“One plus one equals three.” That’s what Martha Stewart Living Omnimedia chairman Charles Koppelman said last July after the company appointed Wenda Millard and Robin Marino co-CEOs.

I — and many investors — expressed skepticism. Co-CEO set-ups are so unusual that during the past decade, among Fortune 500 companies, only 15 such arrangements have existed. Koppelman literally wagered that the co-CEO set-up at his company would flourish. “I’ll bet you that in three years, you’ll say ‘Wow! What a genius move!’” he told me.

Alas, Koppelman has lost this bet. MSLO announced this morning that Millard is leaving to become president of Media Link, a consultancy that helps Fortune 500 companies like Microsoft , AT&T , Unilever, and Home Depot figure out their media strategy.

Millard, a onetime chief sales officer at Yahoo (YHOO), says that this latest move “has nothing to do with Martha Stewart. It’s all about Media Link.” Widespread confusion about where marketers should place their media — so many choices today! — has helped Media Link chairman Michael Kassan, who is Millard’s new partner and her longtime friend, double his business these past couple of years.

“A lot of my focus will be on digital,” says Millard, 54. “The most important thing for clients is understanding ‘What does intelligent, integrated marketing look like?'” Lessons learned overseeing Martha Stewart’s multimedia platforms, she adds, will help her guide her new clients.

And what about the reports in today’s New York Post that tensions with Martha and Robin Marino, the company’s other co-CEO, drove Millard out the door? “That’s such bullshit!” she says. “I hope no one takes that seriously.” Asked whether tensions with Stewart and Marino exist at all, she didn’t deny it but said, “I would never leave because there’s tension. That’s part of business.”

Admits Koppelman: “Of course, there was tension.” Indeed, tension was inevitable given the economic meltdown, MSLO’s struggles for profitability (the company lost $15.7 million last year), high-level turnover (Susan Lyne, who was CEO until a year ago, is now running online apparel merchant Gilt Groupe) and the company’s long-suffering stock price. MSLO shares, trading at $3.37, are down more than 80% in the past two years.

Millard’s exit leaves one woman in official charge: Marino, a merchandising expert who was president of Kate Spade before joining MSLO in 2005. Though another woman gains power in today’s management shift: That would be the irrepressible Martha. Koppelman says that Stewart is taking direct responsibility for the company’s creative side. Chief creative officer Gail Towey will now report to Stewart, whose title is founder. Stewart is prohibited from serving as a corporate officer or director for five years by her 2006 SEC settlement. But no question, she’s still calling the shots.

As for that bet that Koppelman, MSLO’s chairman, made with me, he says, “You got a free dinner!” My choice on the restaurant.