By Michele Gershberg and Robert MacMillan

NEW YORK (Reuters) - Martha Stewart Living Omnimedia Inc. chief executive Susan Lyne is stepping down after nearly four years of navigating the lifestyle brand through quarterly losses and the brief imprisonment of its founder.

Martha Stewart Living said on Wednesday it will make two of its executives co-CEOs: Wenda Harris Millard, a former Yahoo Inc executive who now serves as president of media, and Robin Marino, president of merchandising.

Shares of the media and merchandising company fell 6 percent.

The former head of entertainment at television network ABC, Lyne joined the company in late 2004 while its founder and namesake Martha Stewart served a five-month prison sentence over a suspicious stock sale.

Lyne was hired to turn the company around as it suffered from a flight of advertisers and falling circulation. At ABC, Lyne was credited with spotting hit shows like "Desperate Housewives."

"Our principal goal was to rebuild the company and return it to profitability. We have done that," Lyne said in a company statement on Wednesday.

She gave no explanation for her departure and was not immediately available for comment. Media industry columnists and blogs have speculated that Lyne could vie for a top role at publisher Time Inc among other jobs.

In recent quarters, Martha Stewart Living reported improved advertising at its flagship magazine and growth for its websites. It has also taken steps to diversify its brand beyond a reliance on Stewart's own tips for gracious living, including a deal with celebrity chef Emeril Lagasse.