As Martha Stewart Omnimedia Inc. (NYSE: MSO) prepares it first-quarter earnings release, one piece of bad news is sure to be included. Print advertising at its flagship magazine, which is essential to the firm’s revenue, has not rebounded from a terrible 2012. The overall prospects of the public company will be in doubt until this changes, or the magazine is sold or shuttered.

According to Media Industry Newsletter, Martha Stewart Living advertising pages rose 7% in the first four issues of the 2013 to 241. Under most circumstances, such a rebound would be positive. However, ad pages fell in numbers well into the double digits last year, so a much larger recovery would be necessary to make a substantial difference.

The public corporation’s publishing revenue was 60% of all sales in 2012, with broadcasting and merchandising representing the balance. And the revenue of the publishing division fell from $141 million in 2011 to $124 million. The operating loss for the division was $62 million. Full year expenses for the unit included a $44 million impairment cost. The company disclosed the specifics of the problem:

Publishing segment revenues decreased 13% in 2012 from 2011. Print advertising revenue decreased $11.0 million primarily due to a decrease in advertising pages in Martha Stewart Living, along with slightly lower rates.

Almost all the focus on Martha Stewart Omnimedia recently has been on the battle between Macy’s Inc. (NYSE: M) and J.C. Penney Co. Inc. (NYSE: JPC) over the rights to sell certain Martha Stewart brand products. Based on the history of the media company, that dispute is merely a sideshow that ignores the business that will set the tone for earnings in the first quarter, and probably the entire year.

Like many old media companies, Martha Stewart Living Omnimedia remains stuck with a legacy print business model in an era in which print has nearly died and will not recover.

The stock market usually is wise about what makes companies successes or failures. As the front page stories about Martha Stewart are about retail products, the firm’s shares have dropped to $2.39, very close to a 52-week low. Martha Stewart Living Omnimedia is still on life support. That will not change until it addresses its print advertising problem, which is almost certainly one it cannot solve.

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