NEW YORK — With a House committee awaiting records from Merrill Lynch on Thursday regarding the share dealings of Martha Stewart, media analysts and ad buyers remained mixed about how the ImClone scandal will affect her company Martha Stewart Living Omnimedia and its flagship product Martha Stewart Living.
This story first appeared in the June 28, 2002 issue of WWD. Subscribe Today.
Blake Callaway, who works in the media kitchen at Kirschenbaum, Bond, and Partners said, “We’re taking the position of innocent until proven guilty, but we are monitoring it, keeping an eye on them.” Still, he acknowledged that the information coming out “doesn’t look great.”
Reem Acra, a bridalwear designer who advertises heavily in Martha Stewart Weddings, said, “It’s important to separate Martha Stewart the individual and Martha Stewart the bridal entity. We have a great partnership with the magazine and look forward to continuing it.” Her spokeswoman added that Acra will be advertising in the magazine’s fall issue.
Nicole Miller, who also advertises heavily in the Weddings issue, said that, in addition to sexism tainting the coverage of Stewart, “I’m bored. There’s WorldCom today, Martha Stewart was yesterday. Every week something pushes the last thing out of the news, it all dissipates. It’s unbelievable how many scandals have been in the news lately.”
But others were less convinced the drama would blow over and weren’t so sure a separation between Martha Stewart, the brand, and Martha Stewart, the person, could be made.
“There is no closer relationship between the personality and the brand than with Martha Stewart,” said Ellis Verdi, president of DeVito/Verdi, a boutique ad agency that has done campaigns for companies such as Daffy’s and Circuit City.
“That’s a wonderful business proposition because she actually controls the brand from every level, but it’s also a tremendous risk since you’re dealing with a person, a person who has foibles.” For ad buyers, he said, “it’s balancing a great success story against the damage caused.”
But when asked specifically about whether he would place ads in her magazines for the fall, Verdi laughed and said, “That’s no comment.”
On Thursday, shares of Martha Stewart Living Omnimedia rebounded 5.8 percent, finishing the day at $11, up 60 cents from its Wednesday close, which remains the lowest its shares have gone in the year to date. Shares began the month at $19.40 and have traded as high as $23.50 in the past year.
The gains came as the house committee investigating ImClone awaited detailed phone records from Merrill Lynch, the company which employed Stewart’s stockbroker Peter Bacanovic.
The House Energy and Commerce Committee is requesting extensive phone records and client lists from Bacanovic, in hopes that they will shed light on what he knew about ImClone and whether he improperly passed knowledge onto Stewart, who sold her 4,000 shares of the stock the day before it was announced that the Food and Drug Administration would not be approving ImClone’s cancer drug.
It was not clear whether all of the records had been submitted by the end of the working day Thursday.
Stewart has publicly denied any wrongdoing and spokesmen for her have said that she had ordered Bacanovic to sell her stock when it fell below $60 a share, which it did on December 27, the day she executed the sale.
But in recent days, an assistant to Bacanovic, Douglas Faneuil, who had backed this up, recanted on his former statements and said he had been pressured by Bacanovic to tell Merrill Lynch that such an agreement had existed.”