##### Table of Contents





UNITED STATES
    SECURITIES AND EXCHANGE COMMISSION
    Washington, D.C. 20549
  Form 10-K
  x

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    December 31, 2007ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period
    fromto   Commission file number
    001-15395
  MARTHA STEWART LIVING
    OMNIMEDIA, INC.
 (Exact Name of Registrant as
    Specified in Its Charter)
  Delaware

52-2187059(State or Other Jurisdiction of Incorporation or Organization)

(I.R.S. Employer Identification No.)11 West 42nd Street, New York, New York

10036(Address of Principal Executive Offices)

(Zip Code)   Registrants telephone number,
    including area code:
    (212) 827-8000
  Securities Registered Pursuant
    to Section 12(b) of the Act:
  Title of Each Class

Name of Each Exchange on Which RegisteredClass A Common Stock, Par Value $0.01 Per Share

New York Stock Exchange   Securities Registered Pursuant
    to Section 12(g) of the Act: None
  Indicate by check mark if the
    registrant is a well-known seasoned issuer, as defined in
    Rule 405 of the Securities Act.    Yes
    o No
    x
  Indicate by check mark if the
    registrant is not required to file reports pursuant to
    Section 13 of Section 15(d) of the Act.  Yes
    o No
    x
  Indicate by check mark whether the
    registrant: (1) has filed all reports required to be filed
    by Section 13 or 15(d) of the Securities Exchange Act of
    1934 during the preceding 12 months (or for such shorter
    period that the registrant was required to file such reports),
    and (2) has been subject to such filing requirements for
    the past
    90 days. Yes x No
    o
  Indicate by check mark if
    disclosure of delinquent filers pursuant to Item 405 of
    Regulation S-K
    is not contained herein, and will not be contained, to the best
    of registrants knowledge, in definitive proxy or
    information statements incorporated by reference in
    Part III of this
    Form 10-K
    or any amendment to this
    Form 10-K.x
  Indicate by check mark whether the
    registrant is a large accelerated filer, an accelerated filer, a
    non-accelerated filer or a smaller reporting company. See
    definitions of large accelerated filer,
    accelerated filer and smaller reporting
    company in
    Rule 12b-2
    of the Exchange Act. (Check one):
  Large accelerated
    filer o

Accelerated
    filer x

Non-accelerated
    filer o(Do not check if a smaller
    reporting company)   Indicate by check mark whether the
    registrant is a shell company (as defined in
    Rule 12b-2
    of the Act).  Yes
    o No
    x
  The aggregate market value of the
    voting stock held by non-affiliates of the registrant, computed
    by reference to the number of shares outstanding and using the
    price at which the stock was last sold on June 30, 2007,
    was $408,967,135.*
  *Excludes 2,938,623 shares of
    our Class A Common Stock, and 26,722,032 shares of our
    Class B Common Stock, held by directors, officers and our
    founder, as of June 30, 2007. Exclusion of shares held by
    any person should not be construed to indicate that such person
    possesses the power, direct or indirect, to direct or cause the
    direction of the management or policies of the Company, or that
    such person controls, is controlled by or under common control
    with the Company.
  Number of Shares Outstanding As
    of March 10, 2008:
 27,129,447 shares of
    Class A Common Stock
 26,690,125 shares of
    Class B Common Stock
  Documents Incorporated by
    Reference.
 Portions of Martha Stewart Living
    Omnimedia, Inc.s Proxy Statement for
 Its 2008 Annual Meeting of
    Stockholders are Incorporated
 by Reference into Part III of
    This Report.




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##### Table of Contents





TABLE OF
    CONTENTS
  PARTIItem 1.

Business


3Overview


3History


4Publishing


4Merchandising


6Internet


10Broadcasting


11Intellectual Property


12Available Information


12Item 1A.

Risk Factors


12Item 1B.

Unresolved Staff Comments


18Item 2.

Properties


19Item 3.

Legal Proceedings


19Item 4.

Submission of Matters to a Vote of Security
    Holders


20PART IIItem 5.

Market for Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities


20Item 6.

Selected Financial Data


23Item 7.

Managements Discussion and Analysis of
    Financial Condition and Results of Operations


25Item 7A.

Quantitative and Qualitative Disclosure About
    Market Risk


43Item 8.

Financial Statements and Supplementary Data


43Item 9.

Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure


43Item 9A.

Controls and Procedures


44Item 9B.

Other Information


46PART IIIItem 10.

Directors, Executive Officers and Corporate
    Governance


46Item 11.

Executive Compensation


46Item 12.

Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters


46Item 13.

Certain Relationships and Related Transactions,
    and Director Independence


46Item 14.

Principal Accountant Fees and Services


46PART IVItem 15.

Exhibits and Financial Statement Schedules


47Signatures


51Index to Consolidated Financial Statements,
    Financial Statement Schedules and Other Financial
    Information


F-1Report of Independent Registered Public
    Accounting Firm


F-2Consolidated Statements of Operations for the
    years ended December 31, 2007, 2006 and 2005


F-3Consolidated Balance Sheets at December 31,
    2007 and 2006


F-4Consolidated Statements of Shareholders
    Equity for the years ended December 31, 2007, 2006 and
    2005


F-5Consolidated Statements of Cash Flows for the
    years ended December 31, 2007, 2006 and 2005


F-6Notes to Consolidated Financial Statements


F-7Financial Statement Schedule: II 
    Valuation and Qualifying Accounts for the years ended
    December 31, 2007, 2006 and 2005


F-29Exhibit IndexEX-10.41: EMPLOYMENT AGREEMENT WITH GREGORY BARTONEX-21: LIST OF SUBSIDIARIESEX-23.1: CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMEX-31.1: CERTIFICATIONEX-31.2: CERTIFICATIONEX-32: CERTIFICATION  2




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Form 10-K,
  FORWARD-LOOKING
    STATEMENTS
  Form 10-K, Form 10-K, Form 10-K.
 PART I Item 1.  Business. OVERVIEW     
    Continue to increase advertising on our media platforms,
    including publishing, broadcasting and online, through
    cross-platform, omnimedia initiatives;
    Leverage our brands through merchandising relationships; and
    Create, launch
    and/or
    acquire new brands     
    Cooking and Entertaining (recipes, techniques, and indoor and
    outdoor entertaining)
    Holidays (celebrating special days and special occasions)
    Crafts (how-to projects)
    Home (decorating, collecting and renovating)
    Whole Living (healthy living and sustainable practices)
    Weddings (all aspects of planning, celebrating and commemorating
    a wedding) 3




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##### Table of Contents




    Organizing (homekeeping, petkeeping, clotheskeeping, restoring
    and other types of domestic maintenance)
    Gardening (planting, landscape design and outdoor living)   HISTORY  Entertaining Martha Stewart Living editor-in-chief. Living Martha by Mail
  BUSINESS
    SEGMENTS
   PUBLISHING    Magazines
  Martha Stewart Living. Martha Stewart Living Martha
    Stewart Living Martha Stewart
    Living
  Everyday Food. Everyday Food Everyday
    Food
  Martha Stewart Weddings. Martha
    Stewart Weddings Martha Stewart Weddings Martha Stewart
    Weddings
 4




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Body + Soul. Body + Soul Dr. Andrew Weils Self Healing Body + Soul
  Blueprint: Design Your Life. Blueprint: Design Your
    Life ages 25-39, Blueprint
  Magazine Summary
    Yearly

2007 RateTitle

Description

Frequency

Base *Martha Stewart Living

Home and womens lifestyle


12


1,950,000Everyday Food

Cooking


10


875,000Martha Stewart Weddings

Weddings


5
**

N/A ***Body + Soul

Whole living


8
****

450,000Blueprint

Womens lifestyle


6
*****

400,000  *
    
    Current 2008 rate bases are:
    Martha Stewart Living (2,000,000); Everyday Food
    (900,000); and Body + Soul (550,000)**
    
    2007 included one special issue of
    Martha Stewart Weddings: Special Color Issue***
    
    Does not have a stated rate base.****
    
    2008 yearly frequency will
    increase to 10 issues of Body+ Soul*****
    
    Blueprintwas launched in May 2006 and discontinued as a stand-alone
    publication after the January/February 2008 issue.  Special Interest Publications. and/or Martha Stewart
    Living Good Things for the
    Kitchen, Martha Stewart Living: Outdoor Living, Good Things for
    Kids, Good Things for the Home, Martha Stewart Holiday:
    Halloween, Everyday Food Holiday Baking Body +
    Soul
  Magazine Production, Distribution and
    Fulfillment. Martha Stewart Living
 5




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Books
  Martha Stewart Living Cookbook Volume I: The
    Original Classics; Martha Stewart Living Cookbook Volume II: The
    New Classics; Martha Stewarts Wedding
    Cakes Martha
    Stewarts Homekeeping Handbook: The Essential Guide to
    Caring for Everything in Your Home; Everyday Food: Great Food
    Fast; Martha Stewarts Baking Handbook
  Competition
  Martha Stewart Living Everyday Food Martha Stewart Weddings Body + Soul
  Seasonality
  Martha Stewart Weddings
 MERCHANDISING  and/or
  Licensed
    Retail Partnerships
  Martha
    Stewart Everyday at Kmart and Sears Canada
  Martha Stewart Everyday
 6




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Martha Stewart Everyday
  Martha Stewart Everyday
  Martha
    Stewart Collection at Macys
  Martha Stewart Collection Martha Stewart Collection trim-a-tree Martha Stewart Collection
  Martha
    Stewart at Costco
    Martha
    Stewart Colors at Lowes
  Martha Stewart
    Colors
  Martha
    Stewart Flowers with 1-800-Flowers
  same-day
  Digital
    Photography Products
   7




