Martha Stewart Living Omnimedia Inc., whose founder is serving a five month prison sentence for obstructing justice, named Susan Lyne as president and chief executive officer, replacing Sharon Patrick.

Ms. Lyne, former president of Walt Disney Co.’s ABC Entertainment unit, was elected to Martha Stewart Living’s board in June. Ms. Patrick will resign, the company said in a statement.

The publishing, broadcasting, and house wares company is trying to restore its image and regain its financial footing following Martha Stewart’s conviction. Sales have fallen as advertisers have shunned Martha Stewart Living, the flagship magazine. The unit that includes the publication accounts for more than half of the company’s revenue.

Ms. Lyne was president of ABC Entertainment from January 2002 to May 2004, responsible for development and management of the television network’s prime-time schedule. She joined ABC in 1996 and has developed films for Disney’s feature film and television divisions.

Before Disney, Ms. Lyne was editor-in-chief of Premiere magazine, which she helped create. The publication focuses on film and features celebrity interviews, reviews, and industry trend stories.

Thomas Siekman, the chairman of Martha Stewart Living’s board, said in a statement that Ms. Lyne was hired for her “proven track record in the media industry.”

Ms. Lyne left ABC in April as the broadcast network struggled to develop popular shows and was ranked fourth in audience ratings. ABC’s Entertainment Chairman Lloyd Braun, who left along with Ms. Lyne, said a month before their departures that the network had failed to produce a “megahit” during Ms. Lyne’s tenure.

Under Mr. Braun and Ms. Lyne’s administration, the network developed two programs that have helped lift the network to third place this season: “Desperate Housewives” and “Lost.”

The prime-time soap opera “Desperate Housewives” is the no. 3 show for the television season, averaging 21.8 million viewers per episode since its October 3 premier, according to Nielsen Media Research.

“Lost,” about survivors of an airplane crash who are stranded on an island, is the season’s ninth-ranked show, averaging 17.5 million viewers since the first episode was shown on September 22.

Martha Stewart Living shares have risen 89% this year as investors expect Stewart to help rebuild the company once she finishes her jail sentence in March. The stock rose 5 cents to $18.62 in New York Stock Exchange composite trading.

Of the five securities analysts who cover the company, all rate Martha Stewart Living shares sell.

Martha Stewart Living’s revenue and profit have fallen for three consecutive quarters. The company’s net loss widened to $15 million in the third quarter as advertising sales plummeted. Chief Financial Officer James Follo last month forecast a loss of about 20 cents for the fourth quarter.

Ms. Patrick said in October the company was planning for Stewart’s comeback and has plans for new television shows and magazines. In September, it signed an agreement with Mark Burnett, developer of the CBS show “Survivor,” to create a program featuring Ms. Stewart.

Ms. Patrick took over as CEO in June 2003 after serving as the company’s president for six years. She drew up the business plan that turned Stewart into a household icon after the women met on a hiking trip to Africa’s Mt. Kilimanjaro ten years ago.

While Stewart presented her company’s public face, Ms. Patrick focused on business details.