Martha Stewart Living in 10-year deal with Meredith

Martha Stewart Living Omnimedia is sticking to its knitting.

Beginning Nov. 1, Meredith Corp. will take over ad sales, circulation and production of Martha Stewart Living and Martha Stewart Weddings magazines. A source close to Martha Stewart Living Omnimedia explained that the 10-year partnership with Meredith will allow the company to concentrate on its strengths in design and content, and keeping control of the brand's equity.

Martha Stewart speaks during the Women's Wear Daily Apparel/Retail CEO Summit in New York.
Daniel Acker | Bloomberg | Getty Images

Martha Stewart Living CEO Dan Dienst joined the company 11 months ago, bringing with him a resume with expertise in restructuring failing businesses. Wednesday's news is the second major slimming down of the company's business units under Dienst.

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The partnership is designed to benefit both companies financially. MSLO expects the agreement will improve operating income by $10 million to $15 million annually, and it will recognize a restructuring charge of between $2 million and $3 million for the fourth quarter, principally for severance.

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CNBC learned Martha Stewart Living employees were informed just as the news was released.

While the number of jobs that will be cut has not been disclosed, a source close to the company told CNBC it is likely some employees will be offered jobs at Meredith.

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Martha Stewart gained more than 25 percent in extended-hours trade on news, while shares of Meredith were unchanged in after-hours trade.