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Licensed
    Manufacturing Partnerships
  Martha
    Stewart Crafts
  Martha Stewart Crafts
  Martha
    Stewart Furniture with Bernhardt
    KB Home /
    Martha Stewart Homes
    Martha
    Stewart Fine China for Waterford Wedgwood
  Martha Stewart Collection
  Martha
    Stewart Lighting
  Martha Stewart Lighting
  Martha
    Stewart Area Rugs
  Martha Stewart Rugs
 8




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Martha
    Stewart Carpet Tiles for FLOR
  Martha Stewart Floor Designs
  Summary of Retail and Merchandising License
    Agreements
 License Partner

Basis For Royalties[a]

Expiration Date[b]Kmart (Multiple product lines)

Retail sales

January 2010Sears Canada (Multiple product lines)

Retail sales

August 2008Macys (Multiple product lines)

Retail sales

January 2013Costco (Food)

Retail sales

December 2009Lowes (Paint)

Fee based upon gallons tinted from the Martha Stewart
    Colors palette

December 20091-800-Flowers

Retail sales

March 2011EK Success (Crafts)

Sales (Retail and/or Wholesale)

March 2012Wilton (Crafts)

Sales (Retail and/or Wholesale)

Five years after LaunchBernhardt (Furniture)

Wholesale sales

December 2012KB Home (Cary, NC)

[c]

[c]KB Home (National Agreement)

Aggregate gross sales

February 2011Waterford Wedgwood (China)

Wholesale sales

January 2013Generation Brands (Lighting)

Wholesale sales

September 2010Safavieh (Area Rugs)

Wholesale sales

July 2010FLOR (Carpet Tiles)

Sales (Retail and/or Wholesale)

July 2010  [a]
    
    Basis for royalties is a summary of
    contractual agreements regarding the calculation of royalties
    but does not represent the basis for revenue recognition as
    several contracts contain minimum guarantee clauses or other
    revenue triggers that require specific accounting application
    (see Note 2 to Consolidated Financial
    Statements  Summary of Significant Accounting
    Policies).[b]
    
    Expiration dates are typically a
    function of the launch date of the program. Therefore, these
    expiration dates are subject to change for products that have
    not been introduced to date. Certain contracts are subject to
    possible renewals.[c]
    
    In December 2007, we amended the
    terms of our relationship with this initial KB Home contract,
    accepting a one-time payment in exchange for certain promotional
    obligations.  Competition
   9




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Seasonality
   INTERNET  marthastewart.com Martha Stewart Flowers
  Martha By Mail
  Marthastewart.com
  marthastewart.com
  Martha
    Stewart Flowers
  marthasflowers.com marthastewartflowers.com same-day Martha Stewart
    Flowers
  Digital
    Photo Products
   10




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Competition
  Marthastewart.com
  Seasonality
  marthastewart.com Martha Stewart Flowers
 BROADCASTING    The Martha Stewart
    Show The Martha Stewart Show Living The Martha Stewart Show
  Martha Stewart Living Radio
  Everyday Food half-hour The
    Martha Stewart Show, Everyday Food Everyday Baking from Everyday
    Food
  The Martha
    Stewart Show one-day Martha Stewart Crafts Living
  video-on-demand Martha Stewart On Demand
 11




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Competition
  and/or
 INTELLECTUAL
    PROPERTY  Martha Stewart Living Martha Stewart Everyday Martha Stewart Collection Everyday Food Martha Stewart Weddings marthastewart.com, Martha
    Stewart Flowers, Body + Soul wholeliving.com Form 10-K.
 AVAILABLE
    INFORMATION  www.marthastewart.com www.marthastewart.com Form 10-K, Form 10-Q Form 8-K, marthastewart.com
 Item 1A. Risk
    Factors    Our success depends in part on the popularity of our brands
    and the reputation and popularity of our founder, Martha
    Stewart, and any adverse reactions to publicity relating to
    Ms. Stewart, or the loss of her services, could adversely
    affect our revenues, results of operations and our ability to
    maintain or generate a consumer base.
   12




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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.
   13




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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 Showfails 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.
    Failure of our television programming to maintain a
    sufficient audience
  The Martha Stewart Show one-hour
  Adverse trends in the television business generally
    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.
   14




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marthastewart.com
  
    significantly increase our online traffic and advertising
    revenue;
    attract and retain a base of frequent visitors to our website;
    expand the content, products and tools we offer over our website;
    respond to competitive developments while maintaining a distinct
    brand identity;
    attract and retain talent for critical positions;
    maintain and form relationships with strategic partners to
    attract more consumers;
    continue to develop and upgrade our technologies; and
    bring new product features to market in a timely manner.    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.
  Blueprint
  Acquiring or developing additional brands or businesses, and
    integrating acquired assets, poses inherent financial and other
    risks and challenges.
   15




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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.
    
    decreased competition, which may lead to increased prices;
    interruptions and delays in services provided by such
    vendors; and
    greater dependence on certain vendors. 16




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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.
   17




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Our intellectual property may be infringed upon or others may
    accuse us of infringing on their intellectual property, either
    of which could adversely affect our business and result in
    costly litigation.
    A loss of the services of other key personnel could have a
    material adverse effect on our business.
    We operate in four highly competitive businesses: Publishing,
    Merchandising, Internet and Broadcasting each of which subjects
    us to competitive pressures.
  Form 10-K
 Item 1B.  Unresolved
    Staff Comments.   18




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Item 2.  Properties.    Approximate AreaLocation

Use

in Square Feet601 West
    26th Street
    New York, NY

Product design facilities, photography studio, Merchandising and
    Internet offices, test kitchens, and prop storage


206,61411 West 42nd Street New York, NY

Principal executive and administrative offices; publishing
    offices; and sales offices


92,649226 West
    26th Street
    New York, NY

Executive and administrative office for television production


22,050221 West
    26th Street
    New York, NY

Television production facilities


25,80042 Pleasant Street Watertown, MA

Publishing office for Body & Soul Group


7,860Satellite Sales Offices in MI, IL & CA

Advertising sales offices


8,359     Form 10-K.
   Item 3.  Legal
    Proceedings.  In re Martha Stewart
    Living Omnimedia, Inc. Securities Litigation, 02-CV-6273
   19




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Item 4.  Submission
    of Matters to a Vote of Security Holders.   PART II Item 5.  Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities.  Market
    for the Common Stock
    Q1


Q2


Q3


Q4


Q1


Q2


Q3


Q42006


2006


2006


2006


2007


2007


2007


2007High Sales Price

$
19.80


$
21.47


$
19.30


$
23.21


$
22.50


$
19.50


$
17.27


$
13.96Low Sales Price

$
16.30


$
16.01


$
14.76


$
17.46


$
16.70


$
16.65


$
10.80


$
8.75     Dividends
    Recent
    Sales of Unregistered Securities and Use of Proceeds
   20




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Issuer
    Purchases of Equity Securities
    Maximum Number (orTotal Number of



Approximate DollarShares (or Units)



Value) of Shares (orTotal Number of







Purchased as Part of



Units) that May Yet BeShares (or Units)



Average Price Paid



Publicly Announced



Purchased under thePeriod


Purchased



per Share (or Unit)



Plans or Programs



Plans or ProgramsOctober
    2007(1)



2,544



$
13.37




Not applicable




Not applicableNovember
    2007(1)



30,495



$
10.68




Not applicable




Not applicableDecember
    2007(1)



7,560



$
10.42




Not applicable




Not applicableTotal for the quarter ended December 31, 2007



40,599



$
11.08




Not applicable




Not applicable   (1)
    Represents shares withheld by, or delivered to us pursuant to
    provisions in agreements with recipients of restricted stock
    granted under our stock incentive plan allowing us to withhold,
    or the recipient to deliver to us, the number of shares having
    the fair value equal to tax withholding due. 21




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Notwithstanding anything to the contrary set forth in any of
    our filings under the Securities Act of 1933, as amended, or the
    Securities Exchange Act of 1934, as amended, that might
    incorporate Securities and Exchange Commission filings, in whole
    or in part, the following performance graph shall not be deemed
    to be incorporated by reference into any such filings.
  Performance Graph
    COMPARE
    CUMULATIVE TOTAL RETURN
 AMONG
    MARTHA STEWART LIVING OMNIMEDIA, INC.,
 S&P
    COMPOSITE INDEX AND SIC CODE INDEX
  
  ASSUMES
    $100 INVESTED ON DEC. 31, 2002
 ASSUMES
    DIVIDEND REINVESTED
 FISCAL
    YEAR ENDING DEC. 31, 2007
    The Publishing Index
    consists of companies that are primarily publishers of
    periodicals, although many also conduct other businesses,
    including owning and operating television stations and cable
    networks, and is weighted according to market capitalization of
    the companies in the index. The hypothetical investment assumes
    investment in a portfolio of equity securities that mirror the
    composition of the Publishing Index.
 22




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Item 6.  Selected
    Financial Data.  SELECTED
    FINANCIAL DATA
    Five Years ended December 31,
    (in thousands except per share data)
  2007


2006


2005


2004


2003INCOME STATEMENT DATAREVENUESPublishing

$
183,727


$
156,559


$
125,765


$
95,960


$
135,529Merchandising


84,711



69,504



58,819



53,386



53,395Internet


19,189



15,775



11,258



27,512



30,813Broadcasting


40,263



46,503



16,591



10,580



26,111Total revenues


327,890



288,341



212,433



187,438



245,848Operating income (loss)


