In addition to the merchandise revenues, J.C. Penney also will make advertising commitments. The investment gives it a stake in the company’s success across the board.

The deal, which gives MSLO a cash infusion, should put to rest the notions of an outright sale raised when MSLO brought in Blackstone Advisory Partners in June “to review and respond to various parties that have expressed interest in potentially partnering with or investing in the Company, as well as exploring other opportunities.” Wednesday’s announcement marked the end of Blackstone’s role with the company.

Blackstone was part of a sweeping series of moves announced at the same time, include the hiring of Oxygen alum Lisa Gersh as president and COO with the goal of making her CEO by early 2013. Coincidentally, June is also when Ron Johnson left as the head of Apple’s phenomenally successful retail operations to take the helm as CEO of J.C. Penney.

Martha Stewart also rejoined the board of directors of the company she founded. The two women appeared together Wednesday at the annual UBS media conference, where they stood out because of the buzz around the deal — and because companies led by women are still an exception. The session was scheduled for Tuesday but was postponed at the company’s request for what turned out to be good reason. (Much better news for MSLO than for THQ; (NSDQ: THQI) the gaming company canceled, then announced a 25 percent cut in its net sale estimates for the quarter.)

The J.C. Penney announcement comes as Gersh finished her first six months. The next six and beyond will be about making it pay off, along with the company’s other major retail partnerships, while continuing to push the publishing and broadcasting segments to perform to capability. Despite numerous iterations, reorgs and personnel changes, MSLO has yet to find a way to turn up the flames on all burners at the same time. A healthy cross platform matters not only for revenues but for the ultimate success of merchandising, which relies on the personal brand of Martha Stewart and MSLO’s reach across its sites, apps, magazines, TV shows and radio.

Analog and digital: The agreement with J.C. Penney is both analog and digital, calling for Martha Stewart retail stores in the majority of jcpenney department stores and a jointly developed new e-commerce site planned to launch in 2013. Each includes a focus on “how to” advice in addition to selling merchandise.

This is where Johnson’s background at Apple (NSDQ: AAPL), where he opened more than 300 stores over a decade, and previously at Target, where he launched the Michael Graves line that helped give the discount chain a sophisticated veneer, comes into play. Johnson understands how to blend retail and e-tail. As important, he knows what’s it’s like to work with an iconic perfectionist.

He also gets the human component of sales. As Apple retail chief, Johnson suggested a way to bridge the concierge experience a guest might expect at the Ritz-Carlton with in-store customer service. His suggestion was the Genius staffed with the “smartest Mac people.” In his bio Steve Jobs, Walter Isaacson says the Apple co-founder called the idea crazy: “You can’t call them geniuses. They’re geeks. They don’t have the people skills to deliver on something called the genius bar.” The next day Johnson heard Jobs ordered up a trademark on the name. As anyone who has been to an Apple store can tell you, the Genius Bar is the hub. Jobs was right about the geek component — not every geek is cut out to help people — but he was also wrong — a lot of geeks are great at it.

The idea for Martha Stewart is to help people use the merchandise in ways that work for them, just as the Genius Bar helps people learn to use new shiny objects to show off family pictures, make movies or do schoolwork. We can’t all be Martha Stewart and buying a Martha Stewart plate doesn’t mean you know how to set a festive table. They promise trained staffers for each retail outlet with lifestyle expertise.

Done right, it should boost the publishing and broadcasting segments as well.

In a brief interview Wednesday as she left UBS, Stewart told me they have yet to settle on a name for the service. (Note trademark mention above for one reason why it won’t be a Genius Bar.) But the way she spoke of Johnson suggested a comfort level working with him that could bode well.

Stewart also was careful not to leave other retailers out of the conversation — Macy’s, Home Depot and Staples (the Martha Stewart office collection) — but given Johnson’s aspirations and the chains head-to-head competition in malls, it’s easy to see why Macy’s might not be keen. Indeed, according to the WSJ, the department store chain that has had an exclusive line since 2007, said Wednesday that it is reviewing potential changes. The paper also reported that Macy’s was told about the new pact the night before it was announced. The five-year deal with Macy’s expires at the end of 2012 with a renewal option; if that isn’t picked up it would be a blow for MSLO and its investors, including J.C. Penney. MSLO promises the lines will be different. Will that be enough — and will Macy’s really want to feature Martha Stewart as prominently as it has in marketing?

Having spent considerable time in various Macy’s Martha Stewart spaces, I can safely say the chain hasn’t come close to creating the kind of experience Johnson envisions. The collections blend in to various departments instead of truly standing out and despite the engaging ad campaign that highlights Stewart’s contributions and some in-store events, it rarely feels connected to other elements of the MSLO empire. And I’ve never had the sense anyone wants to show me how to use a bundt cake pan.

