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CNN Larry King Live

Encore Presentation: Interview with Martha Stewart

Aired March 05, 2005 - 21:00 ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

LARRY KING, HOST: Tonight, an exclusive hour with Martha Stewart. Now that she's finished serving 5 months in prison, a look back at her last interview before she did her time. And exclusive, encore edition of LARRY KING LIVE is next.
Good evening. As you probably know by now, Martha Stewart got out of jail yesterday after serving 5 months for conspiracy and lying to investigators about a stock sale. We figured it's a good time to revisit a fascinating hour we spent with her last July just days after her sentence had been handed down.

This was her first and only interview since that sentence. And her last before she went to prison. Martha was speaking only for herself, not on behalf of her company, Martha Stewart Living Omnimedia. And because of her pending appeal, there were some areas of the case we could not discuss.

Still, a lot to talk about. I began by asking her, if she had to do it all over again, what she might have done differently.

(BEGIN VIDEOTAPE)

MARTHA STEWART, BUSINESSWOMAN: Well, that's a hard question, because I sold it for a specific reason, it was going down. And I can't imagine, I mean it's just such a conundrum to decide what I could have done, what I should have done, what I should have done afterward. There's so many variables, Larry in a thing like this.

KING: It boggles the mind, though, doesn't it, your own case to think that would've, should've, could've?

STEWART: You wake up pretty much every night about 2:00 a.m. Saying oh, my gosh, what if I had. What if, what if, what if. And that's pretty terrible for a 2 and half year process like this.

KING: Some of the things that have developed recently with some fair questions. Why not serve it, you'd only serve about four months I think on mandatory, do 80 percent.

You serve four months, the stock...

STEWART: Are you an expert?

KING: I think it is four months. I think it's 80 percent.

STEWART: Do you think or do you know?

KING: I'm pretty sure. Anyway, but I know you don't...

STEWART: I haven't done my research totally yet on any of this. And we have a good appeal. We have -- I have not made up my mind one way or the other.

KING: You mean you might serve?

STEWART: Well, again there's a conundrum. My company needs me. I would like to get back to work. I would like this to be over. This has been a long, drawn-out process. And I would like very much to go back to work. On the one hand, business, Wall Street, advertising, they would like to see finality. They would like to see an end to all of this.

KING: Obviously.

STEWART: I, as a person, with rights, with a belief in the judicial system and fairness, think that an appeal is the way to go. So, what do I do, OK. If it weren't wrapped up with my company, and it shouldn't be, but it is, inextricably.

What do you do?

What would you do, Larry?

KING: That's a fair question.

STEWART: This is a hard thing. And people say -- and pundits are out there saying oh, she should go in.

Do they know what it's like to go to jail? I don't think they know.

KING: Everybody seems to always...

STEWART: I don't know what it's like to go to jail.

KING: There are a lot of people saying I'd go do it. I'd get it over with.

STEWART: I know, why? Why do they say that?

Would they do it themselves?

KING: No, they say it for you.

STEWART: Of course. Of course. It's easy to say what somebody else should do. But what to do is the problem here.

KING: Since you are so involved in business and so caring about your business, are you leaning toward possibly doing it, since that would stabilize the market?

STEWART: I have two options, either to go or not to go. But no actually I have three options.

KING: What's the third?

STEWART: Well, to go and appeal. So, you can go in and not appeal. You can go in and -- we've left out, it's very open. Because we are out on bail pending appeal. Luckily we...

KING: What if you go, serve and you win your appeal?

Then what do you get?

STEWART: Well...

KING: Just a clearinghouse, right?

STEWART: Right. But then, I mean, that's another question. What do I get? I'd have peace of mind. I'm finished. I don't have to go back to another trial, maybe. I don't know if you have to go back to another trial after that or not. No one...

KING: You don't want that, do you?

STEWART: No, I do not. It's very, very difficult to go through a trial like this.

KING: That's would have come down on the side of serving, forgetting, dropping the appeal. Serving getting over with, because you could win the appeal and they order a new trial.

STEWART: Well they could, but maybe not. Maybe the appeal -- again, I'm not an expert. I have wonderful appeals attorneys working on this. Walter Dellinger and his full team. And I -- I'm going to, you know, take their advice, but I have to make up my mind.

KING: Alan Dershowitz the famous appeals lawyer, said the other day, you have a great appeal.

STEWART: Well, everybody has an idea whether it's Alan Dershowitz or Bob Morvillo or Walter Dellinger, everybody has something to say. And I appreciate all their opinions. And I have to weigh it myself. No one can make up my mind.

KING: There were some criticizing for a remark you made, I think with Barbara Walters about comparing to Nelson Mandela.

You want to straighten us out on that?

STEWART: Yes, I would like to straighten you out on that. Not you, but the press. What I said, Barbara asked me something about, you know, how are you going to do this?

And what I said, and I am so in awe and so -- I love Nelson Mandela so much. I said Nelson Mandela was able to survive 27 years in prison, I could survive five years. I wasn't comparing myself to Nelson Mandela. I am not a Nobel Prize winner. I am -- my -- our situations are -- well, it shouldn't have and it didn't. If you watch the tape. I watched it. I mean, I didn't seem like I was comparing myself to Nelson Mandela in any way. And I really don't want anybody to be confused about that.

KING: When you walked out of the courtroom and made that statement, which had to be a very pressure situation for you, you also asked people to have faith in your business.

Did you think a lot about that, since it looked like you were also pitching.

STEWART: Well, again...

KING: Of course that's what you've done all your life, so.

STEWART: Well, I am -- you know, I have a company called Martha Stewart Living Omnimedia. Our company makes wonderful products. Our company continues to make wonderful, trusted, terrific products, best quality. And it is my job -- one of my jobs is to tell people to buy our products, encourage people to buy our products, hope that people buy our products because they're good. You know that. I've been on your program for years.

KING: You have.

STEWART: I'm bringing beautiful things to your viewing public. I've done that on our television program for years and years and years. So I'm not -- I'm not going to stop and say, you know what, don't buy our products.

I mean, this is part of what I do. And one way that all our supporters, and we have so many terrific supporters, Larry, and that's what I found during this entire process. That there are many, many, many millions of people out there that care, that kind of question the whole process that has -- that I've gone through and will support us.

KING: You made the strong statement that you have faith in the legal system.

Do you like this judge?

Was she fair, in your opinion?

And what do you think of mandatory sentencing?

STEWART: OK, well that's a lot of questions in one question. Judge Cedarbaum is an elegant lady. She happened to go to the same college I went to, do you know that?

KING: No.

STEWART: Oh, yes she went to Barnard College where I went, my daughter went, several people in our family went. And I think she is an intelligent judge. I think she took this entirely seriously. She had great faith in her jurors. She had great faith, again, in the legal system, as I went into this process having.

And that said, I think that -- what was the second part of your question? KING: Mandatory sentencing. She gave you the minimum.

STEWART: She did, and I am grateful for that. I think that the sentencing guidelines are under a siege right now. Many judges in America are questioning the validity of the sentencing guidelines. I'm not an expert in that, but when I see and hear what I've been hearing about them, the question of the validity of them is going to the Supreme Court.

KING: Emotionally, this roller coaster ride, how are you doing?

STEWART: Well, you know, as a child I loved the roller coaster. I hate this process. I hate it. It has been really devastating. And very, very difficult.

KING: We'll come back in a minute with Martha Stewart. We'll take your calls later. We thank her for being with us tonight. Don't go away.

(COMMERCIAL BREAK)

KING: We're back with Martha Stewart. By the way, there is -- I know a lot of people are writing President Bush about pardoning. He could pardon you tomorrow and it's over.

STEWART: Wouldn't that be nice.

KING: Would you ask for that?

STEWART: Would I accept a pardon?

KING: Yes, yes.

