The 10-year commercial agreement, which promises to deliver more than $200 million to MSLO, also calls for a jointly developed e-commerce site from which consumers can purchase home-and-lifestyle products either designed or selected by Martha Stewart or sold in the Martha Stewart stores inside of J.C. Penney stores. In addition, J.C. Penney will receive board representation after purchasing what amounts to a 16.6% stake in MSLO for $3.50 per share.

MSLO's publicly traded stock jumped more than 30% to top $4 per share in early trading Wednesday, as investors digested not just the J.C. Penney agreement but also a special dividend of $0.25 per share to which MSLO committed itself to paying on Dec. 30 to shareholders of record as of Dec. 19. Both the stores within stores and the jointly developed e-commerce site covered by the alliance are to open in 2013.

Ron Johnson, the former Apple Inc. executive who joined J.C. Penney as CEO in November, heralded the partnership for its ability "to unlock the full potential of Martha Stewart's extraordinary assets in new and exciting ways." Johnson also said his company would work with MSLO as "an investor and as a retail partner."

Martha Stewart, the founder, largest shareholder and a newly returned director of MSLO, called Johnson "a true innovator and someone who has been fundamentally redefining the retail experience." She added that MSLO's most recent alliance -- not expected to affect those already in place -- would serve as an "important step in realizing my dream of putting our Martha Stewart-designed products within easy reach of an even broader consumer audience."

The alliance concludes an exploration of strategic alternatives begun in May by Blackstone Advisory Partners LP. In addition to receiving financial advice on the alliance from Blackstone, MSLO obtained legal services from Paul, Weiss, Rifkind, Wharton & Garrison LLP. J.C. Penney turned to Peter J. Solomon Co. for financial advice and to Skadden, Arps, Slate, Meagher & Flom LLP for counsel.

In May, on retaining Blackstone, MSLO also announced that media heavyweight Lisa Gersh would join the company as president and COO and advance to CEO within 12 to 20 months. The announcement provided a timetable of sorts in that no executive of the caliber of Gersh -- an Oxygen Media LLC co-founder who served as its president until its acquisition in 2007 by NBC Universal Inc. -- would want to accept a CEO title but then quickly relinquish it in deference to a change of control.

Gersh indicated her approval of MSLO's new minority owner Wednesday by applauding J.C. Penney for recognizing "the powerful cross-promotional value and reach this alliance represents in light of our magazine, digital and broadcast properties." She also noted the alliance "strengthens our balance sheet, will enhance the reach of our brands and expand our vibrant merchandising and media presence for the benefit of all of our partners."

Despite the jolt to MSLO's stock price, it's still uncomfortably distant from the $18 per share the company commanded on going public in October 1999. It also bears noting that MSLO's status as a stock-market laggard has nothing to do with Stewart's spending five months in jail in the mid-2000s for insider trading. In fact, during her period of incarceration, MSLO shares more than doubled to $37.45 from $15.35.

No, the loss since then reflects the same forces sending all of publishing into a tailspin. Moreover, because MSLO now comprises publishing, broadcasting and merchandising, its first impression as a publishing highflier in the bubble of 1999 faded to something much fuzzier as it became a pan-media player. That it recently has had so many moving parts -- from the trading last year of Kmart Corp. for Home Depot Inc. in merchandising to the abandoning two years ago of NBC for the Hallmark Channel in broadcasting -- has merely added to this perception of fuzziness.