7,714



(2,833)



(78,311)



(60,004)



(6,405)Income (loss) from continuing operations


10,289



(16,250)



(75,295)



(59,073)



(1,923)Loss from discontinued operations


-



(745)



(494)



(526)



(848)Net income (loss)

$
10,289


$
(16,995)


$
(75,789)


$
(59,599)


$
(2,771)PER SHARE DATAEarnings per share:Basic and diluted  Income (loss) from continuing
    operations

$
0.20


$
(0.32)


$
(1.48)


$
(1.19)


$
(0.04)Basic and diluted  Loss from discontinued operations


-



(0.01)



(0.01)



(0.01)



(0.02)Basic and diluted  Net income (loss)

$
0.20


$
(0.33)


$
(1.49)


$
(1.20)


$
(0.06)Weighted average common shares outstanding:Basic


52,449



51,312



50,991



49,712



49,389Diluted


52,696



51,312



50,991



49,712



49,389Dividends per common share

$
-


$
0.50


$
-


$
-


$
-FINANCIAL POSITIONCash and cash equivalents

$
30,536


$
28,528


$
20,249


$
104,647


$
165,566Short-term investments


26,745



35,321



83,788



35,309



3,100Total assets


255,267



228,047



253,828



264,678



309,102Shareholders equity


155,529



130,957



160,631



187,628



236,665OTHER FINANCIAL DATACash flow provided by (used in) operating activities

$
11,735


$
(5,711)


$
(30,349)


$
(22,226)


$
(9,634)Cash flow provided by (used in) investing activities


(6,606)



40,125



(58,300)



(39,756)



15,956Cash flow provided by (used in) financing activities


(3,121)



(26,135)



4,251



1,063



404  23




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NOTES TO
    SELECTED FINANCIAL DATA
  General
    Earnings
    from continuing operations
  Fiscal 2007 The Martha Stewart Show
  Fiscal 2006 The Martha Stewart Show In re Martha Stewart Living Omnimedia Securities
    Litigation
  Fiscal 2005 The Martha Stewart
    Show
  Fiscal 2004
  Fiscal 2003
 24




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Item 7.  Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations.  EXECUTIVE
    SUMMARY
    Martha Stewart Collection Martha Stewart Crafts
  Publishing
  Martha Stewart Living,
    Martha Stewart Weddings, Everyday Food, Body + Soul; Blueprint
    Merchandising
   25




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Martha Stewart
    Collection
    1/31/02


1/31/03


1/31/04


1/31/05


1/31/06


1/31/07


1/31/08


1/31/09


1/31/10Minimum
    Royalty
    Amounts


$15.3


$40.4


$47.5


$49.0


$54.0


$59.0


$65.0


$20.0*


$15.0*      Internet
  marthastewart.com Martha Stewart
    Flowers
  marthastewart.com
  Broadcasting
  The Martha Stewart Show Everyday
    Food Everyday
    Baking from Everyday Food Martha Stewart Living Radio
  The Martha Stewart
    Show
 26




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The Martha Stewart Show The Martha Stewart Show Everyday Food Everyday Baking Martha
    Stewart Crafts
   27




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RESULTS
    OF OPERATIONS
  Comparison
    for the Year Ended December 31, 2007 to the Year Ended
    December 31, 2006.
  PUBLISHING
    SEGMENT
  (in thousands)

2007


2006


VariancePublishing Segment RevenuesAdvertising

$
106,691


$
83,285


$
23,406Circulation


71,707



69,721



1,986Other


5,329



3,553



1,776Total Publishing Segment Revenues


183,727



156,559



27,168Publishing Segment Operating Costs and ExpensesProduction, distribution and editorial


93,312



83,770



(9,542)Selling and promotion


72,655



63,386



(9,269)General and administrative


5,034



2,777



(2,257)Depreciation and amortization


1,188



600



(588)Total Publishing Segment Operating Costs and Expenses


172,189



150,533



(21,656)Publishing Segment Operating Income

$
11,538


$
6,026


$
5,512   Martha Stewart Living Everyday Food Body + Soul Martha Stewart
    Weddings Blueprint Blueprint Martha
    Stewart Weddings Everyday Food Martha Stewart Living
  Magazine Publication ScheduleYear ended December 31,

2007


2006Martha Stewart Living


Twelve Issues



Twelve IssuesMartha Stewart Weddings(a)


Five Issues



Four IssuesEveryday Food


Ten Issues



Ten IssuesSpecial Interest Publications


Nine Issues



Five IssuesBody + Soul


Eight Issues



Eight IssuesBlueprint(b)


Six Issues



Two Issues   (a)
    
    In 2007, we published one special
    Martha Stewart Weddingsissue.(b)
    
    Launched in May 2006 and
    discontinued as a stand-alone publication after the
    January/February 2008 issue.  Martha Stewart Living Blueprint
 28




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##### Table of Contents



Martha Stewart Living Everyday Food Blueprint
  MERCHANDISING
    SEGMENT
  (in thousands)

2007


2006


VarianceMerchandising Segment RevenuesKmart earned royalty

$
25,190


$
29,853


$
(4,663)Kmart minimum guarantee
    true-up


39,102



26,126



12,976Other


20,419



13,525



6,894Total Merchandising Segment Revenues


84,711



69,504



15,207Merchandising Segment Operating Costs and ExpensesProduction, distribution and editorial


13,348



11,956



(1,392)Selling and promotion


6,475



3,145



(3,330)General and administrative


7,284



6,853



(431)Depreciation and amortization


375



1,021



646Total Merchandising Segment Operating Costs
    and Expenses


27,482



22,975



(4,507)Merchandising Segment Operating Income

$
57,229


$
46,529


$
10,700   Martha Stewart Collection macys.com Martha Stewart Crafts Singer Husqvarna Viking Pfaff
   29




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##### Table of Contents



INTERNET
    SEGMENT
  (in thousands)

2007


2006


VarianceInternet Segment RevenuesAdvertising and other

$
11,779


$
8,196


$
3,583Product


7,410



7,579



(169)Total Internet Segment Revenues


19,189



15,775



3,414Internet Segment Operating Costs and ExpensesProduction, distribution and editorial


14,092



10,444



(3,648)Selling and promotion


6,023



3,335



(2,688)General and administrative


3,969



2,410



(1,559)Depreciation and amortization


1,242



117



(1,125)Total Internet Segment Operating Costs and Expenses


25,326



16,306



(9,020)Internet Segment Operating Loss

$
(6,137)


$
(531)


$
5,606      30




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##### Table of Contents



BROADCASTING
    SEGMENT
  (in thousands)

2007


2006


VarianceBroadcasting Segment RevenuesAdvertising

$
21,078


$
16,969


$
4,109Radio


7,500



7,504



(4)Licensing and other


11,685



22,030



(10,345)Total Broadcasting Segment Revenues


40,263



46,503



(6,240)Broadcasting Segment Operating Costs and ExpensesProduction, distribution and editorial


34,099



32,043



(2,056)Selling and promotion


4,026



4,324



298General and administrative


7,456



8,726



1,270Depreciation and amortization


2,201



3,026



825Total Broadcasting Segment Operating Costs and Expenses


47,782



48,119



337Broadcasting Segment Operating Loss

$
(7,519)


$
(1,616)


$
(5,903)   The Martha Stewart Show The Martha Stewart Show The
    Martha Stewart Show
  The Martha Stewart Show The Martha
    Stewart Show The Martha
    Stewart Show
 31




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##### Table of Contents



CORPORATE
  (in thousands)

2007


2006


VarianceCorporate Operating Costs and ExpensesGeneral and administrative

$
44,841


$
49,407


$
4,566Depreciation and amortization


2,556



3,834



1,278Total Corporate Operating Costs and Expenses


47,397



53,241



5,844Corporate Operating Loss

$
(47,397)


$
(53,241)


$
5,844     INTEREST INCOME, NET.
  LEGAL SETTLEMENT. In
    re Martha Stewart Living Omnimedia, Inc. Securities
    Litigation
  INCOME TAX PROVISION.
  LOSS FROM DISCONTINUED OPERATIONS.
  NET INCOME.
 32




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##### Table of Contents



RESULTS
    OF OPERATIONS
  Comparison
    for the Year Ended December 31, 2006 to the Year Ended
    December 31, 2005.
  PUBLISHING
    SEGMENT
  (in thousands)

2006


2005


VariancePublishing Segment RevenuesAdvertising

$
83,285


$
52,032


$
31,253Circulation


69,721



68,607



1,114Other


3,553



5,126



(1,573)Total Publishing Segment Revenues


156,559



125,765



30,794Publishing Segment Operating Costs and ExpensesProduction, distribution and editorial


83,770



75,342



(8,428)Selling and promotion


63,386



62,076



(1,310)General and administrative


2,777



2,695



(82)Depreciation and amortization


600



987



387Total Publishing Segment Operating Costs and Expenses


150,533



141,100



(9,433)Publishing Segment Operating Income/(Loss)

$
6,026


$
(15,335)


$
21,361   Martha Stewart Living Everyday Food Martha Stewart Weddings Body + Soul Blueprint The Martha Rules
  Magazine Publication ScheduleYear ended December 31,

2006


2005Martha Stewart Living


Twelve Issues



Twelve IssuesMartha Stewart Weddings(a)


Four Issues



Five IssuesEveryday Food


Ten Issues



Ten IssuesSpecial Interest Publications


Five Issues



Seven IssuesBody + Soul


Eight Issues



Eight IssuesBlueprint(b)


Two Issues



N/A   (a)
    