STEWART: Of course.

KING: Some people decline, because a pardon doesn't mean you didn't do it. It just means you're pardoned.

STEWART: Well, I would like to be out of this mess.

KING: You'd accept a pardon?

STEWART: I would.

KING: In your letter to the judge, you offered an explanation for the sale. You said it was not because I was secretly tipped but because I set a price, made a profit when it was sold. Which has happened every day in America, right? so the question is obvious, why you?

STEWART: Well, we don't know.

KING: Why do you think you?

STEWART: Many people have said that it is because I am a woman. Many people have said it is because I am a business person, a successful business person. But maybe so. I don't know for sure.

KING: What do you think?

STEWART: I don't know. I think it was a combination, and a coincidence. And I think that even though the government says there's no such thing as coincidence, I think there is coincidence in this world.

KING: So it just -- the breaks (ph) didn't fall?

STEWART: Well, they fell in the wrong place, didn't they?

KING: From your standpoint?

STEWART: Oh, yes, indeed.

KING: All right. We didn't get a chance to talk on the air. We did talk off the air after the verdict. What was that day like?

STEWART: Friday?

KING: No, not the sentence, the verdict.

STEWART: Oh, excuse me.

KING: You didn't do any interviews since the verdict.

STEWART: No, I haven't. Well, we were very disappointed, obviously.

KING: Surprised?

STEWART: I think we were all very surprised. We had sat in the courtroom, all of us, the whole legal team, my daughter, I, my family, my friends, and all of us thought that there would be exoneration. We were so wrong, obviously. And we were very sad. And it's been, again, a long wait to last Friday.

KING: Were you surprised at the sentence?

STEWART: You're always surprised at something like that, I would think. And you can't say that you're happy. You can't say, I mean, I'm happy that it's five months in, and five months house arrest. Rather than 16 months in prison. Which -- that was the sentencing guidelines. And the judge stayed within the minimum. I'm grateful for that.

KING: But not surprised? I mean, you expect to get no time?

STEWART: You learn a lot when you go through a process like this, Larry. And there are things called pre-sentencing memos from the probation officer.

KING: Who interviews you, right?

STEWART: Yes, yes and then he makes suggestions to the judge. The judge looks through the entire case again and again and again, I'm sure. Reads all the wonderful letters of support that came on my behalf. She then has to work with the sentencing guidelines and the probation officers and their superiors. So it's a big process. And they come to a conclusion. And the conclusion was what I was sentenced to.

KING: Your daughter who appeared with us after the verdict took it very badly.

STEWART: Oh, yes. When the verdict came...

KING: Worse than you.

STEWART: Well, when the verdict was passed she actually fainted and I heard sort of the thump and I thought, well, maybe that's just a bang on the bench, but she had actually fainted. And that's horrible. But she did come. I didn't -- for the sentencing I really didn't want anybody to come. And yet the night before...

KING: No?

STEWART: Oh, no, I didn't. I really felt horrible about going down there again, and hearing a fate. And she insisted on coming. Other people insisted on coming and came, even though I didn't invite them. And my mom, I asked my mom not to come. She's just -- she's taken this really hard. And I asked her to stay home and she did.

KING: The other defendant, were you surprised that he got the same sentence as you?

STEWART: No. We were co-defendants. And we were treated very similarly. And I was told that we would probably get identical sentences.

KING: What was your reaction when that juror did speak out in a way that seemed prejudicial?

STEWART: Chappell Hatridge? It's quite obvious that he did perjure himself, and that is one of the points in our appeal, to have a juror who misleads in the process is dishonest.

KING: What was your reaction? How did you hear it, by the way? Just watch the news?

STEWART: Oh, I watched him. He was the first one out the door to talk to the press. And it's disheartening. Because the judge was in such favor of the jury, and had instructed them each and every day.

KING: This process taught you what?

STEWART: Oh, it's taught me a lot of things. And I think I'll write a book. Because, I think it could be helpful to other people, just about -- just about what lawyer to choose, how to behave, how to attend an interview. I mean there's things that, you know, there's no how-to book about this.

KING: No, there ain't.

STEWART: There isn't. Not that, you know, it's going to be a big bestseller. But for anybody who has to go through this process, there should be some guidelines. Because, guidelines would help.

KING: Was it a mistake, some think it was a mistake to wear an expensive handbag.

STEWART: Oh, we're back to the handbag?

KING: I've never asked you about the handbag.

STEWART: No, you haven't. I don't mean you. But oh, my gosh, the newspapers and everything. And you know, this case was not about a handbag. It was not about me testifying. The jury was clearly instructed about what the case was about.

KING: Donald Trump on this show said the night of the verdict, that you should have testified. Because when a person is as big as you are in the public's eye, and has been as public as you've been, the public expects you, and therefore the jury expects you.

STEWART: Well, Donald Trump has been a very big supporter and a very nice source of comfort for me. And I've known him for quite a few years. And what he says about that is his opinion. It was the opinion of my attorneys that I shouldn't testify, and I listened to my attorneys.

KING: In retrospect do you regret it? In retrospect, hindsight?

STEWART: You know, I don't know. I don't know if it would have changed the jury's verdict or not. I do not know. I can truthfully say that.

KING: Have you spoken to Sam Waksal, by the way, at all?

STEWART: Have I spoken to him?

KING: Has he called you from jail?

STEWART: I spoke to him once, yes.

KING: How's he doing?

STEWART: He seems to be OK. He said he's read 180 books and he's learned Italian.

KING: Is it kind of ironic to know that that stock is now doing very well?

STEWART: No, it's not at all ironic.

KING: If you had never had this, never sold it, never set that price, you'd be ahead now, right?

STEWART: Well, if I had held the stock down through $5, it went down to $5 you know.

KING: What's it now?

STEWART: It's, I think, around $70 something. But that's good. But, it's not about the price of the stock. It's about the drug. And that drug is a good drug, it's saving lives, it will save lives, it's a cure for cancer. And what an admirable goal for someone to set for oneself and actually attain it, even though, you know, it didn't work out for him.

KING: So you don't feel any irony in it from your own standpoint?

STEWART: No.

KING: We'll be right back with Martha Stewart on this edition of LARRY KING LIVE. Don't forget Wednesday night Senator John Edwards and Elizabeth Edwards for the hour. Don't go away.

(COMMERCIAL BREAK)

KING: We're back with Martha Stewart. We'll go to some of your calls at the bottom of the hour.

What did you mean by shameful?

STEWART: Well, it is shameful. It's shameful to me. I feel both shamed, and that the situation for me was shameful, for my family, for my friends, for my company. It's -- it's a word.

KING: How about the press and you? Especially some of the press. "The New York Post" has been very hard on you. Other tabloid media very difficult on you.

STEWART: Well, if you go to the Midwest, there's none of those stories, you know.

KING: So what do you think it is? You live in New York? You're an easy target?

STEWART: I think that it sells newspapers. That's really -- that's it. And the stories are really something, aren't they?

KING: Do you ever wonder why people like to see bad things happen to prominent people?

STEWART: Well, I've been told during this whole process that oh, in America, we like to build 'em up, we like to break 'em down, we like to see them suffer. We like to see success turn into failure.

I don't. I am a hero worshiper. I love the number one tennis player. I love the number one baseball player. I want to see those records broken.

KING: You root for the Yankees.

STEWART: Oh, of course I'm a Yankee fan.

KING: Figures.

STEWART: But don't hold that against me.

KING: I won't -- oh, no, no. Hey, I like George.

STEWART: No, but, see, I have never felt that way. When someone is successful, I just applaud. And if they're doing good things, I applaud them even louder.

KING: How about an image that some people thought you arrogant?

STEWART: Well, again, in my letter to the judge, I said that...

KING: You've mentioned that.

