Martha Stewart Living Gets "Two For One" With New co-CEOs

| About: Martha Stewart (MSO)

Martha Stewart's media empire is replacing its CEO, Susan Lyne, who's stepping down, by promoting two of its current execs to co-CEO, Wenda Harris Millard and Robin Marino.

The first question is of course: Why is Lyne leaving? She arrived at Martha Stewart Living Omnimedia (NYSE:MSO) in late 2004 while Martha Stewart was serving her prison sentence (remember Martha in the poncho era?). No explanation was given for Lyne's departure, but she said in a statement "the company is on sound footing and we expect the transition to be very smooth."

How'd Lyne do in the CEO post? The company's stock is down 57 percent since she was named CEO, as the whole publishing industry has suffered, with the stock down nearly 15 percent year-to-date. But looking beyond stock price, Lyne diversified the company beyond Stewart and her homemaker brand, striking a deal with Emeril Lagasse. And advertising revenues at the Martha Stewart Living magazine and on its websites has improved over the past few quarters. So while investors have been concerned about the publishing industry as a whole, it seemed Lyne was making progress.

What now? Millard, until now President of Media, was considered a front-runner for the CEO role, and she's been called one of the most innovative executives in interactive advertising, having previously been chief sales officer at Yahoo (NASDAQ:YHOO). Marino, who was President of Merchandising was previously president and COO of Kate Spade, and has worked at retailers including Polo Ralph Lauren and Burberry. The two women will continue to be in charge of their respective divisions, reporting to company chairman Charles Koppelman.

The big surprise: the decision to split the CEO job. One one hand, having two distinct divisions--media and merchandise--makes it a bit easier. But how often do you see co-CEOs? Does this indicate that Koppelman will be more involved than most chairmen?

This move raised the question of whether MSO could potentially split into two separate companies, but Koppelman shot that one down. Now the question is whether these two women can work together well enough to reassure Wall Street.