Martha Stewart rode out of federal prison in Alderson, W.Va., today to launch an audacious comeback campaign that might be tougher than anything she faced during her five months behind penitentiary walls.
Her carefully scripted departure at 12:30 a.m. was carried live by cable news channels, complete with helicopters chasing her SUV on its 22-minute drive to Greenbrier Valley Airport.
On the night of her release, Stewart appeared to be everywhere. CNN dedicated hours of coverage, including a one-hour biography special featuring grainy, hand-held camera footage by an inmate. Stewart was not interviewed for the show, but she could be seen in prison, chatting with and hugging other inmates.
In Alderson, W.Va., the media and Stewart supporters kept vigil. Four television satellite trucks and at least as many ad hoc broadcast sites crowded the space between a railroad crossing and the modest stone gates of the minimum-security prison. About three-dozen fans braved the below-freezing temperatures, one from as far away as Seattle.
Advertisement
Stewart, in sweater and jeans and flanked by her daughter Alexis, waved to cameras as she walked to her private airplane shortly after 1 a.m. At that time, she released a statement, saying, "The experience of the last five months in Alderson, West Virginia has been life altering and life affirming. Someday, I hope to have the chance to talk more about all that has happened, the extraordinary people I have met here and all that I have learned."
Stewart said she "will never forget the friends that I met here, all that they have done to help me over these five months, their children, and the stories they have told me."
Her personal appeal has been rising while she has been in prison, but the future of the firm is far from certain.
Martha Stewart Living Omnimedia Inc. last week reported a fourth-quarter loss of $7.3 million and predicted an even larger loss for the first quarter of this year.
Advertisement
And there are questions about how Stewart will work with the company's strong new chief executive, Susan M. Lyne, a widely respected former ABC entertainment head who is moving to put her own mark on the company. This week, the company's publisher and executive vice president, Suzanne Sobel, said she was quitting to pursue "new challenges."
When Stewart officially returns to work, she will take the title of "founder." While she could technically reassume the chief executive job, legal experts say she is unlikely to do so because she still faces a Securities and Exchange Commission civil suit that seeks to bar her for life from serving as a director at a public company and limit her ability to serve as an officer. The SEC case is suspended until Stewart completes the appeal of her criminal conviction.
The SEC would not view a quick reemergence as chief executive warmly, said a source familiar with the agency's views who spoke on the condition of anonymity because settlement talks are underway. Such a move could undermine a possible deal that would allow Stewart to ultimately return to a top executive job and a board seat in a number of years.
Advertisement
Paul A. Argenti, a professor of corporate communication at Dartmouth's Tuck School of Business who worked with Stewart as a consultant in the early 1990s, was blunt with his concerns about how Stewart and Lyne would work together.
"I cannot imagine those two people are going to get along," he said. "It happens in companies I work with all the time, where the person in charge won't allow a really good executive to shine because they fear that the spotlight will be taken off them. And Martha is more like that than anyone I've ever met."
In an interview, Lyne dismissed such concerns, saying she has grown close to Stewart through multiple prison visits and is confident they will have a cordial working relationship. While they have no formal agreement about their respective duties, Lyne said she expects Stewart will focus on big-picture strategic planning.
Advertisement
Stewart will be allowed to work outside her home for 48 hours per week during her five months of home confinement at her estate in Bedford, N.Y. She will have to wear an electronic ankle bracelet.
"At the same time, she has two big TV shows that are going to demand a lot of attention and focus because she clearly wants them to be great," Lyne said.
Not everyone agrees that Stewart's full-tilt comeback campaign will necessarily be a "good thing" for the company. Firing people on her spinoff version of NBC's "The Apprentice" might not do much to counter Stewart's reputation as a haughty ice queen, some marketing experts and analysts who cover the stock say. And the company won't make much money directly from the show.
"They have a pretty big hole to dig out of," said Douglas M. Arthur, a Morgan Stanley analyst who has an "underweight" rating on Martha Stewart shares. "The stock is strong but the numbers are quite weak. . . . And I'm a little concerned that Martha will spend all her time on the TV side, which might be good for the brand but is not going to do a lot for the company's bottom line."
Advertisement
Argenti called the "Apprentice: Martha Stewart" deal "exactly the worst thing she could do."
"It highlights all the worst aspects of her personality for everyone to see," he said. "It puts her right back in a situation where people can find a reason to dislike her again. And it does nothing for the company for her to be involved in that show. Zero."
According to the company's most recent proxy statement, Stewart owns about 30 million shares, or about 61 percent of the total number of shares outstanding. The company's stock has soared in advance of Stewart's release, closing yesterday at $33.95, up $1.91, after falling as low as $5.26 on Oct. 9, 2002, when Stewart's ImClone stock sale scandal was in full flower.
But some Wall Street analysts and professional investors view the shares as overhyped and overpriced. Some say the stock has been boosted by a "short squeeze" in which investors who bet that the stock they had borrowed would fall have been forced to buy shares to limit their losses.
Advertisement
On the positive side, anecdotal reports suggest advertisers are warming up to the company's flagship magazine, Martha Stewart Living. But it will be at least a couple of months before it becomes clear whether the title can fatten up to its pre-stock-scandal size. That won't be easy, as magazine racks now teem with good-living guides such as Real Simple and O, the Oprah Magazine.
And, in addition to her "Apprentice," Stewart will host a daily lifestyle show that will air on most NBC affiliates. Stewart supporters cite high demand for the show as an indication that the public will warmly embrace a post-prison Martha. Unlike the "Apprentice" spinoff, which will be unaffiliated with the company, Martha Stewart Living Omnimedia will receive much of the advertising revenue from the daily syndicated show, which is to begin airing in September.
That would also boost a sagging part of the company's balance sheet. With Stewart in prison and off the air, television revenue in the fourth quarter dropped to $1.1 million from $5.9 million a year earlier.
Advertisement
Among bright spots cited by Lyne and others, the company launched the "Everyday Food" television show on PBS in January, building on the success of Everyday Food magazine, which Lyne said was growing quickly.
Lyne also said she would focus on packaging the company's "evergreen" media products, such as how-to cooking and entertaining videos for delivery over multiple media devices.
And Lyne said Stewart's "Apprentice" show would draw more people to the brand and bear little resemblance to the current version, with Donald Trump's signature boardroom firings.
"Within the basic format I think there is a lot of leeway for her to create a show that is comfortable for her tonally and features tasks that are more in keeping with the creative work of a company like ours," Lyne said.
If Stewart were allowed to become chief executive again, some corporate consultants say it would be a bad idea, especially with an executive as talented as Lyne already in the slot and because it might derail the company's efforts to make itself about more than just Martha.
Instead, consultants say, Stewart should give up control of day-to-day operations and allow the company to chart its post-Martha future.
White reported from New York; Ahrens reported from Alderson, W.Va.
Martha Stewart waves as she boards her airplane at Greenbrier Valley Airport in Lewisburg, W.Va., early this morning.
ncG1vNJzZmivp6x7uK3SoaCnn6Sku7G70q1lnKedZK6zr8eirZ5noKS5qsDInKpoamBlgnB8kmhnbWefqsFuu8Vmp6uho6S7brnAq6uhmV2owabDwKurZqWRrnqvu9ZmnZqblWKubsDOrp6hnaJiwbO1wKVma51gaa6khJNma29vZmKBdq%2FEZnCda2VirnZ%2FxHFvb5qSZ4Vzew%3D%3D