STEWART: Yeah, I have been perceived as arrogant. And my explanation was that, you know, I work really, really hard. I'm really hard on myself, Larry. You know that. You know how many hours a day I put in at the job.

KING: You carry your own equipment.

STEWART: Whatever.

KING: You do.

STEWART: But I -- I have sometimes probably forgotten, and I know I have, forgotten to pat the back of someone, or said, thank you, you know, enough times, or even maybe once sometimes. So I -- you know, I wish I were perfect. I wish I were just, you know, the nicest, nicest, nicest person on Earth. But I'm a businessperson in addition to a creator of domestic arts. And it's an odd combination. No excuse. But if I were a man, you know, no one would say I was arrogant.

KING: You ever cry?

STEWART: Of course I cry.

KING: Did you ever cry during this?

STEWART: Only about other things. It's hard...

KING: You lost a friend to cancer.

STEWART: Oh, yeah, Carolyn Kelly Wallach (ph). She died last week right during the worst week of this whole episode. And we went to her funeral. She had the most beautiful funeral. She has worked with me for about almost 17 years. She really helped shape the television program.

KING: Has a little son.

STEWART: She has a son and two daughters. A wonderful husband. And I just can just pray that everything is OK.

KING: But nothing about this made you cry?

STEWART: No. Because, I -- I -- I'm sad, rather than sobbing.

KING: What did you make of all the people writing to the judge and the people writing to the president?

STEWART: The letters were phenomenally great.

KING: Are you surprised at all the attention this got? Are you surprised that you were front page?

STEWART: Sometimes, yes. Sometimes no. It depended on the day. But repetitious articles really got to me. The articles that just said the same thing over and over and over again. I don't know if the reading public wants to read the same thing over and over again. I certainly don't. I would rather read about something else. But, again, I think it's what sells newspapers.

KING: But you became on cable television, as well, day of sentencing, day of verdict, you were wall-to-wall.

STEWART: Well, I'd rather if my program was on television and people were watching me tell them how to bake a pie, how to create a beautiful home, how to make a wonderful garden. I cannot tell you how I long for that.

KING: We asked the former head of Enron the other night this question, James Donovan said when he was secretary of labor in the Reagan administration and was charged with things, and eventually exonerated on appeal. He said, where do I go to get my name back?

STEWART: Well, that's a famous quote.

KING: Where do you go?

STEWART: Well, I hope my name is still intact. I hope it is. I hope our brand is still the brand, Martha Stewart. I think it is. The products have not changed, Larry. The magazines are as good as they ever were. The products are still beautiful and useful, and high quality.

KING: Are they selling?

STEWART: Oh, yes. They are.

KING: You're still with Kmart?

STEWART: Oh, yes. Of course.

KING: That's been renewed.

STEWART: Oh, yeah.

KING: So what went down? The magazine circulation went down? STEWART: Well, advertising went down. And as a result of advertising pages -- a lot of advertisers had to take a wait-and-see attitude. And I thank the advertisers who stayed. I thank the advertisers who will come back in force, I hope. It's the same beautiful product.

KING: And back to the initial thing we talked about, if you serve now, they might come back tomorrow?

STEWART: I wish they could tell me.

KING: Maybe they will.

We'll be right back. We'll start including your phone calls for Martha Stewart on this edition of LARRY KING LIVE. Don't go away.

(COMMERCIAL BREAK)

' KING: We're back with Martha Stewart on this edition of LARRY KING LIVE.

We go to Washington, D.C. hello.

CALLER: Hello.

KING: Hi.

CALLER: Miss Stewart, I want to tell you that I admire you very, very much, and don't give those people satisfaction who seem to need to see you on your hands and knees with tears streaming down your face. You're much stronger than that. You don't need to do it. And the people who recognize people who work hard and know how hard you've worked to build up your company don't need to see you do that. And Mr. King I'd like to say to you that I think it's very ironic that Friday night on your show you had Henry Blodget commented on Miss Stewart's case.

Didn't he have to leave his job for some securities fraud himself?

So, you know, that goes to show you the world we live in.

KING: I didn't host the show Friday.

But did he? I didn't see it.

STEWART: He was on the show, yes.

KING: Do you have a question for Martha, ma'am?

CALLER: I just wanted to tell her to keep her head up high and also to ask her how is Mr. Bacanovic doing?

STEWART: He's saddened, as I am. And I...

KING: Have you spoken to him? STEWART: I have, yes. And he is raising an appeal right now also.

KING: And he intends to go through with the appeal?

STEWART: I think so.

KING: Or you may serve, too?

STEWART: I don't know.

KING: McKinleyville, California. Hello.

CALLER: Hi. I just want to tell Martha how much I love her for years, and now my 4-year-old granddaughter is a fan, also. We watch her every day. And I always learn something new. Now, I heard your show is going to be taken off the air. And I don't think we can live without it, because we have Halloween and Christmas and every day things to learn from.

So what can we do?

STEWART: Well, you can write to your stations...

KING: This is radio show?

STEWART: No this is both. The radio is off. The television is off. But, our programming will be on the air on the Style Network. They will not be -- it won't be original programming for the next season but it will be wonderful, wonderful compilations of past seasons. So please watch it on the Style Network.

KING: That's a cable network?

STEWART: Yes.

KING: The Style Network?

STEWART: Yes.

KING: When you say you feel like you're part of the holidays in America. I mean, that's what she asked. You always visited our show.

STEWART: Oh, I did, always.

KING: Flushing, Ohio, hello.

CALLER: Hi. Yes, this is Ashley. And I was wondering how Alexis is doing? I heard that she fainted in the courtroom, and I was very concerned about that. And I'm just so concerned about you and your company, and all that. And I watch the news all the time, and I see you and I just feel so sorry for you.

STEWART: Well, thank you.

CALLER: And what about, like, I hear like you are appealing and all this.

What if you are sentenced to prison?

You know, you'll have a felony, and you can't run your company. You know...

KING: First Alexis is fine. She's here tonight. She looks great by the way.

STEWART: Alexis joined me tonight, and she's OK. I -- well, if I...

KING: Can you continue to run a company?

STEWART: From jail?

KING: No, with a felony conviction, can you run a company that's listed on the board? I guess you can.

STEWART: Well, that's yet to be determined legally. But I will remain very active in our company. And I will hopefully be able to start producing television again when this is all over, which I hope is over as soon as possible. And thank you for your concern is.

KING: Can you run things from prison?

Being logical can you?

STEWART: I don't think so, no. I don't think so. I don't think that's...

KING: You're allowed calls?

STEWART: But you're not allowed to talk about business. This is one thing I did learn.

KING: Oh, you can't talk about business?

STEWART: No.

KING: You once said business is your life.

STEWART: My life is my business, and my business is my life.

KING: Isn't that kind of sad in a way?

I mean I know you love it and everything.

STEWART: Sad?

KING: Your life is your business?

STEWART: Well, my business encompasses a lot of things that I do. I mean, all the things I love is what my business is all about. So that's not sad. It's about child raising, it's about home keeping. It's about gardening, entertaining, cooking. All the things that I'm really interested in, the domestic arts. So, you know, I met your little boys, and I mean, they're part of what I do. Children. We have a magazine called "Kids," Larry that kids use all the projects in the magazine. They told me.

KING: That's right. Everybody I know, my whole family is involved with you.

STEWART: They are very charming little boys, too, I must tell you. It's the first time I've met them and they're wonderful.

KING: Sacramento, hello.

CALLER: Yes, Martha, I would like to ask you if you do have to do jail time and you come out do you -- will you bring some of your ideas from jail to your show?

And will you do your show again yourself or will someone else do it?

STEWART: Wouldn't it really be better if I could take my ideas from my show to jail, I think that that might be a better thing.

KING: People make jokes you're going to redo the jail.