All about the execution: We’ve all seen deals that sound great go sour and promises that look good on paper fail to deliver. They have about 18 months to set the foundations to really make this work. Johnson knows what it takes to create a great retail experience for electronics in today’s environment. That has to translate in a consumer world that’s far more tech savvy and comfortable with mobile and e-commerce but inside a mid-range department store chain. You aren’t going to see stone floors from Italy and floating staircases in these stores. J.C. Penney also will have to deal with the same issue of anyone basing a strategy on a key figure: it has to be able to work without Martha Stewart, too. Johnson knows this all too well but while Apple and Steve Jobs were synonymous, he was not “the” brand.

Boost for the stock: The stock popped in June on expectations that Blackstone would deliver. It popped again Wednesday on the deal news and word of a special dividend for shareholders on record as of Dec. 19, rising more than a dollar to close 33 percent higher at $4.16 although it didn’t get back to the June high of $5.49.

The company also said that Gersh will become CEO within 12-20 months, and it is expected that she will join the Company’s Board of Directors in the near future. Ms. Gersh will report to Executive Chairman and Principal Executive Officer Charles Koppelman.

Following the founding Oxygen Media, Gersh served as its president and COO from 1998 until 2007, when Oxygen was acquired by NBC Universal (NSDQ: CMCSA). After that, Gersh took on several executive roles for NBCU, most recently as president, Strategic Initiatives, where she was responsible for the creation of NBC’s Education Nation program. In between that post and Oxygen, she served as managing director and CEO of TheWeather Channel Companies.

Over the past year, the media lifestyles and home improvement company has experienced a number of personnel shifts at the top as the company sought to hold on to the revenue and profitability gains it had accrued and then saw eroded by the economic downturn.

Last fall, MSLO restructured its ad sales team to make one person the focal point across all print, broadcast and online marketing efforts. As a result, Group Publisher Sally Preston was promoted to EVP, Media Sales and Marketing. With her promotion, three veteran MSLO execs were dismissed, including Janet Balis as MSLO EVP of Media Sales & Marketing; Orlando Reece as SVP for broadcasting; and SVP for digital Christine Cook, who was quickly hired to manage ad sales for News Corp.’s The Daily.

Through it all, digital has been on solid footing, as the company has pursued a strategy involving a series of paid apps, such as its recent egg-dyeing app for the iPhone. In terms of business segments, the merchandising side has remained positive. As Marino departs, Patsy Pollack is being promoted and will take charge of merchandising.

Neverheless, bringing in Blackstone is a signal that the changes have not been working fast enough enough. As the news circulated, investors in the company were cheered, as the stock price rose 25 percent by early afternoon to $4.72 a share. Release

MSLO’s print magazines experienced a slight 2 percent increase in revenues. While positive, the weakness of that growth suggests that the momentum that magazines hoped to ride following the ad recover that began at the end of 2009 was waning.

Broadcasting revenues were down 35 percent, reflecting the fact that MSLO is essentially still at the start of a new relationship with The Hallmark Channel, and it will take time to move advertisers and audiences over to that venue. The Hallmark deal did come with a $5 million licensing fee for MSLO, which may have skewed things in Q111, since that came in the year-ago quarter..

MSLO has been particularly aggressive in driving premium ad dollars to its digital creations, as well as charging consumers for its related apps. Both Martha Stewart Living and Everyday Food magazine apps for the iPad launched in the quarter; both titles are now available in print and digitized formats each month.

Additionally, its “Egg Dyeing 101 from Martha Stewart Living,” an egg-decorating app for the iPhone and iPod Touch, has been a top-seller in the lifestyle category for paid apps on the App Store since launching in late March.

“There is so much more we can do when it comes to storytelling in a truly multimedia setting,” said Towey, who not only oversaw the creation of the Living app, but also worked on the first issue of that magazine exactly 20 years ago (and no, it’s not a coincidence).

The latest app launch also comes less than a month after MSLO completed a big shakeup of its ad sales team. Under the new approach, one person is the focal point across all print, broadcast and online marketing efforts. As part of the change, Group Publisher Sally Preston is being promoted to EVP, media sales and marketing. At the same time, three veteran MSLO execs were dismissed: Janet Balis, EVP of media sales and marketing; Orlando Reece, SVP of broadcasting; and Christine Cook, SVP of digital.

There’s a greater ability and call for blending all the various media formats available to MSLO, Towey said. “And that’s why we’re doing what we’re doing.”

