Business Allies Desert Stewart in Wake of Verdict

10 March 2004

Martha Stewart, the fallen idol of gracious living, emerged Monday from a Lower Manhattan courthouse in subdued and humble mode after an hour-long session with her probation officer.

Asked by the besieging hack-pack if she had anything to say, Stewart replied: "I want to thank my readers, my viewers and the internet users [of her website]. I just want to thank everyone for their support."

The media maven was convicted Friday alongside her Merrill Lynch stockbroker Peter Bacanovic. Both are expected to get ten to sixteen months in prison when they are sentenced on June 17.

Stewart had pleaded innocent to charges of making false statements, conspiracy and obstruction of justice -- all relating to her sale of ImClone stock the day before it became publicly known that the Food & Drug Administration had refused a licence to the firm's anti-cancer product Erbitux.

But as one media cynic noted, Stewart is a former director of the New York Stock Exchange, an organization not known for electing artless investors to its board.

Meantime, Stewart resigned Monday from the board of cosmetics colossus Revlon on which she had served for eight years. The same day, her syndicated television show, Martha Stewart Living, was taken off-air on the CBS network and UPN stations, both owned by Viacom.

All these events coincided with a board meeting of her publicly listed exploitation vehicle, Martha Stewart Living Omnimedia. Insiders say its purpose was to discuss Stewart's future with the firm, from which she stepped down last June as chief executive and chairman following her indictment. She remains a director and the company's chief creative officer.

Investors -- many of whom see Stewart's wrecked reputation for probity as MSLO's most important asset -- continued to sell their stock in the company. After dropping 23% Friday on the NYSE, shares fell a further 8.84% by close of business Monday.

Prior to Stewart's involvement in the ImClone affair, MSLO stock had traded at about $19 a share. At Monday's close the price stood at $9.90. The style queen herself owns around thirty million shares, an approximate 61% stake in the company.

Data sourced from: The Wall Street Journal Online; additional content by WARC staff