    In 2005, we published one special
    Martha Stewart Weddingsissue.(b)
    
    Launched in May 2006 and
    discontinued as a stand-alone publication after the
    January/February 2008 issue.  Martha Stewart Living Blueprint
 33




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##### Table of Contents



Blueprint
  MERCHANDISING
    SEGMENT
  (in thousands)

2006


2005


VarianceMerchandising Segment RevenuesKmart earned royalty

$
29,853


$
31,126


$
(1,273)Kmart minimum guarantee
    true-up


26,126



18,708



7,418Other


13,525



8,985



4,540Total Merchandising Segment Revenues


69,504



58,819



10,685Merchandising Segment Operating Costs and ExpensesProduction, distribution and editorial


11,956



10,475



(1,481)Selling and promotion


3,145



3,135



(10)General and administrative


6,853



5,655



(1,198)Depreciation and amortization


1,021



845



(176)Total Merchandising Segment Operating Costs and Expenses


22,975



20,110



(2,865)Merchandising Segment Operating Income

$
46,529


$
38,709


$
7,820      34




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##### Table of Contents



INTERNET
    SEGMENT
  (In thousands)

2006


2005


VarianceInternet Segment RevenuesAdvertising and other

$
8,196


$
2,516


$
5,680Product


7,579



8,742



(1,163)Total Internet Segment Revenues


15,775



11,258



4,517Internet Operating Costs and ExpensesProduction, distribution and editorial


10,444



10,719



275Selling and promotion


3,335



1,649



(1,686)General and administrative


2,410



1,476



(934)Depreciation and amortization


117



951



834Total Internet Segment Operating Costs and Expenses


16,306



14,795



(1,511)Internet Segment Operating Loss

$
(531)


$
(3,537)


$
3,006   marthastewart.com Martha By Mail marthastewartflowers.com
  Martha Stewart: The Catalog for Living marthastewart.com marthastewart.com
 35




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##### Table of Contents



BROADCASTING
    SEGMENT
  (In thousands)

2006


2005


VarianceBroadcasting Segment RevenuesAdvertising

$
16,969


$
6,363


$
10,606Radio


7,504



939



6,565Licensing and other


22,030



9,289



12,741Total Broadcasting Segment Revenues


46,503



16,591



29,912Broadcasting Segment Operating Costs and ExpensesProduction, distribution and editorial


32,043



29,393



(2,650)Selling and promotion


4,324



4,177



(147)General and administrative


8,726



8,901



175Depreciation and amortization


3,026



1,321



(1,705)Total Broadcasting Segment Operating Costs and Expenses


48,119



43,792



(4,327)Broadcasting Segment Operating Loss

$
(1,616)


$
(27,201)


$
25,585   The Martha Stewart Show Martha Stewart Living Radio
  The Martha Stewart Show The Martha Stewart Show
 36




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##### Table of Contents



CORPORATE
  (In thousands)

2006


2005


VarianceCorporate Operating Costs and ExpensesGeneral and administrative

$
49,407


$
67,254


$
17,847Depreciation and amortization


3,834



3,693



(141)Total Corporate Operating Costs and Expenses


53,241



70,947



17,706Corporate Operating Loss

$
(53,241)


$
(70,947)


$
17,706   The Apprentice:
    Martha Stewart
  INTEREST INCOME, NET.
  LITIGATION RESERVE. In
    re Martha Stewart Living Omnimedia, Inc. Securities
    Litigation
  INCOME TAX PROVISION.
  LOSS FROM DISCONTINUED OPERATIONS.
  NET LOSS.
 37




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##### Table of Contents



LIQUIDITY
    AND CAPITAL RESOURCES
  Overview
        Sources
    and Uses of Cash
    Operating
    Activities
      Investing
    Activities
     38




---



##### Table of Contents



marthastewart.com
  marthastewart.com
  The Martha Stewart
    Show
  Financing
    Activities
         39




---



##### Table of Contents



Cash
    Requirements
    Payments due by period (in thousands)MoreLess than











thanContractual Obligations


Total



1 year



1-3 years



3-5 years



5 years



OtherLong-Term Debt Obligations




























Capital Lease Obligations




























Operating Lease Obligations


$
90,129



$
14,028



$
23,887



$
14,468



$
37,746



$
Purchase Obligations




























Unrecognized Tax Benefits *



1,284




148



















1,136Other Long-Term Liabilities Reflected on the Companys
    Balance Sheet under GAAP




























Total


$
91,413



$
14,176



$
23,887



$
14,468



$
37,746



$
1,136          OFF-BALANCE
    SHEET ARRANGEMENTS
    CRITICAL
    ACCOUNTING POLICIES AND ESTIMATES
  General
   40




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##### Table of Contents



Revenue
    Recognition
    No. 00-21, (EITF 00-21) EITF 00-21 EITF 00-21 EITF 00-21
    true-up
     41




---



##### Table of Contents



Television
    Production Costs
    Intangible
    Assets
        Long-Lived
    Assets
    Deferred
    Income Tax Asset Valuation Allowance
   42




---



##### Table of Contents



Non-Cash
    Equity Compensation
   Item 7A.  Quantitative
    and Qualitative Disclosure about Market Risk.       Item 8.  Financial
    Statements and Supplementary Data.  Form 10-K
 Item 9.  Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure.   43




---



##### Table of Contents



Item 9A.  Controls
    and Procedures.  Evaluation
    of Disclosure Controls and Procedures
  Rules 13a-15(e) 15d-15(e) Rules 13a-15(b) 15d-15(e)),
  Managements
    Report on Internal Control Over Financial Reporting
      Evaluation
    of Changes in Internal Control Over Financial
    Reporting
   44




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
                    45




---



##### Table of Contents



Item 9B.  Other
    Information.   PART III Item 10.  Directors,
    Executive Officers and Corporate Governance.  ELECTION OF DIRECTORS INFORMATION CONCERNING
    EXECUTIVE OFFICERS AND OUR FOUNDER, MEETINGS
    AND COMMITTEES OF THE BOARD SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING
    COMPLIANCE
 Item 11.  Executive
    Compensation.  MEETINGS AND COMMITTEES OF
    THE BOARD COMPENSATION OF OUTSIDE
    DIRECTORS, DIRECTOR COMPENSATION TABLE,
    COMPENSATION COMMITTEE REPORT, COMPENSATION
    DISCUSSION AND ANALYSIS, SUMMARY COMPENSATION
    TABLE, GRANTS OF PLAN-BASED AWARDS IN 2007,
    OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END,
    OPTION EXERCISES AND STOCK VESTED DURING 2007, POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE
    IN CONTROL
 Item 12.  Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters.  SECURITY OWNERSHIP OF
    CERTAIN BENEFICIAL OWNERS AND MANAGEMENT EQUITY COMPENSATION PLAN INFORMATION
 Item 13.  Certain
    Relationships and Related Transactions, and Director
    Independence.  CERTAIN RELATIONSHIPS AND
    RELATED PARTY TRANSACTIONS MEETING AND
    COMMITTEES OF THE BOARD
 Item 14.  Principal
    Accountant Fees and Services.  PRINCIPAL ACCOUNTANT FEES
    AND SERVICES
   46




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##### Table of Contents



PART IV Item 15.  Exhibits
    and Financial Statement Schedules.  page F-1 Form 10-K.
  Exhibits:
  ExhibitNumber



Exhibit Title3.1



Martha Stewart Living Omnimedia, Inc.s Certificate of
    Incorporation (incorporated by reference to our Registration
    Statement on
    Form S-1,
    File Number
    333-84001
    (the Registration Statement)).3.2



Martha Stewart Living Omnimedia, Inc.s By-Laws
    (incorporated by reference to the Registration Statement).3.3



Amendment and Restatement of Article V, Section 5.1 of
    By-Laws of Martha Stewart Living Omnimedia, Inc. (incorporated
    by reference to our Current Report on
    Form 8-K
    filed on December 7, 2007).4.1



Warrant to purchase shares of Class A Common Stock, dated
    August 11, 2006 (incorporated by reference to our Quarterly
    Report on
    Form 10-Q
    for the quarter ended September 30, 2006).10.1



Form of Stockholders Agreement (incorporated by reference
    to the Registration Statement).10.2



1999 Stock Incentive Plan (incorporated by reference to the
    Registration Statement), as amended by Exhibits 10.2.1,
    10.2.2 and 10.2.1.10.2.1



Amendment No. 1 to the 1999 Stock Incentive Plan, dated as
    of March 9, 2000 (incorporated by reference to our Annual
    Report on
    Form 10-K
    for the year ended December 31, 1999, File Number
    001-15395
    (the 1999
    10-K))
    as amended by Exhibits 10.2.2 and 10.2.3.10.2.2



Amendment No. 2 to the Amended and Restated 1999 Stock
    Incentive Plan, dated as of May 11, 2000 (incorporated by
    reference to our Quarterly Report on
    Form 10-Q
    for the quarter ended June 30, 2000 (the June 2000
    10-Q))
    as amended by Exhibit 10.2.3.10.2.3



Amendment No. 3 to the Amended and Restated 1999 Stock
    Incentive Plan (incorporated by reference to our Current Report
    on
    Form 8-K
    filed on May 17, 2005 (the May 17, 2005
    8-K)).10.3



1999 Non-Employee Director Stock and Option Compensation Plan
    (incorporated by reference to the Registration Statement) as
    amended by Exhibit 10.3.1.10.3.1



Amendment No. 1 to the Martha Stewart Living Omnimedia,
    Inc. Non-Employee Director Stock and Option Compensation Plan
    (incorporated by reference to the May 17, 2005
    8-K).10.4