The digital issue — which is completely separate from the current print edition on the stands — is subtitled “Boundless Beauty.” The app (embedded below) opens with an animated image of a single peony blooming. The animation was composed of 180 stills photographed over 10 hours to create the effect of the petals opening.

Inside, the subject matter is the standard Martha Stewart Living fare: articles and advice on decorating, crafting, cooking. But there’s one other small difference in the content, which is more articles and ads revolving around personal beauty. “We expect that the app audience would skew a little younger than the typical reader, so we aimed some of those features at what we expect will be a new audience,” Towey said.

Aside from that, there’s also a fairly spectacular photo essay and video about salmon fishing in Alaska. (Is this a regular thing Martha Stewart Living readers expect from the mag as well?)

As the MSLO creative team gets ready to blend the print and digital apps next year, the app issue also lays the groundwork for more e-commerce by creating a partnership program for marketers who advertise in the mag.

Preston joined MSLO in April 2005 as SVP, Publisher of Martha Stewart Living and in August 2008 was named Group Publisher.

The point of the structuring is to knock down the sales walls between the “omnimedia” empire that Martha Stewart runs. All print, digital, TV and radio sales will fall under Preston, who will report directly to MSLO’s Executive Chairman Charles Koppelman.

In a statement, Preston said: “As we prepare to celebrate the 20th anniversary of the launch of Martha Stewart Living magazine, we continue to evolve to address the new realities of what is an ever-changing media landscape. Streamlining our approach will enable us to more efficiently provide our clients with a single point of contact and the best ideas and the best resources across the full range of our media assets.”

The rationale behind such a get-together is simple: Crown Media, which operates two programming services, Hallmark Channel and Hallmark Movie Channel, wants to tap Martha Stewart Living Omnimedia’s digital expertise, while MSLO wants a bigger stake in the TV business. And if Oprah’s getting her own channel, why not Martha?

Executives stress that the talks are in the very early stages. The result could be a much smaller joint venture deal that would have the two firms simply agreeing to launch a new joint venture channel, tentatively called Hallmark Home. According to sources, the partners have already been sounding out distributors about plans for the service. More at B&C.

“We’re trying to show how digital and other platforms, our magazines, our TV programming, all revolves around close interaction with our audience, and how digital is central to that,” said Janet Balis, MSLO EVP of Media Sales & Marketing, after the presentation. “For example, with Help Me Martha, we’re going to find the stories we feature in the shows online. At the end of the day, digital is the glue between the interaction and the content.”

The expanded cross-platform push comes follows a significant turnaround for MSLO in Q4, when, in addition to returning to profitability, the company’s online ad dollars jumped 30 percent.

Among the 12 cross-platform ideas MSLO will be promoting in the next few weeks — executives are taking the upfront show on the road to Chicago and Los Angeles next — are At Martha’s Table, which touches on chef Emeril Lagasse and MSLO, along with PBS’ Everyday Food hosts Lucinda Scala Quinn and Sarah Carey, bringing in other star cooks together for a talk show about food. In addition to touching on the Everyday Food mag, paid iPhone app and PBS series, as well as The Martha Stewart Show (which is moving to Hallmark), At Martha’s Table will also spawn a new original web series featuring Emeril.

“I’m hoping that marketers will engage us in a conversation in taking Lucinda and Emeril and create a deeper, more social experience with these programs,” Balis told paidContent. “I hate to use the phrase ‘branded entertainment,’ but I do think there are opportunities there as well, especially on the web. The other fundamental shift here is that it’s not just about distribution on our platforms, it’s also about distribution seamlessly on other media companies’ properties.” While the iPad is an example of outside distribution in a sense, Balis didn’t say whether there were other, more typical content distribution deals in the works with other media companies. But the company appears to be keeping more of an open-mind when it comes to distribution.

There is also going to be more willingness to give its audience more influence. As an example, during her introduction, Martha Stewart read an e-mail from an Everyday Food subscriber who asked the company to come up with an iPhone app, saying she would be willing to pay for both. Last month, MSLO granted the reader’s wish. “Everyday Food was the number one paid app the week it was released and for the past month, has remained in the top four,” Stewart told attendees, noting that more use of mobile was also on the way.

That’s not to say all is well for MSLO’s online business, but it appears to be improving. The internet segment posted an smaller operating loss in Q2 of $500,000 versus a loss of $2 million the year before. On the print side, the story is the same throughout the industry, as MSLO’s publishing revenues declined 27 percent to $33.5 million, as ad pages continued fall.

Earnings release | Webcast (10:00 AM EDT) | Transcript (via Seeking Alpha)