STEWART: Larry, it's not a joking matter.

KING: No, it's not.

STEWART: It's not.

KING: Do you fear it?

STEWART: Sure.

KING: What do you fear the most?

STEWART: I mean, I'm not afraid to go to jail. I'm afraid to be incarcerated. I mean, it's a lack of freedom. My freedom is taken away. Anybody in their right mind would fear incarceration. But the thing of going into a jail doesn't -- I mean I'm not so afraid of that.

KING: Do you have thoughts as to how you might be treated?

STEWART: No, not yet. I think I have to do some research.

KING: Which, knowing you, you will. You'll...

STEWART: Well, you have to. I mean, it would be silly not to don't you think?

KING: Did the judge make any recommendations as to where?

Do you have a preference as to where?

STEWART: She actually asked me where, and I asked her for Danbury, which she recommended. Because Danbury is close to my mom, who's going to turn 90 in September. And so that would be a convenient place, she could actually come and visit me. And it's convenient to New York City. There are other places, but very far away.

KING: How was your probation officer?

STEWART: A very nice man. Very nice man.

KING: He was -- did he spend a lot of time with you?

Did he do a thorough report?

You don't get to see that report do you?

STEWART: Oh, yes I do.

KING: You do?

STEWART: Oh, yes. It's called a presence sentencing report. They have a job to do. They do their research. They do a very thorough job, and ask many, many, many questions. But it's just like a research project.

KING: Do you have -- are you very confident in your appeals attorney, who was on this program, I think?

STEWART: Oh, yes. Walter Dellinger and Marty Weinberg, David Chesnoff, there's a team.

KING: They're separate from the trial attorneys, that's specialist.

STEWART: Yes. And they will be mounting the appeal. They filed for the appeal on last Friday. So, it's in the process.

KING: You'll be 63-years-old...

STEWART: Oh!

KING: ... in August.

Oh!

KING: You feel it?

STEWART: No. No.

KING: You never felt older, did you?

STEWART: No. I didn't. I don't.

KING: Do you -- you look at your life, what you've become -- I mean this little girl from little town.

STEWART: Look at you. Who's talking. KING: Well, I'm leading up to something. I pinch myself every day. I pinch myself every day. I consider myself lucky.

STEWART: Well, sure, you are lucky. I'm lucky.

KING: Any successful...

STEWART: And I'm just having an unlucky period right now.

KING: That's the way to look at it right?

STEWART: Yes.

KING: Because Paul Newman once said any successful person who doesn't use the word luck is lying.

STEWART: Well, I've usually been in the right place at the right time.

KING: That's right. Things happen to lucky people.

STEWART: Mm-hmm. Well, things happen to everyone. And like my friend Carolyn, I said in my letter to the judge, Carolyn can no longer dream, create, do. I can. Right?

KING: Yes. So you consider yourself blessed?

STEWART: Of course I'm blessed. Not right this minute. Generally, very blessed.

KING: We'll be back with more of Martha Stewart, more of your phone calls. Don't go away.

(COMMERCIAL BREAK)

KING: We're back with Martha Stewart. By the way, is there an heir apparent? Is there someone in the wings who, in case you don't run the company, will run the company?

STEWART: Oh, the company is very well run. We have a whole management team there that is doing as good a job as I could hope for under the circumstances. And so the company, the brand, can certainly exist without me. It's been designed to exist without me.

KING: Is there -- have you seen another Martha Stewart on the horizon?

STEWART: Well, I'm always looking.

KING: Are you?

STEWART: Oh, yes. And I -- you know, you think you have somebody in mind, not just to replace me because, you don't want to replace yourself. You want to build another person. Or another group of people.

KING: Sure.

STEWART: I mean if -- the one way to grow our company is to grow more brands around other people. We have Marc Marone (ph) our pet- keeping guy. We're working with him very closely on a lot of things. We have our "Everyday Food" magazine now.

KING: So you wouldn't mind if another woman emerged in the company and got well-known?

STEWART: Absolutely not. I might be able to take a vacation.

KING: Downey, California. Hello.

CALLER: Hi.

KING: Hi.

CALLER: Thanks for taking my call.

KING: Sure.

CALLER: First, Martha, I've never bought a magazine from you, I never saw your shows but I am totally in awe of how well you handled yourself and you are an inspiration. I know what you feel like, I think. I had a similar situation. My question to you is -- but I will buy your magazine. I will support.

STEWART: Thank you very much.

CALLER: I'm just so sorry that happened to you. My question is, when that movie with Cybill Shepherd portraying your life, did that hurt you very badly?

STEWART: All those things that are so exaggerated, and so almost parody-like, hurt a little bit. And especially when they bring up things in the past and quotes from people who haven't seen me in 17 to 20 years. There's nothing fresh in those shows. Nothing. And I always like to say, I'd rather do my own show.

KING: Was it weird to see yourself played?

STEWART: I didn't watch the whole show.

KING: You didn't?

STEWART: No. No! I couldn't.

KING: You were bored?

STEWART: No. I mean, it's similar in a way, you know. Cybill Shepherd with a tire around her waist, you know, trying to look really fat. Maybe, you know -- no, I can't watch things like that. I just can't.

KING: Do you read bad stories?

STEWART: About me?

KING: Yes.

STEWART: Well, I try to read, keep current with what the press is saying, just in case I meet somebody on the street some day.

KING: Even if it's vicious, you read it?

STEWART: Well, yes. Not with any sense of enjoyment, by the way.

KING: Of course.

STEWART: Of course not.

KING: To Mesa, Arizona. Hello. Mesa, are you there?

CALLER: Yes, hello.

KING: Go ahead. Hi.

CALLER: How many employees have lost their jobs with your company since this has started?

STEWART: In 2001, we had about 650 employees. And as a result of this situation, and just some other -- and the Internet crisis we have about 470 employees now. So quite a few have lost their jobs. But, I must say that I'm so sorry for all that. This has been a very painful experience for those people, for their families, and of course for me.

KING: Did you have normally a lot of longevity at the company?

STEWART: Oh, we do, we do. Many people who are in the management of the company have been with me since we started the magazine. And they're still there. And they're terrific people, and we have a lot of that, yes.

KING: You still do catering?

STEWART: No! No.

KING: Monterey, California. Hello.

CALLER: Hello. My question is about the house arrest portion.

KING: Yes.

CALLER: If she does serve prison and then has five months of house arrest, is she allowed to run her company then?

STEWART: Oh.

KING: Good question.

STEWART: OK. Well, I will be able to work. KING: Out of the house.

STEWART: On house arrest. I was granted, I think, 48 hours a week out of the house.

KING: Where you can go to work.

STEWART: Yes. So that's good.

KING: So you can work. And you can run the company.

STEWART: Well, run the company. Work at the company. Whatever it is.

KING: I guess one of the more curious aspects of the trial is Marianna Pasternak. Your friend, travel with you, testified against you and then on cross-examination seemed to say that she didn't remember. What did you make of all that? What was it like for you to sit and listen to all of that?

STEWART: That gets pretty close to the case so I really am not going to comment on that.

KING: OK, then I'll ask, emotionally, was it difficult to hear a friend talk?

STEWART: Let's say that her two daughters are my godchildren. It's pretty hard to see the whole -- the whole thing.

KING: Do you know your friends in a case like this?

STEWART: Do any of us know our friends in a case like this?

KING: You would think that you'd get to know those who support you and those who cross the street when you walk.

STEWART: I have so many really nice friends, Larry, and I am very grateful for that. They have been very supportive. I have friends who call me each and every day to make sure I'm feeling OK. I have friends to have dinner with on a daily basis. No problem at all.

KING: Why have you been very public?

STEWART: What do you mean?

KING: You go to Yankee games. You go to museums. You go out to dinner. In other words you're not hiding.

STEWART: Well...