Martha Stewart Living Omnimedia LLC Nonqualified Class A
    LLC Unit/Stock Option Plan (incorporated by reference to the
    Registration Statement).10.5



Form of Employment Agreement, dated as of October 22, 1999,
    by and between Martha Stewart Living Omnimedia, Inc. and Martha
    Stewart (incorporated by reference to the Registration
    Statement) as amended by Exhibit 10.5.1.10.5.1



Amendment, dated as of March 15, 2004 to the Employment
    Agreement, dated October 22, 1999, as amended, by and
    between the Company and Martha Stewart (incorporated by
    reference to our Quarterly Report on
    Form 10-Q
    for the quarter ended March 31, 2004 (the March 2004
    10-Q)).10.6



Form of Intellectual Property License and Preservation
    Agreement, dated as of October 22, 1999, by and between
    Martha Stewart Living Omnimedia, Inc. and Martha Stewart
    (incorporated by reference to the Registration Statement).10.7



Form of Location Rental Agreement, dated as of October 22,
    1999, by and between Martha Stewart Living Omnimedia, Inc. and
    Martha Stewart (incorporated by reference to the Registration
    Statement) as amended by Exhibit 10.7.1 and 10.7.2.10.7.1



Amendment, dated as of January 1, 2003, to Location Rental
    Agreement, dated as of October 22, 1999, by and between
    Martha Stewart Living Omnimedia, Inc. and Martha Stewart
    (incorporated by reference to our Annual Report on
    Form 10-K
    for the year ended December 31, 2002 (the 2002
    10-K))
    as amended by Exhibit 10.7.2.10.7.2



Amendment, dated as of March 15, 2004 to the Location
    Rental Agreement, dated October 22, 1999, as amended, by
    and between the Company and Martha Stewart (incorporated by
    reference to the March 2004
    10-Q).10.8



Lease, dated as of September 24, 1992, between Tishman
    Speyer Silverstein Partnership and Time Publishing Ventures,
    Inc., as amended by First Amendment of Lease dated as of
    September 24, 1994 between 11 West 42 Limited
    Partnership and Time Publishing Ventures, Inc. (incorporated by
    reference to the Registration Statement). 47




---



##### Table of Contents



ExhibitNumber



Exhibit Title10.9



Lease, dated as of March 31, 1998, between 11 West 42
    Limited Partnership and Martha Stewart Living Omnimedia LLC
    (incorporated by reference to the Registration Statement).10.10



Lease, dated August 20, 1999, between 601 West
    Associates LLC and Martha Stewart Living Omnimedia LLC
    (incorporated by reference to the Registration Statement).10.10.1



First Lease Modification Agreement, dated December 24,
    1999, between 601 West Associates LLC and Martha Stewart
    Living Omnimedia, Inc. (incorporated by reference to the 1999
    10-K).10.11



Lease, dated as of October 1, 2000, between Newtown Group
    Properties Limited Partnership and Martha Stewart Living
    Omnimedia, Inc. (incorporated by reference to our Quarterly
    Report on
    Form 10-Q
    for the quarter ended June 30, 2001(the June 2001
    10-Q)).10.12



License Agreement, dated June 21, 2001 by and between Kmart
    Corporation and MSO IP Holdings, Inc. (incorporated by reference
    to the June 2001
    10-Q) as
    amended by Exhibit 10.12.1.10.12.1



Amendment, dated as of April 22, 2004 to the License
    Agreement, by and between MSO IP Holdings, Inc. and Kmart
    Corporation, dated June 21, 2001 (incorporated by reference
    to our Quarterly Report on
    Form 10-Q
    for the quarter ended June 30, 2004).10.13



Split-Dollar Life Insurance Agreement, dated February 28,
    2001, by and among Martha Stewart Living Omnimedia, Inc., Martha
    Stewart and The Martha Stewart Family Limited Partnership
    (incorporated by reference to our Annual Report on
    Form 10-K
    for the year ended December 31, 2000 (the 2000
    10-K))
    as amended by Exhibits 10.13.1 and 10.13.2.10.13.1



Amendment, dated January 28, 2002, to Split-Dollar Life
    Insurance Agreement, dated February 28, 2001, by and
    between Martha Stewart Living Omnimedia, Inc., Martha Stewart
    and The Martha Stewart Family Limited Partnership (incorporated
    by reference to our Annual Report on
    Form 10-K
    for the year ended December 31, 2001 (the 2001
    10-K))
    as amended by Exhibit 10.13.2.10.13.2



Amendment, dated as of January 1, 2003, to Split-Dollar
    Life Insurance Agreement, dated February 28, 2001, as
    amended, by and among Martha Stewart Living Omnimedia, Inc.,
    Martha Stewart and The Martha Stewart Family Limited Partnership
    (incorporated by reference to our 2002
    10-K).10.14



Investment Agreement, dated as of January 8, 2002, by and
    among Martha Stewart Living Omnimedia, Inc., The Martha Stewart
    Family Limited Partnership, ValueAct Capital Partners, L.P.,
    ValueAct Capital Partners II, L.P. and ValueAct Capital
    International, Ltd (incorporated by reference to the 2001
    10-K).10.15



2002 Performance-Based Executive Bonus Plan (incorporated by
    reference to the 2002
    10-K).10.16



2003 Key Executive Bonus Plan (incorporated by reference to our
    Annual Report on
    Form 10-K
    for the year ended December 31, 2003 (the 2003
    10-K)).10.17



Employment Agreement dated as of September 17, 2004,
    between Martha Stewart Living Omnimedia, Inc. and Martha Stewart
    (incorporated by reference to our Current Report on
    Form 8-K
    filed on September 23, 2004 (September 23, 2004
    8-K)).10.18



Location Rental Agreement dated as of September 17, 2004,
    between Martha Stewart Living Omnimedia, Inc. and Martha Stewart
    (incorporated by reference to the September 23, 2004
    8-K).10.18.1



Letter Agreement between Martha Stewart Living Omnimedia, Inc.
    and Martha Stewart extending that certain Location Rental
    Agreement, dated as of September 17, 2004, between the
    parties (incorporated by reference to our Quarterly Report on
    Form 10-Q
    filed November 9, 2007).10.19



Letter Agreement dated September 17, 2004 between Martha
    Stewart Living Omnimedia, Inc. and Martha Stewart (incorporated
    by reference to the September 23, 2004
    8-K).10.20



Employment Agreement dated as of November 11, 2004, between
    Martha Stewart Living Omnimedia, Inc. and Susan Lyne
    (incorporated by reference to our Current Report on
    Form 8-K
    filed on November 16, 2004 (the November 16,
    2004
    8-K)).10.21



Restricted Stock Agreement dated as of November 11, 2004,
    between Martha Stewart Living Omnimedia, Inc. and Susan Lyne
    (incorporated by reference to the November 16, 2004
    8-K).10.22



Stock Option Agreement dated as of November 11, 2004,
    between Martha Stewart Living Omnimedia, Inc. and Susan Lyne
    (incorporated by reference to the November 16, 2004
    8-K).10.23



2005 Executive Severance Pay Plan (incorporated by reference to
    our Current Report on
    Form 8-K
    filed on January 6, 2005).10.24



Form of Restricted Stock Award Agreement for use under the
    Martha Stewart Living Omnimedia, Inc. Amended and Restated 1999
    Stock Inventive Plan (incorporated by reference to our Current
    Report on
    Form 8-K
    filed on January 14, 2005).10.25



Martha Stewart Living Omnimedia, Inc. Annual Incentive Plan
    (incorporated by reference to the May 17, 2005
    8-K). 48




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##### Table of Contents



ExhibitNumber



Exhibit Title10.26



Employment Agreement dated as of May 2, 2005, between
    Martha Stewart Living Omnimedia, Inc. and Robin Marino
    (incorporated by reference to our Current Report on
    Form 8-K
    filed on June 10, 2005).10.27



Employment Agreement dated as of July 21, 2005, between
    Martha Stewart Living Omnimedia, Inc. and John R. Cuti
    (incorporated by reference to our Current Report on
    Form 8-K
    filed on September 8, 2005).10.28



Consulting Agreement dated as of October 21, 2005 between
    Martha Stewart Living Omnimedia, Inc. and CAK Entertainment
    Inc., an entity for which Mr. Charles A. Koppelman serves
    as Chairman and Chief Executive Officer (incorporated by
    reference to our Current Report on
    Form 8-K
    filed on October 21, 2005 (the October 21, 2005
    8-K)).10.28.1



Letter Agreement between Martha Stewart Living Omnimedia, Inc.
    and CAK Entertainment, dated as of July 19, 2007, amending
    the Consulting Agreement dated October 21, 2005 between the
    parties (incorporated by reference to our Quarterly Report on
    Form 10-Q
    for the quarter ended June 30, 2007).10.29



Consulting Agreement between Charles A. Koppelman and Martha
    Stewart Living Omnimedia, Inc. dated January 24, 2005
    (incorporated by reference to the October 21, 2005
    8-K).10.30



Registration Rights Agreement between Charles A. Koppelman and
    Martha Stewart Living Omnimedia, Inc. dated January 24,
    2005 (incorporated by reference to the October 21, 2005
    8-K).10.31



Employment Agreement dated as of November 15, 2005, between
    Martha Stewart Living Omnimedia, Inc. and Sheraton Kalouria
    (incorporated by reference to our Current Report on
    Form 8-K
    filed on November 22, 2005).10.32



Separation Agreement dated as of March 7, 2006, between
    Martha Stewart Living Omnimedia, Inc. and James Follo
    (incorporated by reference to our Current Report on
    Form 8-K
    filed on March 8, 2006).10.33



