike.
UPDATE: From an interview conducted two weeks ago with Susan Lyne: "Q: Assuming you finally get some time off, what would be your dream vacation? A: My dream would be going somewhere I've never been that's reasonably exotic." Now she can! Also: Slate's Daniel Gross used Lyne's career path from journalism to the executive suite as the prime example of why journalists shouldn't become CEOs. Back in 2004. The more you know!