KING: A lot of people in that position would, you know, walk quietly into the night and I'll see you later.

STEWART: For 2 1/2 years? At my time of life? With the things I want to do and the things I want to see and learn? I can't hole myself up. I wouldn't. I wouldn't think of it. It's not -- it's not the way I am.

KING: All right, maybe the most difficult thing of all. What was it like to have to be quiet publicly?

STEWART: Difficult. You know that.

KING: You're a public person.

STEWART: Yes. And I'm a communicator.

KING: And a media person.

STEWART: And I am a media person. And I am a journalist, and I am, you know, a visible person.

KING: Mm-hmm.

STEWART: Being on television so many times a week, with programming. On the radio every day. And newspaper columns. All of that...

KING: So what was it like to not have it?

STEWART: Well, that didn't stop. What stopped was I wasn't able to speak on my behalf. Because that is part of the legal system, and the legal way in this country. So, when you are, you know, when you are embroiled in a situation like this, you are advised not to speak about the case.

KING: But look how frustrating that is.

STEWART: Oh, you would be very frustrated. Everyone would be frustrated. Because you want people to know what you think, what the truth is. You want to tell them everything. And you just can't speak about it. Because anything you say might be held against you.

KING: We'll be back with our remaining moments, take a few more phone calls for Martha Stewart. Don't go away.

(COMMERCIAL BREAK)

KING: By the way, because of her pending appeal, Martha is -- there were things she was unable to talk about tonight, specifics of the legal case. We had one item come up that she explained. And she's also speaking for herself, not for Martha Stewart Living Omnimedia.

And we go to Lakeland, Florida. Hello.

CALLER: Martha, I've been following your story on MJ (ph) morning show, and wanted to know how your mother is handling the ordeal?

STEWART: Mom is strong 89-year-old. And it's very hard on her. But she has a great support group at her church, at her senior center. She swims at the Y every other day. And she's still driving herself around, and coping.

KING: She's a nice lady.

STEWART: Yes, she is a very nice lady.

KING: Nashville, Tennessee, hello.

CALLER: Hello, Larry. Thank you for taking my call. Martha, it's an honor to speak to you. My question is, what do you feel is the biggest misconception the public has about you, or doesn't know about you?

KING: Good question.

STEWART: Well, I think that -- I think that there have been so many kind of misrepresentations of me. And...

KING: What's the biggest misconception, do you think?

STEWART: Meany!

KING: Meany.

STEWART: I'm a softie.

KING: How did that begin?

STEWART: I don't know.

KING: Where did that start?

STEWART: Where does stuff like that start? I don't know.

KING: Maybe it's because you're a perfectionist. And perfectionists can get labeled meany because they'll say move that tray, right?

STEWART: Well...

KING: Are you a perfectionist?

STEWART: I am a perfectionist. But I want to make sure that everybody understands that I'm not personally perfect. How's that?

KING: You're not a perfect person?

STEWART: No. Are you?

KING: No. No, but I mean, but you...

STEWART: But I never said I was perfect. I've always said I was a perfectionist, because I'm a teacher. And if teachers don't do it well, who's going to listen to you? Do you want to see me make that flop cake? No. I'm not a comedian. I am a teacher.

KING: Are you very judgmental? STEWART: No, I don't know. I don't know if that's really the right word. Teachers, teachers want to see their students perform as well or better than they. And I love a student that does things better than I do.

KING: You do?

STEWART: Oh, yes. That's what you look for. You look, when you're a teacher, that's -- you're hoping always for somebody who comes along and does it better than you do it. And I always -- I celebrate that. I certainly wouldn't malign it.

KING: You're very hands-on, though, right?

STEWART: Oh, yeah.

KING: Was it difficult for you, therefore, to be told what to do by lawyers?

STEWART: Oh, yeah.

KING: Because you want to run the show?

STEWART: Well...

KING: You're used to running the show.

STEWART: Yeah, but I'm not a lawyer. And you know, I took advice. I made up my mind that I would take the advice of the best lawyers I could find. And that's it.

KING: All right. What kept you going, through it all?

STEWART: My work. My ideas. My creativity. My family. My friends. The constant evolutionary work of our company. I have all that. That's what's so good. That's my support system.

KING: And how about the days you were in court, though? Couldn't run the company those days, you had to be in court all day, right?

STEWART: Yeah. It's a real challenge to set your mind on something else. Something else that, oh, is sometimes so mind- boggling. And it was mind-boggling.

KING: Now, what was it like to know every time you step out of a car, they're all looking at you?

STEWART: Well, you know, in New York, unless there are photographers who are like pushing at you and stuff with the cameras, everybody, the truck drivers, the cab drivers, the passersby on the street, have all been so nice. Really nice. Really supportive.

KING: You haven't run into any situation where someone has accosted you?

STEWART: No.

KING: Come up to you on the street and yelled at you?

STEWART: Not once, Larry. And that's what's so nice. And that's what keeps me going, that I know that I have friends out there.

KING: We only have about 30 seconds left. But when will you be making this decision, do you know, about serving, not serving?

STEWART: I don't know. Don't know. It's a big decision. Can't rush it.

KING: Thank you for coming, Martha.

STEWART: Thank you. And you're a good friend.

KING: I appreciate your coming.

STEWART: Thank you.

KING: Martha Stewart. On Friday, she was sentenced to five months in prison and five months confinement, two years probation after that and fined $30,000. You don't pay that yet, do you?

STEWART: I haven't, no. I was waiting for them to ask me for it. But -- I'm not joking about it.

KING: OK, no jokes.

STEWART: I owe it.

KING: We thank you very much, Martha.

And I'll be back in a couple of minutes and tell you about tomorrow night and the nights ahead. Don't go away.

(COMMERCIAL BREAK)

KING: We wish Martha nothing but the best. We look forward to hearing from her soon. Hope to have her on this show soon. She said she'd be here when she got out. And we expect we'll be letting you know that day when it arrives.

Tomorrow night, a look at the life and times of the late Sandra Dee.

More news ahead on your most trusted name in news, CNN. Good night.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com

Aired March 5, 2005 - 21:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
LARRY KING, HOST: Tonight, an exclusive hour with Martha Stewart. Now that she's finished serving 5 months in prison, a look back at her last interview before she did her time. And exclusive, encore edition of LARRY KING LIVE is next.
Good evening. As you probably know by now, Martha Stewart got out of jail yesterday after serving 5 months for conspiracy and lying to investigators about a stock sale. We figured it's a good time to revisit a fascinating hour we spent with her last July just days after her sentence had been handed down.

This was her first and only interview since that sentence. And her last before she went to prison. Martha was speaking only for herself, not on behalf of her company, Martha Stewart Living Omnimedia. And because of her pending appeal, there were some areas of the case we could not discuss.

Still, a lot to talk about. I began by asking her, if she had to do it all over again, what she might have done differently.

(BEGIN VIDEOTAPE)

MARTHA STEWART, BUSINESSWOMAN: Well, that's a hard question, because I sold it for a specific reason, it was going down. And I can't imagine, I mean it's just such a conundrum to decide what I could have done, what I should have done, what I should have done afterward. There's so many variables, Larry in a thing like this.

KING: It boggles the mind, though, doesn't it, your own case to think that would've, should've, could've?

STEWART: You wake up pretty much every night about 2:00 a.m. Saying oh, my gosh, what if I had. What if, what if, what if. And that's pretty terrible for a 2 and half year process like this.

KING: Some of the things that have developed recently with some fair questions. Why not serve it, you'd only serve about four months I think on mandatory, do 80 percent.

You serve four months, the stock...

STEWART: Are you an expert?

KING: I think it is four months. I think it's 80 percent.

STEWART: Do you think or do you know?

KING: I'm pretty sure. Anyway, but I know you don't...