Employment Agreement dated as of July 24, 2006, between
    Martha Stewart Living Omnimedia, Inc. and Holly Brown
    (incorporated by reference to our Current Report on
    Form 8-K
    filed on July 26, 2006).10.34



Employment Agreement dated as of July 24, 2006, between
    Martha Stewart Living Omnimedia, Inc. and Howard Hochhauser
    (incorporated by reference to our Current Report on
    Form 8-K
    filed on July 26, 2006).10.35



Warrant Registration Rights Agreement dated as of
    August 11, 2006, between Martha Stewart Living Omnimedia,
    Inc. and Mark Burnett (incorporated by reference to the
    Companys quarterly report on
    Form 10-Q
    for the period ended September 30, 2006).10.36



Letter Agreement dated as of October 24, 2006, between
    Martha Stewart Living Omnimedia, Inc. and Robin Marino
    (incorporated by reference to our Current Report on
    Form 8-K
    filed on October 25, 2006).10.37



Bonus Conversion Policy (incorporated by reference to our
    Current Report on
    Form 8-K
    filed on February 27, 2007).10.38



Form of Restricted Stock Unit Award Agreement (incorporated by
    reference to our Current Report on
    Form 8-K
    filed on February 27, 2007).10.39



Letter Agreement between Martha Stewart Living Omnimedia, Inc.
    and Robin Marino  Modification of employment
    arrangement and grant of restricted stock (incorporated by
    reference to our Current Report on
    Form 8-K
    filed May 1, 2007).10.40



Employment Agreement dated as of June 25, 2007 between
    Martha Stewart Living Omnimedia, Inc. and Wenda Harris Millard
    (incorporated by reference to our Quarterly Report on
    Form 10-Q
    filed November 9, 2007).10.41*



Employment Agreement dated as of October 1, 2007 between
    Martha Stewart Living Omnimedia, Inc. and Gregory Barton.10.42



2008 Executive Severance Pay Plan (incorporated by reference to
    our Quarterly Report on
    Form 10-Q
    filed November 9, 2007).14.1



Code of Business Conduct and Ethics (incorporated by reference
    to our Current Report on Form 8-K filed on
    February 27, 2007).21*



List of Subsidiaries.23.1*



Consent of Independent Registered Public Accounting Firm.31.1*



Certification of Chief Executive Officer Pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002.31.2*



Certification of Chief Financial Officer Pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002.32*



Certification of Chief Executive Officer and Chief Financial
    Officer Pursuant to Section 906 of the Sarbanes-Oxley Act
    of 2002.     49




---



##### Table of Contents



Disclosures Required by Section 303A.12 of the NYSE
    Listed Company Manual. Form 10-K Form 10-K. Form 10-K Form 10-K.
 50




---



##### Table of Contents



SIGNATURES      By:
    /s/  Susan
    Lyne   Title:
    President and Chief Executive Officer    Signature

Title/s/  Susan
    LyneSusan
    Lyne

President, Chief Executive Officer and Director (Principal
    Executive Officer)/s/  Howard
    HochhauserHoward
    Hochhauser

Chief Financial Officer (Principal Financial and Accounting
    Officer)/s/  Rick
    BoykoRick
    Boyko

Director/s/  Michael
    GoldsteinMichael
    Goldstein

Director/s/  Jill
    A. GreenthalJill
    A. Greenthal

Director/s/  Charles
    KoppelmanCharles
    Koppelman

Chairman of the Board/s/  Thomas
    C. SiekmanThomas
    C. Siekman

Lead Independent Director/s/  Bradley
    E. SingerBradley
    E. Singer

Director    51




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##### Table of Contents



INDEX TO
    CONSOLIDATED FINANCIAL STATEMENTS,
    FINANCIAL STATEMENT SCHEDULES AND OTHER
    FINANCIAL INFORMATION  Consolidated Financial Statements:Report of Independent Registered Public
    Accounting Firm

F-2Consolidated Statements of Operations for the
    years ended 
    December 31, 2007, 2006 and 2005

F-3Consolidated Balance Sheets at December 31,
    2007 and 2006

F-4Consolidated Statements of Shareholders
    Equity for the years ended
    December 31, 2007, 2006, and 2005

F-5Consolidated Statements of Cash Flows for the
    years ended
    December 31, 2007, 2006, and 2005

F-6Notes to Consolidated Financial Statements

F-7Financial Statement Schedule:II  Valuation and Qualifying Accounts
    for the three years ended
    December 31, 2007, 2006 and 2005

F-29     F-1




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM                  F-2




---



##### Table of Contents



MARTHA STEWART
    LIVING OMNIMEDIA, INC.
    CONSOLIDATED STATEMENTS OF OPERATIONSFor the Years Ended
    December 31, 2007, 2006 and 2005
    (in thousands except per share data)  2007


2006


2005REVENUESPublishing

$
183,727


$
156,559


$
125,765Merchandising


84,711



69,504



58,819Internet


19,189



15,775



11,258Broadcasting


40,263



46,503



16,591Total
    revenues


327,890



288,341



212,433OPERATING COSTS
    AND EXPENSESProduction, distribution and editorial


154,851



138,213



125,929Selling and promotion


89,179



74,190



71,037General and administrative


68,584



70,173



85,981Depreciation and amortization


7,562



8,598



7,797Total operating
    costs and expenses


320,176



291,174



290,744OPERATING
    INCOME/(LOSS)


7,714



(2,833)



(78,311)Interest income, net


2,771



4,511



3,423Legal Settlement


432



(17,090)



INCOME/(LOSS)
    BEFORE INCOME TAXES


10,917



(15,412)



(74,888)Income tax provision


(628)



(838)



(407)INCOME/(LOSS)
    FROM CONTINUING OPERATIONS


10,289



(16,250)



(75,295)Loss from discontinued operations






(745)



(494)NET
    INCOME/(LOSS)

$
10,289


$
(16,995)


$
(75,789)INCOME/(LOSS) PER
    SHAREBasic and diluted - Income/(loss) from continuing operations

$
0.20


$
(0.32)


$
(1.48)Basic and diluted - Loss from discontinued operations






(0.01)



(0.01)Basic and diluted - Net income/(loss)

$
0.20


$
(0.33)


$
(1.49)WEIGHTED AVERAGE
    COMMON SHARES OUTSTANDINGBasic


52,449



51,312



50,991Diluted


52,696



51,312



50,991DIVIDENDS PER
    COMMON SHARE


n/a


$
0.50



n/a   The accompanying notes are an
    integral part of these consolidated financial
    statements.
 F-3




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##### Table of Contents



MARTHA STEWART
    LIVING OMNIMEDIA, INC.
    CONSOLIDATED BALANCE SHEETSDecember 31, 2007 and 2006
    (in thousands except per share data)  2007


2006ASSETSCURRENT
    ASSETSCash and cash equivalents

$
30,536


$
28,528Short-term investments


26,745



35,321Accounts receivable, net


94,195



70,319Inventories, net


4,933



4,448Deferred television production costs


5,316



4,609Income taxes receivable


513



482Other current assets


3,921



3,857Total current
    assets


166,159



147,564PROPERTY, PLANT
    AND EQUIPMENT,net


17,086



19,616INTANGIBLE
    ASSETS,net


53,605



53,605OTHER NON-CURRENT
    ASSETS


18,417



7,262Total
    assets

$
255,267


$
228,047LIABILITIES AND
    SHAREHOLDERS EQUITYCURRENT
    LIABILITIESAccounts payable and accrued liabilities

$
27,425


$
28,053Accrued payroll and related costs


13,863



13,646Income taxes payable


1,246



1,011Current portion of deferred subscription revenue


25,578



28,884Current portion of other deferred revenue


5,598



3,159Total current
    liabilities


73,710



74,753DEFERRED
    SUBSCRIPTION REVENUE


9,577



10,032OTHER DEFERRED
    REVENUE


14,482



9,845OTHER NON-CURRENT
    LIABILITIES


1,969



2,460Total
    liabilities


99,738



97,090COMMITMENTS AND
    CONTINGENCIESSHAREHOLDERS
    EQUITYClass A Common Stock, $.01 par value,
    350,000 shares
    authorized; 26,738 and 26,109 shares outstanding in 2007
    and 2006, respectively


267



261Class B Common Stock, $.01 par value,
    150,000 shares
    authorized; 26,722 and 26,791 shares outstanding in
    2007 and 2006, respectively


267



268Capital in excess of par value


272,132



257,014Accumulated deficit


(116,362)



(125,811)156,304



131,732Less Class A treasury stock  59 shares at
    cost


(775)



(775)Total
    shareholders equity


155,529



130,957Total liabilities
    and shareholders equity

$
255,267


$
228,047   The accompanying notes are an
    integral part of these consolidated financial
    statements.
 F-4




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##### Table of Contents





MARTHA STEWART
    LIVING OMNIMEDIA, INC.
    CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITYFor the Years Ended
    December 31, 2007, 2006 and 2005
    (in thousands)  Class A


Class B








Class ACommon Stock


Common Stock








Treasury StockCapital inexcess of par


AccumulatedShares


Amount


Shares


Amount


value


deficit


Shares


Amount


TotalBalance at January 1, 2005


21,660


$
217



29,123


$
291


$
193,988


$
(6,093)



(59)


$
(775)


$
187,628Net loss






















(75,789)











(75,789)Conversion of shares


1,828



18



(1,828)



(18)



















Shares returned on net treasury basis










(422)



(4)



