Martha Stewart Living CEO steps down

Susan Lyne, who helped rebuild the Martha Stewart Living business in the aftermath of its namesake founder’s legal woes, has stepped down as chief executive, and the job is being split between two company executives.

The management changes come as Martha Stewart Living Omnimedia Inc. navigates through a tough advertising climate and uncertainty about whether consumers will spend freely on merchandise when they are being squeezed by high gasoline and food prices.

Lyne, 58, was hired by Martha Stewart in November 2004 as CEO. Before that, she was a Walt Disney Co. executive in Burbank.

As ABC Entertainment president, Lyne was an early champion of “Desperate Housewives” and “Lost,” two programs that turned around the fortunes of the network.

She also spent more than a decade in publishing, working as managing editor of the Village Voice and launching now-defunct Premiere, one of the first magazines to provide in-depth stories about the business of Hollywood.

“She had a lot of accomplishments here,” Martha Stewart Living spokeswoman Elizabeth Estroff said. “When she arrived nearly four years ago, the goal was to rebuild the company, diversify the business, both in media and merchandising, and restore the company to profitability.”

Stewart was found guilty in 2004 of obstructing a federal investigation into insider stock trading and served a five-month prison sentence.

Lyne “did a great job dealing with the issues that arose in the wake of Martha Stewart’s legal troubles,” said David Bank, an analyst at RBC Capital Markets. But he expressed concern that a challenging environment had stalled the company’s growth.

The company has lost three-quarters of its value during Lyne’s tenure, with shares falling from a high of about $37 in February 2005 to below $8. The shares fell 48 cents, or 6%, to $7.50 on Wednesday.

The New York-based media empire said Wenda Harris Millard, 53, president of media at Martha Stewart, and Robin Marino, 53, president of merchandising, would be co-CEOs.

“While there is never a perfect time to depart, the company is on sound footing and we expect the transition to be very smooth,” Lyne said in a statement. Lyne, who is also stepping down as president, will remain a director and an advisor for 30 days.