STEWART: I haven't done my research totally yet on any of this. And we have a good appeal. We have -- I have not made up my mind one way or the other.

KING: You mean you might serve?

STEWART: Well, again there's a conundrum. My company needs me. I would like to get back to work. I would like this to be over. This has been a long, drawn-out process. And I would like very much to go back to work. On the one hand, business, Wall Street, advertising, they would like to see finality. They would like to see an end to all of this.

KING: Obviously.

STEWART: I, as a person, with rights, with a belief in the judicial system and fairness, think that an appeal is the way to go. So, what do I do, OK. If it weren't wrapped up with my company, and it shouldn't be, but it is, inextricably.

What do you do?

What would you do, Larry?

KING: That's a fair question.

STEWART: This is a hard thing. And people say -- and pundits are out there saying oh, she should go in.

Do they know what it's like to go to jail? I don't think they know.

KING: Everybody seems to always...

STEWART: I don't know what it's like to go to jail.

KING: There are a lot of people saying I'd go do it. I'd get it over with.

STEWART: I know, why? Why do they say that?

Would they do it themselves?

KING: No, they say it for you.

STEWART: Of course. Of course. It's easy to say what somebody else should do. But what to do is the problem here.

KING: Since you are so involved in business and so caring about your business, are you leaning toward possibly doing it, since that would stabilize the market?

STEWART: I have two options, either to go or not to go. But no actually I have three options.

KING: What's the third?

STEWART: Well, to go and appeal. So, you can go in and not appeal. You can go in and -- we've left out, it's very open. Because we are out on bail pending appeal. Luckily we...

KING: What if you go, serve and you win your appeal?

Then what do you get?

STEWART: Well...

KING: Just a clearinghouse, right?

STEWART: Right. But then, I mean, that's another question. What do I get? I'd have peace of mind. I'm finished. I don't have to go back to another trial, maybe. I don't know if you have to go back to another trial after that or not. No one...

KING: You don't want that, do you?

STEWART: No, I do not. It's very, very difficult to go through a trial like this.

KING: That's would have come down on the side of serving, forgetting, dropping the appeal. Serving getting over with, because you could win the appeal and they order a new trial.

STEWART: Well they could, but maybe not. Maybe the appeal -- again, I'm not an expert. I have wonderful appeals attorneys working on this. Walter Dellinger and his full team. And I -- I'm going to, you know, take their advice, but I have to make up my mind.

KING: Alan Dershowitz the famous appeals lawyer, said the other day, you have a great appeal.

STEWART: Well, everybody has an idea whether it's Alan Dershowitz or Bob Morvillo or Walter Dellinger, everybody has something to say. And I appreciate all their opinions. And I have to weigh it myself. No one can make up my mind.

KING: There were some criticizing for a remark you made, I think with Barbara Walters about comparing to Nelson Mandela.

You want to straighten us out on that?

STEWART: Yes, I would like to straighten you out on that. Not you, but the press. What I said, Barbara asked me something about, you know, how are you going to do this?

And what I said, and I am so in awe and so -- I love Nelson Mandela so much. I said Nelson Mandela was able to survive 27 years in prison, I could survive five years. I wasn't comparing myself to Nelson Mandela. I am not a Nobel Prize winner. I am -- my -- our situations are -- well, it shouldn't have and it didn't. If you watch the tape. I watched it. I mean, I didn't seem like I was comparing myself to Nelson Mandela in any way. And I really don't want anybody to be confused about that.

KING: When you walked out of the courtroom and made that statement, which had to be a very pressure situation for you, you also asked people to have faith in your business.

Did you think a lot about that, since it looked like you were also pitching.

STEWART: Well, again...

KING: Of course that's what you've done all your life, so.

STEWART: Well, I am -- you know, I have a company called Martha Stewart Living Omnimedia. Our company makes wonderful products. Our company continues to make wonderful, trusted, terrific products, best quality. And it is my job -- one of my jobs is to tell people to buy our products, encourage people to buy our products, hope that people buy our products because they're good. You know that. I've been on your program for years.

KING: You have.

STEWART: I'm bringing beautiful things to your viewing public. I've done that on our television program for years and years and years. So I'm not -- I'm not going to stop and say, you know what, don't buy our products.

I mean, this is part of what I do. And one way that all our supporters, and we have so many terrific supporters, Larry, and that's what I found during this entire process. That there are many, many, many millions of people out there that care, that kind of question the whole process that has -- that I've gone through and will support us.

KING: You made the strong statement that you have faith in the legal system.

Do you like this judge?

Was she fair, in your opinion?

And what do you think of mandatory sentencing?

STEWART: OK, well that's a lot of questions in one question. Judge Cedarbaum is an elegant lady. She happened to go to the same college I went to, do you know that?

KING: No.

STEWART: Oh, yes she went to Barnard College where I went, my daughter went, several people in our family went. And I think she is an intelligent judge. I think she took this entirely seriously. She had great faith in her jurors. She had great faith, again, in the legal system, as I went into this process having.

And that said, I think that -- what was the second part of your question? KING: Mandatory sentencing. She gave you the minimum.

STEWART: She did, and I am grateful for that. I think that the sentencing guidelines are under a siege right now. Many judges in America are questioning the validity of the sentencing guidelines. I'm not an expert in that, but when I see and hear what I've been hearing about them, the question of the validity of them is going to the Supreme Court.

KING: Emotionally, this roller coaster ride, how are you doing?

STEWART: Well, you know, as a child I loved the roller coaster. I hate this process. I hate it. It has been really devastating. And very, very difficult.

KING: We'll come back in a minute with Martha Stewart. We'll take your calls later. We thank her for being with us tonight. Don't go away.

(COMMERCIAL BREAK)

KING: We're back with Martha Stewart. By the way, there is -- I know a lot of people are writing President Bush about pardoning. He could pardon you tomorrow and it's over.

STEWART: Wouldn't that be nice.

KING: Would you ask for that?

STEWART: Would I accept a pardon?

KING: Yes, yes.

STEWART: Of course.

KING: Some people decline, because a pardon doesn't mean you didn't do it. It just means you're pardoned.

STEWART: Well, I would like to be out of this mess.

KING: You'd accept a pardon?

STEWART: I would.

KING: In your letter to the judge, you offered an explanation for the sale. You said it was not because I was secretly tipped but because I set a price, made a profit when it was sold. Which has happened every day in America, right? so the question is obvious, why you?

STEWART: Well, we don't know.

KING: Why do you think you?

STEWART: Many people have said that it is because I am a woman. Many people have said it is because I am a business person, a successful business person. But maybe so. I don't know for sure.

KING: What do you think?

STEWART: I don't know. I think it was a combination, and a coincidence. And I think that even though the government says there's no such thing as coincidence, I think there is coincidence in this world.

KING: So it just -- the breaks (ph) didn't fall?

STEWART: Well, they fell in the wrong place, didn't they?

KING: From your standpoint?

STEWART: Oh, yes, indeed.

KING: All right. We didn't get a chance to talk on the air. We did talk off the air after the verdict. What was that day like?

STEWART: Friday?

KING: No, not the sentence, the verdict.

STEWART: Oh, excuse me.

KING: You didn't do any interviews since the verdict.

STEWART: No, I haven't. Well, we were very disappointed, obviously.

KING: Surprised?

STEWART: I think we were all very surprised. We had sat in the courtroom, all of us, the whole legal team, my daughter, I, my family, my friends, and all of us thought that there would be exoneration. We were so wrong, obviously. And we were very sad. And it's been, again, a long wait to last Friday.

KING: Were you surprised at the sentence?

STEWART: You're always surprised at something like that, I would think. And you can't say that you're happy. You can't say, I mean, I'm happy that it's five months in, and five months house arrest. Rather than 16 months in prison. Which -- that was the sentencing guidelines. And the judge stayed within the minimum. I'm grateful for that.

