1091801--3/17/2008--MARTHA_STEWART_LIVING_OMNIMEDIA

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Our Merchandising business currently relies heavily on revenue from a single source. We are expanding our merchandising and licensing programs into new areas and products, the failure of any of which could diminish the perceived value of our brand, impair our ability to grow and adversely affect our prospects. Our Merchandising business and licensing programs may suffer from downturns in the health and stability of the general economy or housing market. Our business is largely dependent on advertising revenues in our publications, online operations and broadcasts and failure to attract or retain these advertisers would have a material adverse effect on our business. If The Martha Stewart Show fails to maintain a sufficient audience, if adverse trends develop in the television production business generally, or if Martha Stewart were to cease to be able to devote substantial time to our television business, that business would be adversely affected. We have placed emphasis on building an advertising revenue based website, dependent on high levels of consumer traffic and resulting page views. Failure to fulfill these undertakings would adversely affect our brand and business prospects. If we are unable to predict, respond to and influence trends in what the public finds appealing, our business will be adversely affected. New product launches may reduce our earnings or generate losses. Acquiring or developing additional brands or businesses, and integrating acquired assets, poses inherent financial and other risks and challenges. We do not have audited GAAP-basis financial information related to the agreement to acquire assets from Emeril Lagasse. We face significant competition for advertising and circulation. Our principal vendors are consolidating and this may adversely affect our business and operations. We may be adversely affected by fluctuations in paper and postage costs. We may face increased costs for distribution of our magazines to newsstands and bookstores. We may be adversely affected by a continued weakening of newsstand sales. Our websites and networks may be vulnerable to unauthorized persons accessing our systems, which could disrupt our operations and result in the theft of our and our users proprietary or personal information. Martha Stewart controls our company through her stock ownership, enabling her to elect who sits on our board of directors, and potentially to block matters requiring stockholder approval, including any potential changes of control.

Full 10-K form ▸

1091801--3/17/2008--MARTHA_STEWART_LIVING_OMNIMEDIA_INC