4















Issuance of shares in conjunction with
    stock options exercises


585



6











7,954















7,960Issuance of shares of stock and restricted stock, net of
    cancellations and tax liabilities


809



8











(3,717)















(3,709)Equity charge associated with common
    stock warrant


















31,755















31,755Non-cash equity compensation


















12,786















12,786Balance at December 31, 2005


24,882



249



26,873



269



242,770



(81,882)



(59)



(775)



160,631Net loss






















(16,995)











(16,995)Shares returned on net treasury basis










(82)



(1)



1















Issuance of shares in conjunction with
    stock options exercises


151



1











1,582















1,583Issuance of shares of stock and restricted stock, net of
    cancellations and tax liabilities


332



3











(794)















(791)Common stock dividends






















(26,934)











(26,934)Issuance of shares in conjunction with
    warrant exercises


744



8



























8Equity charge associated with common
    stock warrant


















2,261















2,261Non-cash equity compensation


















11,194















11,194Balance at December 31, 2006


26,109



261



26,791



268



257,014



(125,811)



(59)



(775)



130,957Net income






















10,289











10,289Cumulative effect of adoption of FIN 48






















(840)











(840)Shares returned on a net treasury basis










(69)



(1)



1















Issuance of shares in conjunction with
    stock options exercises


91



1











307















308Issuance of shares of stock and restricted stock, net of
    cancellations and tax liabilities


384



4











(3,434)















(3,430)Issuance of shares in conjunction with
    warrant exercises


154



1



























1Equity charge associated with common
    stock warrant


















5,530















5,530Non-cash equity compensation


















12,714















12,714Balance at December 31, 2007


26,738


$
267



26,722


$
267


$
272,132


$
(116,362)



(59)


$
(775)


$
155,529   The accompanying notes are an
    integral part of these consolidated financial
    statements.
 F-5




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##### Table of Contents





MARTHA STEWART
    LIVING OMNIMEDIA, INC.
    CONSOLIDATED STATEMENTS OF CASH FLOWSFor the Years Ended
    December 31, 2007, 2006 and 2005
    (in thousands)  2007


2006


2005CASH FLOWS FROM
    OPERATING ACTIVITIESNet income/(loss)

$
10,289


$
(16,995)


$
(75,789)Adjustments to reconcile net income/(loss) to net cash
    provided by/(used in) operating activities:Depreciation and amortization


7,562



8,598



7,797Amortization of deferred television production costs


21,029



25,324



7,844Non-cash equity compensation


19,118



13,811



44,580Changes in operating assets and liabilities,
    net of acquisitionAccounts receivable, net


(23,876)



(14,938)



(24,050)Inventories


(485)



(538)



1,319Other current assets


(64)



509



(793)Deferred television production costs


(22,194)



(23,426)



(14,351)Other non-current assets


(1,357)



(1,946)



1,145Accounts payable and accrued liabilities


(475)



5,626



1,021Income taxes


(636)



572



5,867Deferred subscription revenue


(3,761)



(832)



4,920Other deferred revenue


7,076



(895)



10,461Other non-current liabilities


(491)



(581)



(320)(46,263)



(36,449)



(14,781)Net cash provided
    by/(used in) operating activities


11,735



(5,711)



(30,349)CASH FLOWS FROM
    INVESTING ACTIVITIESCapital expenditures


(5,032)



(8,342)



(9,822)Purchases of short-term investments


(186,210)



(189,755)



(137,876)Sales of short-term investments


194,786



238,222



89,398Investment in other non-current assets


(10,150)







Net cash provided
    by/(used in) investing activities


(6,606)



40,125



(58,300)CASH FLOWS FROM
    FINANCING ACTIVITIESDividends paid


-



(26,101)



Proceeds from exercise of stock options


308



750



7,960Issuance of stock, warrants and restricted stock,
    net of cancellations and tax liabilities


(3,429)



(784)



(3,709)Net cash provided
    by/(used in) financing activities


(3,121)



(26,135)



4,251Net
    increase/(decrease) in cash


2,008



8,279



(84,398)CASH AND CASH
    EQUIVALENTS,
    BEGINNING OF YEAR


28,528



20,249



104,647CASH AND CASH
    EQUIVALENTS, END OF YEAR

$
30,536


$
28,528


$
20,249   The accompanying notes are an integral part of these
    consolidated financial statements.
 F-6




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##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
    (in millions except share data and where noted)  1. THE
    COMPANY
  marthastewart.com
  2. SUMMARY
    OF SIGNIFICANT ACCOUNTING POLICIES
  Principles
    of Consolidation
    Cash
    and Cash Equivalents
    Short-term
    Investments
    Revenue
    Recognition
  (EITF 00-21) EITF 00-21 EITF 00-21 EITF 00-21
     F-7




---



##### Table of Contents



true-up
  Inventories
  first-in,
  Television
    Production Costs
    Property,
    Plant and Equipment
    EITF 00-2, 98-1,
 F-8




---



##### Table of Contents



Studio sets


2 yearsFurniture, fixtures and equipment


3  5 yearsComputer hardware and software


3  5 yearsLeasehold improvements


life of lease   Intangible
    Assets
      AccumulatedAccumulated








Amortization-Amortization





Publishing


PublishingPublishing


 Publishing


Publishing


Subscriber


Subscriber(In thousands)

Goodwill


Goodwill


Trademarks


Lists


Lists


TotalBalance
    January 1,
    2006

$
67,857


$
(14,752)


$
500


$
900


$
(825)


$
53,680Amortization
    expense


-



-



-



-



(75)



(75)Balance
    December 31,
    2006


67,857



(14,752)



500



900



(900)



53,605Amortization
    expense


-



-



-



-



-



-Balance
    December 31,
    2007

$
67,857


$
(14,752)


$
500


$
900


$
(900)


$
53,605   Impairment
    of Long-lived assets
   F-9




---



##### Table of Contents



Investment
    in Other Non-current Assets
        Advertising
    Costs
    Reclassification
    Adjustments
    Earnings
    Per Share
   F-10




---



##### Table of Contents



Use of
    Estimates
    Equity
    Compensation
    Recent
    Accounting Pronouncements
      FAS 157-2
 F-11




---



##### Table of Contents



FAS 157-2.
      3. CASH,
    CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS
    (in thousands)

2007


2006Cash

$
19,469


$
26,342Money market funds


11,067



2,186Total cash and cash equivalents

$
30,536


$
28,528      F-12




---



##### Table of Contents



(in thousands)

2007


2006Municipal debt securities

$
19,586


$
-Auction rate securities


2,875



4,725Corporate debt securities


4,284



11,035U.S. government and agency securities






18,817Foreign bonds






744Total short-term investments

$
26,745


$
35,321     4. ACCOUNTS
    RECEIVABLE, NET
    (in thousands)

2007

2006Advertising

$
42,828

$
26,722Licensing


50,111


41,273Other


6,061


6,08599,000


74,080Less: reserve for credits and uncollectible accounts


4,805


3,761$
94,195

$
70,319   true-up Form 10-K
  5. INVENTORIES
    6.
    PROPERTY,
    PLANT AND EQUIPMENT, NET    (in thousands)

2007


2006Studios and equipment

$
4,202


$
4,202Furniture, fixtures and equipment


10,518



9,071Computer hardware and software


25,956



22,938Leasehold improvements


27,279



26,716Total Property, Plant and Equipment


67,955



62,927Less: accumulated depreciation and amortization


50,869



43,311Net Property, Plant and Equipment

$
17,086


$
19,616  F-13




---



##### Table of Contents



7. LINE
    OF CREDIT
    8. SHAREHOLDERS
    EQUITY
  Common
    Stock
      9. EMPLOYEE
    AND NON-EMPLOYEE BENEFIT AND COMPENSATION PLANS
  Retirement
    Plans
    and/or
  Stock
    Incentive Plans
   F-14




---



##### Table of Contents



Black-Scholes
    Assumptions
    Stock
    Options and Warrants
  after-hours
   F-15




---



##### Table of Contents



2007Risk-free interest rates

3.5% - 5.1%Dividend yields

ZeroExpected volatility

32.9% - 41.5%Expected option life

4.6 - 8.4 yearsAverage fair market value per option granted

$2.89 - $13.32   Note:
    WeightedNumber of


averageoptions


exercise priceOutstanding as of December 31, 2006


59,644



$0
.60Exercised


(50,500)



0
.60Cancelled


(9,144)



0
.60Outstanding as of December 31, 2007


0



$0
.60Options exercisable at December 31, 2007


0Options available for grant at December 31, 2007


Zero  F-16




---



##### Table of Contents



WeightedNumber of


averageoptions


exercise priceOutstanding as of December 31, 2006


1,723,350



$18.70Granted


52,500



18.09Exercised


(40,650)



6.87Cancelled


(12,000)



12.05Outstanding as of December 31, 2007


1,723,200



$19.01Options exercisable at December 31, 2007


1,592,845



$18.93Equity available for grant at December 31,
    2007 after deducting restricted stock outstanding


4,993,205     Options Outstanding


Options ExercisableWeightedAverageRemaining





Weighted





WeightedContractual





Average





AverageRange of Exercise Price

Life in


Number


Exercise


Number


ExercisePer Share

Years


Outstanding


Price


Exercisable


Price$0.60


0.0



0


$
0.0



0


$
0.0$6.78-$10.61


1.5



244,842



8.41



244,842



8.41$14.90-$15.75


3.1



15,825



15.38



15,825



15.38$15.90


4.1



150,000



15.90



150,000



15.90$16.45-$18.90


5.5



722,333



18.42



705,666



18.46$19.92-$26.25


6.6



239,200



21.03



125,512



21.65$26.56-$33.75


5.0



351,000



27.72



351,000



27.72$0.60-$33.75


4.9



1,723,200


$
19.01



1,592,845


$
18.93     2005Risk-free interest rates

3.74%Dividend yields

ZeroExpected volatility

68.3%Expected option life

3.0 yearsAverage fair market value per option granted

$12.01  F-17




---



##### Table of Contents



(in thousands, except per share
    data)