KING: But not surprised? I mean, you expect to get no time?

STEWART: You learn a lot when you go through a process like this, Larry. And there are things called pre-sentencing memos from the probation officer.

KING: Who interviews you, right?

STEWART: Yes, yes and then he makes suggestions to the judge. The judge looks through the entire case again and again and again, I'm sure. Reads all the wonderful letters of support that came on my behalf. She then has to work with the sentencing guidelines and the probation officers and their superiors. So it's a big process. And they come to a conclusion. And the conclusion was what I was sentenced to.

KING: Your daughter who appeared with us after the verdict took it very badly.

STEWART: Oh, yes. When the verdict came...

KING: Worse than you.

STEWART: Well, when the verdict was passed she actually fainted and I heard sort of the thump and I thought, well, maybe that's just a bang on the bench, but she had actually fainted. And that's horrible. But she did come. I didn't -- for the sentencing I really didn't want anybody to come. And yet the night before...

KING: No?

STEWART: Oh, no, I didn't. I really felt horrible about going down there again, and hearing a fate. And she insisted on coming. Other people insisted on coming and came, even though I didn't invite them. And my mom, I asked my mom not to come. She's just -- she's taken this really hard. And I asked her to stay home and she did.

KING: The other defendant, were you surprised that he got the same sentence as you?

STEWART: No. We were co-defendants. And we were treated very similarly. And I was told that we would probably get identical sentences.

KING: What was your reaction when that juror did speak out in a way that seemed prejudicial?

STEWART: Chappell Hatridge? It's quite obvious that he did perjure himself, and that is one of the points in our appeal, to have a juror who misleads in the process is dishonest.

KING: What was your reaction? How did you hear it, by the way? Just watch the news?

STEWART: Oh, I watched him. He was the first one out the door to talk to the press. And it's disheartening. Because the judge was in such favor of the jury, and had instructed them each and every day.

KING: This process taught you what?

STEWART: Oh, it's taught me a lot of things. And I think I'll write a book. Because, I think it could be helpful to other people, just about -- just about what lawyer to choose, how to behave, how to attend an interview. I mean there's things that, you know, there's no how-to book about this.

KING: No, there ain't.

STEWART: There isn't. Not that, you know, it's going to be a big bestseller. But for anybody who has to go through this process, there should be some guidelines. Because, guidelines would help.

KING: Was it a mistake, some think it was a mistake to wear an expensive handbag.

STEWART: Oh, we're back to the handbag?

KING: I've never asked you about the handbag.

STEWART: No, you haven't. I don't mean you. But oh, my gosh, the newspapers and everything. And you know, this case was not about a handbag. It was not about me testifying. The jury was clearly instructed about what the case was about.

KING: Donald Trump on this show said the night of the verdict, that you should have testified. Because when a person is as big as you are in the public's eye, and has been as public as you've been, the public expects you, and therefore the jury expects you.

STEWART: Well, Donald Trump has been a very big supporter and a very nice source of comfort for me. And I've known him for quite a few years. And what he says about that is his opinion. It was the opinion of my attorneys that I shouldn't testify, and I listened to my attorneys.

KING: In retrospect do you regret it? In retrospect, hindsight?

STEWART: You know, I don't know. I don't know if it would have changed the jury's verdict or not. I do not know. I can truthfully say that.

KING: Have you spoken to Sam Waksal, by the way, at all?

STEWART: Have I spoken to him?

KING: Has he called you from jail?

STEWART: I spoke to him once, yes.

KING: How's he doing?

STEWART: He seems to be OK. He said he's read 180 books and he's learned Italian.

KING: Is it kind of ironic to know that that stock is now doing very well?

STEWART: No, it's not at all ironic.

KING: If you had never had this, never sold it, never set that price, you'd be ahead now, right?

STEWART: Well, if I had held the stock down through $5, it went down to $5 you know.

KING: What's it now?

STEWART: It's, I think, around $70 something. But that's good. But, it's not about the price of the stock. It's about the drug. And that drug is a good drug, it's saving lives, it will save lives, it's a cure for cancer. And what an admirable goal for someone to set for oneself and actually attain it, even though, you know, it didn't work out for him.

KING: So you don't feel any irony in it from your own standpoint?

STEWART: No.

KING: We'll be right back with Martha Stewart on this edition of LARRY KING LIVE. Don't forget Wednesday night Senator John Edwards and Elizabeth Edwards for the hour. Don't go away.

(COMMERCIAL BREAK)

KING: We're back with Martha Stewart. We'll go to some of your calls at the bottom of the hour.

What did you mean by shameful?

STEWART: Well, it is shameful. It's shameful to me. I feel both shamed, and that the situation for me was shameful, for my family, for my friends, for my company. It's -- it's a word.

KING: How about the press and you? Especially some of the press. "The New York Post" has been very hard on you. Other tabloid media very difficult on you.

STEWART: Well, if you go to the Midwest, there's none of those stories, you know.

KING: So what do you think it is? You live in New York? You're an easy target?

STEWART: I think that it sells newspapers. That's really -- that's it. And the stories are really something, aren't they?

KING: Do you ever wonder why people like to see bad things happen to prominent people?

STEWART: Well, I've been told during this whole process that oh, in America, we like to build 'em up, we like to break 'em down, we like to see them suffer. We like to see success turn into failure.

I don't. I am a hero worshiper. I love the number one tennis player. I love the number one baseball player. I want to see those records broken.

KING: You root for the Yankees.

STEWART: Oh, of course I'm a Yankee fan.

KING: Figures.

STEWART: But don't hold that against me.

KING: I won't -- oh, no, no. Hey, I like George.

STEWART: No, but, see, I have never felt that way. When someone is successful, I just applaud. And if they're doing good things, I applaud them even louder.

KING: How about an image that some people thought you arrogant?

STEWART: Well, again, in my letter to the judge, I said that...

KING: You've mentioned that.

STEWART: Yeah, I have been perceived as arrogant. And my explanation was that, you know, I work really, really hard. I'm really hard on myself, Larry. You know that. You know how many hours a day I put in at the job.

KING: You carry your own equipment.

STEWART: Whatever.

KING: You do.

STEWART: But I -- I have sometimes probably forgotten, and I know I have, forgotten to pat the back of someone, or said, thank you, you know, enough times, or even maybe once sometimes. So I -- you know, I wish I were perfect. I wish I were just, you know, the nicest, nicest, nicest person on Earth. But I'm a businessperson in addition to a creator of domestic arts. And it's an odd combination. No excuse. But if I were a man, you know, no one would say I was arrogant.

KING: You ever cry?

STEWART: Of course I cry.

KING: Did you ever cry during this?

STEWART: Only about other things. It's hard...

KING: You lost a friend to cancer.

STEWART: Oh, yeah, Carolyn Kelly Wallach (ph). She died last week right during the worst week of this whole episode. And we went to her funeral. She had the most beautiful funeral. She has worked with me for about almost 17 years. She really helped shape the television program.

KING: Has a little son.

STEWART: She has a son and two daughters. A wonderful husband. And I just can just pray that everything is OK.

KING: But nothing about this made you cry?

STEWART: No. Because, I -- I -- I'm sad, rather than sobbing.

KING: What did you make of all the people writing to the judge and the people writing to the president?

STEWART: The letters were phenomenally great.

KING: Are you surprised at all the attention this got? Are you surprised that you were front page?

STEWART: Sometimes, yes. Sometimes no. It depended on the day. But repetitious articles really got to me. The articles that just said the same thing over and over and over again. I don't know if the reading public wants to read the same thing over and over again. I certainly don't. I would rather read about something else. But, again, I think it's what sells newspapers.

KING: But you became on cable television, as well, day of sentencing, day of verdict, you were wall-to-wall.

