November 01, 2002 10:00 AM

While Martha Stewart took to wearing devil horns (all in fun) as she taped this week’s Halloween episode of her TV show “Martha Stewart Living,” the domestic diva’s company announced Thursday that its third-quarter profits plunged and warned of a fourth-quarter shortfall as it struggles to hang on to readers and advertisers amid the insider-trading scandal swirling around its namesake founder.

Martha Stewart Living Omnimedia Inc. “had to combat a great deal of negative publicity surrounding my personal affairs, which have unfairly overshadowed the great work being done at the company,” Stewart, 60, said during her firm’s quarterly conference call to stockholders, according to the New York Daily News.

Because she is the subject of a Justice Department probe, she added that she was unable to provide other comments.

Meanwhile, Stewart’s company — which is involved in the marketing of Martha from her publications to her TV show to her retail products at Kmart — has pulled the plug on its lucrative annual holiday primetime TV special, citing the uncertainty surrounding Stewart, and said it has removed her name from the title of a new magazine it intends to launch, Reuters reports.

Omnimedia’s third-quarter earnings plummeted by 42 percent and there were warnings at the quarterly meeting that profits could be down sharply next year.

Analysts are blaming the situation on Stewart’s woes, which began last year after she sold 4,000 shares of ImClone stock a day before the FDA was going to reject one of the biotech company’s new cancer drugs, sending up a red flag to the SEC.

Stewart has maintained all along that she has done nothing unlawful.

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