FEATURE - Stewart's ability to de-tarnish reputation doubted
By Deena Beasley
LOS ANGELES, Aug 20 (Reuters) - She rose to the Forbes list of 400 richest Americans by showing others how to organize a wedding and whip up a souffle at the drop of a hat. But can Martha Stewart, the doyenne of domestic bliss and graciousness, remove the tarnish from her reputation and media empire.
Many experts say no, that it's too late for Stewart to undo the harm caused by allegations that she engaged in insider trading -- and that is a recipe for trouble at Martha Stewart Living Omnimedia (NYSE:MSO - News), her guide-to-good-living company.
"Even if she is legally exonerated, her image as the mistress of homeyness is significantly tarnished. She's playing this a little too close to the vest. It's a contradiction of the marketplace image of open, warm and domestic," said organizational psychologist Dr. Ken Siegel.
Stewart, also chief executive of Omnimedia, made her fortune by focusing on -- in print, radio and television -- crafts and tasks traditionally done by women. In the current pink and lavender issue of "Martha Stewart Living," she tells readers how to convert shells and bottles into sand candles.
She is being investigated for insider trading after selling nearly 4,000 shares of ImClone Systems a day before they fell precipitously on news that regulators refused to review the biotech company's cancer drug.
Stewart has denied wrongdoing, citing a preexisting arrangement to sell the stock if it fell below $60 a share. On Tuesday, ImClone shares traded at $8.10 on the Nasdaq.
Someone as culturally prominent as Stewart would be expected to address the public and she has not really done that, resulting, rightly or wrongly, in the perception that she has something to hide, said Steven Fink, president of Lexicon Communications, a Los Angeles-based crisis management firm. "She hasn't made any new friends with this episode. Now it's almost so set in concrete it's hard to see a way out," he added.
BUNKER MENTALITY
He and other communications experts say Stewart and her minions have badly bungled their response to the ongoing investigation, failing to address it early on and adopting a bunker mentality that has served to inflame the press.
"She thought she could talk her way out -- she's very glib at the microphone, but to go on TV and keep chopping cabbage while a serious reporter is asking questions was not a good idea," said Fink.
During a June appearance on CBS's "The Early Show," when host Jane Clayson tried to engage her in a discussion of the ImClone sale, Stewart said, "I want to focus on my salad," adding that she would be "exonerated of any ridiculousness." Stewart's appearances on the morning program have since been put on hiatus, a spokeswoman for her company said.
"She is a person who has epitomized etiquette, but not saying anything has left her guilty in everybody's mind," said Beth Kaufman, a director of Brownstein Group, a PR firm with offices in Philadelphia and Bellevue, Washington.
"People can then infer what? That it's OK to undertake illegal actions if your table setting is nice?" she added.
Fink suggested that Stewart "could have a done a mea culpa ... returned the money and paid a fine ... the crisis would have been nipped in the bud."
Instead, stock in Stewart's company has plunged. The company's shares, which traded Tuesday at $8.22 on the New York Stock Exchange, have lost about half their value since the ImClone share scandal broke in June.
"This is one of the rare instances where a brand is a person and because of that you have to be much more careful," Kaufman said.
Omnimedia warned earlier this month that ad revenue, and to a lesser extent merchandise sales, would be hurt later in the year by uncertainty surrounding the insider trading probe.
'TAKE AWAY THE NAME AND IT'S JUST A TOWEL'
"Stewart's expertise in things like home furnishings and linens conveys a sense of home, safety and security. The public is reacting with a sense of outrage to the violation of those expectations," Siegel said.
Stewart's company in June hired the Brunswick Group, an international corporate communications group with an office in New York, as its own crisis manager. "The investigation is a personal one and not into the company," the group said in a statement, adding that Omnimedia believes that the best thing it can do is to continue to work as normal.
Stewart's business empire may conjure maternal images, but she has a behind-the-scenes image as a tough cookie.
"Martha asked for the system that is currently in place -- total control, absolutely her name, her brand. Take away the name and its just a towel," said Mike Paul, a PR executive who also teaches courses on reputation management.
Paul, who believes Stewart's chances of going to jail are slim, said there is a need to separate the court of law from the court of public opinion. "Relying on legal advice is killing her reputation. And the taint will never go away."
Stewart is also the only female executive to so far take a fall in the round of corporate morality scandals that began last year with the collapse of energy trading company Enron.
"It's tough being a woman in that position. Society is quick to brand you with a name that begins with B. It is unfair to her, but if you're dealing with reputation ... you need to accept what people think of you and get help," Paul said.
He said Stewart should humble herself and admit any wrongdoing, "She has to at least admit that she was naive."
Other opinions vary on what Stewart should do next. Some experts think now its the time for a let-your-hair-down interview on "60 Minutes." Others say she needs to get a sympathetic press.
Dr Robert Butterworth, a clinical psychologist, has another idea: "One wonders about her emotional state ... my feeling is she's depressed. If she's not depressed something's wrong, but all the Prozac in the world isn't going to help this." |
