"Today is a shameful day. It's shameful for me, and for my family, and for my beloved company, and for all of its employees and partners. I'm just very, very sorry that ... a small personal matter has been able to be blown out of all proportion," the disgraced domestic diva said. Acknowledging the considerable backing she's received throughout her trial, she continued: "Perhaps all of you out there can continue to show your support by subscribing to our magazine, by buying our products, by encouraging our advertisers to come back in full force to our magazines."
That "small personal matter" was the dumping of her shares in the biotech company ImClone the day before a cancer treatment it was working on was rejected. The sale netted her a small profit of $167,000, but has cost her company, Martha Stewart Living Omnimedia, dearly.
Ad pages on MSLO's flagship title, Martha Stewart Living, are down 41.8 per cent for the first six months of 2004 and are more than 50 per cent down on the levels of two years ago. With the exclusion of merchandising, all MSLO sectors have posted operating losses for the first quarter of this year, and more than 200 employees have been laid off at the company.
In May this year, MSLO suspended broadcast of Martha Stewart Living, its syndicated television show, and the company posted its first-ever loss of $2.8 million on revenues of $245.8 million in 2003.
While shares in MSLO rallied 25 per cent to more than $11 with the news that her sentence would be just five months in a low-security correctional facility, the damage to both her reputation and her product is done.
Many media buyers and their clients in the US are sceptical of associating with the company and predict the decline in ad pages will worsen. Unilever, which spent $4.8 million with MSLO in 2002, cut that figure to just $130,000 in 2003. Martha Stewart Living's circulation has either fallen or been reduced from 2.3 million at the end of 2003 to 1.8 million now.
And the competition has smelled blood. Martha Stewart Living sits in a crowded market. Oprah Winfrey has two rival magazines -Oprah and O at Home, and there are a number of similar titles which don't boast a VIP masthead: Time Inc's Cottage Living and Real Simple to name but two.
There are advertisers prepared to back the title, though. "We're not advising clients to avoid the magazine. We specifically advised one client to stay with the magazine because the editorial product is still strong," a New York print media buyer, who asked not to be named, says.
"Clearly some elements of the industry seem to be making decisions on the basis that Martha's troubles are going to transfer in some way to the brand, but I don't think the Martha Stewart Living brand has been tarnished too badly."
Time will tell. Meanwhile, Stewart looks set to cash in on her predicament, suggesting she might publish a "how-to" book to help any of her loyal fans who find themselves in a similar situation.
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