Martha Stewart the brand has set out an ambitious agenda for a comeback following the jail term of Martha Stewart the individual. Stewart plans to issue a home video line, launch a satellite radio network, and expand into the ready-to-assemble furniture business. How she has managed to sign partnerships with top companies so soon after leaving prison is a testament to the cult of celebrity, an indication of the public’s love of a good comeback story, or an example of the power of PR—or perhaps all three.
Stewart’s company, Martha Stewart Living Omnimedia, suffered through some setbacks following the negative publicity surrounding first the government’s investigation into her stock trades and then her conviction in 2004 for lying to a grand jury. Her long-running television show was cancelled, and advertising at her flagship magazine declined precipitously.
But Stewart has seemingly emerged from prison as strong as ever. In fact, she might be benefiting from a backlash against what many fans believe was the government’s determination to make her a scapegoat for insider trading crimes.
“It’s kind of the Al Capone thing. They couldn’t get her on real issues, so they got her on something to throw sand in her face,” says Joel Raphael, president of Viewpoint, a New York-based marketing research firm. “Obviously lying to the grand jury wasn’t the issue authorities wanted to get her on, and she’s turned it around on them: ‘Look at what they’re doing to me.’”
At the same time, Raphael says, the public may appreciate how she has maintained a stiff upper lip in the face of her professional and personal crisis. “Instead of doing the Enron ‘it’s not our fault’ and getting beat up over it or falling on her sword completely, she really walked a good line. She took responsibility and didn’t crawl away and didn’t disappear,” he says.
If Stewart’s behavior since the crisis began has seemed calculated, Raphael says that’s a good thing, because it has worked. She has refined her trademark haughtiness enough to smooth out the rough edges while displaying the feistiness that her fans enjoy.
“Her PR agency … has done just a miraculous job,” Raphael says. “They obviously worked at this, starting this whole thing while she was behind bars, trying to rebuild her image and reposition her. While she displays some of her arrogance, a little of it seems to have been filed off in the process. She’s still brash and challenges things by stepping out a little more. She’s not kowtowing. She apparently knows enough not to step over the line.” For example, he notes, Stewart walked a fine line in flouting the legal guidelines for leaving her home and her electronic bracelet confinement when she showed up at her recent press conference to hype her new television show.
Among the new businesses Stewart has on in the works is Martha Stewart Living Radio, a lifestyle channel on Sirius Satellite Radio; a deal with Warner Home Video to distribute a line of how-to DVDs; a syndicated television show that already has been picked up by stations covering 90% of the country; and a furniture line at Kmart that expands on her Everyday brand for the retailer.
“The Martha Stewart brand is the premiere brand in the lifestyle arena today,” Jim Cardwell, president of Warner Home Video, said in the press release announcing the DVD deal. Huge multinational companies such as Time Warner do not generally show such support for brands or personalities unless they have solid confidence the people will embrace them and their products as warmly as before her troubles began.
Moreover, Stewart is now ready to leverage her new brands and products across her existing media platforms and with each other in a promotional juggernaut that will make it difficult for anyone to escape her commercial reach.
The company’s first-quarter results show Stewart still has some work to do. Revenue fell 13% from a year ago, to $38.7 million, in part because of the closing of the company’s catalog business, Sales slipped at her Everyday product line and some of her magazines, although her flowers business continues to bud.
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