MSO pays $2 million to use Martha Stewart’s homes…

August 13, 2008

Except for that nasty skirmish with the SEC a few years ago, Martha Stewart’s got it pretty good. In exchange for showing us how to make Chicken Pot-au-Feu and silk-flower ring pillows, she earned more than $2 million last year. Could that deal be any more perfect?

Yes, thanks to a big raise that Martha’s getting for filming her television shows at any of her homes, which include homes in Bedford, Mt. Desert Island, and East Hampton. This exhibit attached to the the 10-Q that Martha Stewart Living Omnimedia (MSO) filed on Monday spells out the terms of the “intangible asset license agreement”. To be fair, the existence of the agreement was first disclosed in this 8K filed on June 17, though the actual terms of the deal with MS Real Estate Management Company – a company owned by Martha Stewart — were delayed until the Q. The agreement, which is retroactive to last November, provides in part:

Pursuant to the Intangible Asset License Agreement, the Company will pay an annual fee of $2 million to the Licensor over the 5-year term for the perpetual, exclusive right to use Ms. Stewart’s lifestyle intangible asset in connection with Company products and services and during the term of the agreement to access various real properties owned by Ms. Stewart.

That’s a nice boost from the terms of the 2004 Location Rental Agreement, which paid Martha $500,000 the first year and $750,000 a year after that to film the television shows at any of her pads.

Of course, Martha does have to pay for her own gardening and maintenance so that the properties remain —in a manner consistent with past practices. But the company will also pay for —approved business expenses — including, presumably, her Mac Book Air — associated with security and telecommunications systems and security personnel related to Ms. Stewart at the properties, and will reimburse Licensor for up to $100,000 of approved and documented household expenses.

That should be more than enough to keep a domestic maven in Miracle-Gro and Windex.

Image source: Peter Duhon

Posted in: Disclosures, M&A, Operations

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