2005Net loss, as reported

$
(75,789)Add back: Total stock option based employee
    compensation expense included in net loss


3,496Deduct: Total stock option based employee
    compensation expense determined under fair value
    based method for all awards


(5,512)Pro forma net loss

$
(77,805)Loss per share:Basic and diluted  as reported

$
(1.49)Basic and diluted  pro forma

$
(1.53)   Restricted
    Stock
      WeightedAverage Grant(in thousands, except share data)

Shares


Date ValueNonvested at December 31, 2006


882,794


$
18,464Granted


650,150



11,041Vested(1)


(495,007)



(10,610)Forfeitures


(76,573)



(1,491)Nonvested at December 31, 2007


961,364


$
17,404   (1)
    
    Included in the gross shares vested
    during the period ended December 31, 2007 are
    200,808 shares of our common stock which were surrendered
    by recipients in order to fulfill their tax withholding
    obligations.    Non-Employee
    Equity Compensation
   F-18




---



##### Table of Contents



The Martha Stewart
    Show The Martha
    Stewart Show The Martha Stewart Show
  Form S-3
      10. INCOME
    TAXES
   F-19




---



##### Table of Contents



(in thousands)

2007


2006


2005Current Income Tax (Expense)/BenefitFederal

$
64


$
(399)


$
(20)State and local


(165)



(77)



(96)Foreign


(527)



(362)



(291)Total current income tax (expense)/benefit


(628)



(838)



(407)Deferred Income Tax ExpenseFederal










State and local










Total deferred income tax expense










Income tax provision from continuingoperations

$
(628)


$
(838)


$
(407)     (in thousands)

2007


2006


2005Computed tax at the federal statutory rate of 35%

$
(3,821)


$
5,655


$
26,384State income taxes, net of federal benefit


(107)



(50)



(62)Non-deductible compensation


(1,347)



(5,486)



(994)Non-deductible expense


(264)



(226)



(164)Non-deductible litigation reserve






(5,981)



Non-taxable foreign income






225



232Valuation allowance


4,911



5,056



(26,104)Other






(31)



301Provision for income taxes

$
(628)


$
(838)


$
(407)Effective tax rate


5.8%



5.4%



0.5%  F-20




---



##### Table of Contents



(in thousands)

2007


2006Deferred Tax AssetsProvision for doubtful accounts

$
918


$
1,020Accrued rent


1,170



1,465Reserve for newsstand returns


926



1,319Accrued compensation


7,531



6,594Deferred royalty revenue


4,101



4,015NOL/credit carryforwards


45,736



46,211Depreciation and amortization


2,328



1,034Other


766



648Total deferred tax assets


63,476



62,306Deferred Tax LiabilitiesPrepaid expenses


(199)



(165)Total deferred tax liabilities


(199)



(165)Valuation allowance


(63,277)



(62,141)Net Deferred Tax Asset

$



$
      F-21




---



##### Table of Contents



(in thousands)

2007Gross balance at January 1

$
1,478Additions based on tax positions related to the current year


Additions for tax positions of prior years


168Reductions for tax positions of prior years


Settlements


(608)Reductions due to lapse of applicable statute of limitations


Gross balance at December 31


1,038Interest and penalties


246Balance including interest and penalties at December 31

$
1,284     11. RELATED
    PARTY TRANSACTIONS
       F-22




---



##### Table of Contents



and/or
   F-23




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##### Table of Contents



sister-in-law brother-in-law
        12. COMMITMENTS
    AND CONTINGENCIES
  Operating
    Leases
      Operating(in thousands)

Leases2008

$
14,0282009


13,6412010


10,2462011


7,4462012


7,022Thereafter


37,746Total minimum lease payments

$
90,129  F-24




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##### Table of Contents



Legal
    Matters
  In re Martha Stewart
    Living Omnimedia, Inc. Securities Litigation, 02-CV-6273
    Other
    13. DISCONTINUED
    OPERATIONS
    (in thousands)

2007


2006


2005Net loss from discontinued operations

$



$
(745)


$
(494)       (in thousands)

2007


2006Total assets

$



$
Accounts payable and accrued expenses


(884)



(1,140)Net liabilities of discontinued operations

$
(884)


$
(1,140)  F-25




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##### Table of Contents



14. OTHER
    INFORMATION
               F-26




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##### Table of Contents



15. BUSINESS
    SEGMENTS
    (in thousands)

Publishing


Merchandising


Internet


Broadcasting


Corporate


Consolidated2007Revenues

$
183,727


$
84,711


$
19,189


$
40,263


$



$
327,890Non-cash equity compensation


4,297



1,555



501



6,866



5,899



19,118Depreciation and amortization


1,188



375



1,242



2,201



2,556



7,562Operating income/(loss)


11,538



57,229



(6,137)



(7,519)



(47,397)



7,714Total assets


92,931



61,784



9,937



19,960



70,655



255,267Capital expenditures


266



64



1,344



183



3,175



5,0322006Revenues

$
156,559


$
69,504


$
15,775


$
46,503


$



$
288,341Non-cash equity compensation


2,715



967



208



3,006



6,915



13,811Depreciation and amortization


600



1,021



117



3,026



3,834



8,598Operating income/(loss)


6,026



46,529



(531)



(1,616)



(53,241)



(2,833)Total assets


82,824



37,734



8,001



17,106



82,382



228,047Capital expenditures


770



70



3,054



439



4,009



8,3422005Revenues

$
125,765


$
58,819


$
11,258


$
16,591


$



$
212,433Non-cash equity compensation


2,154



569



38



17,562



24,257



44,580Depreciation and amortization


987



845



951



1,321



3,693



7,797Operating income/(loss)


(15,335)



38,709



(3,537)



(27,201)



(70,947)



(78,311)Total assets


74,968



29,267



3,819



21,222



124,552



253,828Capital expenditures


242



125



191



6,610



2,654



9,822  F-27




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##### Table of Contents



16. SELECTED
    QUARTERLY FINANCIAL DATA (UNAUDITED)
    (in thousands except per share data)
  First


Second


Third


FourthYear ended December 31,
    2007

Quarter


Quarter


Quarter


Quarter


TotalRevenues

$
66,705


$
73,446


$
69,256


$
118,483


$
327,890Operating income/(loss)


(12,551)



(7,790)



(4,911)



32,966



7,714Net income/( loss)

$
(11,869)


$
(6,737)


$
(4,414)


$
33,309


$
10,289Earnings per share  basic and diluted

$
(0.23)


$
(0.13)


$
(0.08)


$
0.63


$
0.20Weighted average common shares outstandingBasic


52,349



52,386



52,479



52,551



52,449Diluted


52,349



52,386



52,479



52,650



52,696   First


Second


Third


FourthYear ended December 31,
    2006

Quarter


Quarter


Quarter


Quarter


TotalRevenues

$
62,083


$
68,169


$
61,050


$
97,039


$
288,341Operating income/(loss)


(7,691)



(1,790)



(7,927)



14,575



(2,833)Income/(loss) from continuing operations


(6,712)



(662)



(25,090)



16,214



(16,250)Loss from discontinued operations


(123)



(499)



(123)







(745)Net income/(loss)

$
(6,835)


$
(1,161)


$
(25,213)


$
16,214


$
(16,995)Earnings per share  basic and dilutedIncome/(loss) from continuing operations

$
(0.13)


$
(0.01)


$
(0.49)


$
0.31


$
(0.32)Loss from discontinued operations


(0.00)



(0.01)



(0.00)



(0.00)



(0.01)Net income/(loss)

$
(0.13)


$
(0.02)


$
(0.49)


$
0.31


$
(0.33)Weighted average common shares outstandingBasic


51,207



51,176



51,220



51,641



51,312Diluted


51,207



51,176



51,220



52,560



51,312   Fourth
    Quarter Items:
   17. SUBSEQUENT
    EVENTS
       F-28




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##### Table of Contents



MARTHA
    STEWART LIVING OMNIMEDIA, INC.
 SCHEDULE II 
    VALUATION AND QUALIFYING ACCOUNTS



(in
    thousands)  Additions/Additions


(Deductions)


DeductionsBalance,


Charged to


Charged to


Charged toBeginning of


Costs and


Balance Sheet


Costs and


Balance,Description

Year


Expenses


Accounts


Expenses


End of YearAllowance for doubtful
    accounts:Year ended December 31,2007

$
1,207


$
332


$



$
292


$
1,2472006


1,221



316







330



1,2072005


944



376







99



1,221Reserve for audience underdelivery:Year ended December 31,2007

$
2,554


$
2,706


$



$
1,718


$
3,5422006


1,085



2,951







1,482



2,5542005


326



1,135







376



1,085Reserve for obsolete and excess inventory:Year ended December 31,2007

$



$



$



$



$
2006


















2005


286











286



Reserve for product returns:Year ended December 31,2007

$



$



$



$



$
2006


















2005


253











253



Reserve for valuation allowance on the deferred tax asset:Year ended December 31,2007

$
62,141


$



$
6,047


$
4,911


$
63,2772006


71,576







(4,379
)


5,056



62,1412005


31,953



26,104



13,519







71,576  F-29