STEWART: Well, I'd rather if my program was on television and people were watching me tell them how to bake a pie, how to create a beautiful home, how to make a wonderful garden. I cannot tell you how I long for that.

KING: We asked the former head of Enron the other night this question, James Donovan said when he was secretary of labor in the Reagan administration and was charged with things, and eventually exonerated on appeal. He said, where do I go to get my name back?

STEWART: Well, that's a famous quote.

KING: Where do you go?

STEWART: Well, I hope my name is still intact. I hope it is. I hope our brand is still the brand, Martha Stewart. I think it is. The products have not changed, Larry. The magazines are as good as they ever were. The products are still beautiful and useful, and high quality.

KING: Are they selling?

STEWART: Oh, yes. They are.

KING: You're still with Kmart?

STEWART: Oh, yes. Of course.

KING: That's been renewed.

STEWART: Oh, yeah.

KING: So what went down? The magazine circulation went down? STEWART: Well, advertising went down. And as a result of advertising pages -- a lot of advertisers had to take a wait-and-see attitude. And I thank the advertisers who stayed. I thank the advertisers who will come back in force, I hope. It's the same beautiful product.

KING: And back to the initial thing we talked about, if you serve now, they might come back tomorrow?

STEWART: I wish they could tell me.

KING: Maybe they will.

We'll be right back. We'll start including your phone calls for Martha Stewart on this edition of LARRY KING LIVE. Don't go away.

(COMMERCIAL BREAK)

' KING: We're back with Martha Stewart on this edition of LARRY KING LIVE.

We go to Washington, D.C. hello.

CALLER: Hello.

KING: Hi.

CALLER: Miss Stewart, I want to tell you that I admire you very, very much, and don't give those people satisfaction who seem to need to see you on your hands and knees with tears streaming down your face. You're much stronger than that. You don't need to do it. And the people who recognize people who work hard and know how hard you've worked to build up your company don't need to see you do that. And Mr. King I'd like to say to you that I think it's very ironic that Friday night on your show you had Henry Blodget commented on Miss Stewart's case.

Didn't he have to leave his job for some securities fraud himself?

So, you know, that goes to show you the world we live in.

KING: I didn't host the show Friday.

But did he? I didn't see it.

STEWART: He was on the show, yes.

KING: Do you have a question for Martha, ma'am?

CALLER: I just wanted to tell her to keep her head up high and also to ask her how is Mr. Bacanovic doing?

STEWART: He's saddened, as I am. And I...

KING: Have you spoken to him? STEWART: I have, yes. And he is raising an appeal right now also.

KING: And he intends to go through with the appeal?

STEWART: I think so.

KING: Or you may serve, too?

STEWART: I don't know.

KING: McKinleyville, California. Hello.

CALLER: Hi. I just want to tell Martha how much I love her for years, and now my 4-year-old granddaughter is a fan, also. We watch her every day. And I always learn something new. Now, I heard your show is going to be taken off the air. And I don't think we can live without it, because we have Halloween and Christmas and every day things to learn from.

So what can we do?

STEWART: Well, you can write to your stations...

KING: This is radio show?

STEWART: No this is both. The radio is off. The television is off. But, our programming will be on the air on the Style Network. They will not be -- it won't be original programming for the next season but it will be wonderful, wonderful compilations of past seasons. So please watch it on the Style Network.

KING: That's a cable network?

STEWART: Yes.

KING: The Style Network?

STEWART: Yes.

KING: When you say you feel like you're part of the holidays in America. I mean, that's what she asked. You always visited our show.

STEWART: Oh, I did, always.

KING: Flushing, Ohio, hello.

CALLER: Hi. Yes, this is Ashley. And I was wondering how Alexis is doing? I heard that she fainted in the courtroom, and I was very concerned about that. And I'm just so concerned about you and your company, and all that. And I watch the news all the time, and I see you and I just feel so sorry for you.

STEWART: Well, thank you.

CALLER: And what about, like, I hear like you are appealing and all this.

What if you are sentenced to prison?

You know, you'll have a felony, and you can't run your company. You know...

KING: First Alexis is fine. She's here tonight. She looks great by the way.

STEWART: Alexis joined me tonight, and she's OK. I -- well, if I...

KING: Can you continue to run a company?

STEWART: From jail?

KING: No, with a felony conviction, can you run a company that's listed on the board? I guess you can.

STEWART: Well, that's yet to be determined legally. But I will remain very active in our company. And I will hopefully be able to start producing television again when this is all over, which I hope is over as soon as possible. And thank you for your concern is.

KING: Can you run things from prison?

Being logical can you?

STEWART: I don't think so, no. I don't think so. I don't think that's...

KING: You're allowed calls?

STEWART: But you're not allowed to talk about business. This is one thing I did learn.

KING: Oh, you can't talk about business?

STEWART: No.

KING: You once said business is your life.

STEWART: My life is my business, and my business is my life.

KING: Isn't that kind of sad in a way?

I mean I know you love it and everything.

STEWART: Sad?

KING: Your life is your business?

STEWART: Well, my business encompasses a lot of things that I do. I mean, all the things I love is what my business is all about. So that's not sad. It's about child raising, it's about home keeping. It's about gardening, entertaining, cooking. All the things that I'm really interested in, the domestic arts. So, you know, I met your little boys, and I mean, they're part of what I do. Children. We have a magazine called "Kids," Larry that kids use all the projects in the magazine. They told me.

KING: That's right. Everybody I know, my whole family is involved with you.

STEWART: They are very charming little boys, too, I must tell you. It's the first time I've met them and they're wonderful.

KING: Sacramento, hello.

CALLER: Yes, Martha, I would like to ask you if you do have to do jail time and you come out do you -- will you bring some of your ideas from jail to your show?

And will you do your show again yourself or will someone else do it?

STEWART: Wouldn't it really be better if I could take my ideas from my show to jail, I think that that might be a better thing.

KING: People make jokes you're going to redo the jail.

STEWART: Larry, it's not a joking matter.

KING: No, it's not.

STEWART: It's not.

KING: Do you fear it?

STEWART: Sure.

KING: What do you fear the most?

STEWART: I mean, I'm not afraid to go to jail. I'm afraid to be incarcerated. I mean, it's a lack of freedom. My freedom is taken away. Anybody in their right mind would fear incarceration. But the thing of going into a jail doesn't -- I mean I'm not so afraid of that.

KING: Do you have thoughts as to how you might be treated?

STEWART: No, not yet. I think I have to do some research.

KING: Which, knowing you, you will. You'll...

STEWART: Well, you have to. I mean, it would be silly not to don't you think?

KING: Did the judge make any recommendations as to where?

Do you have a preference as to where?

STEWART: She actually asked me where, and I asked her for Danbury, which she recommended. Because Danbury is close to my mom, who's going to turn 90 in September. And so that would be a convenient place, she could actually come and visit me. And it's convenient to New York City. There are other places, but very far away.

KING: How was your probation officer?

STEWART: A very nice man. Very nice man.

KING: He was -- did he spend a lot of time with you?

Did he do a thorough report?

You don't get to see that report do you?

STEWART: Oh, yes I do.

KING: You do?

STEWART: Oh, yes. It's called a presence sentencing report. They have a job to do. They do their research. They do a very thorough job, and ask many, many, many questions. But it's just like a research project.

KING: Do you have -- are you very confident in your appeals attorney, who was on this program, I think?

STEWART: Oh, yes. Walter Dellinger and Marty Weinberg, David Chesnoff, there's a team.

KING: They're separate from the trial attorneys, that's specialist.

STEWART: Yes. And they will be mounting the appeal. They filed for the appeal on last Friday. So, it's in the process.

KING: You'll be 63-years-old...

STEWART: Oh!

KING: ... in August.

Oh!

KING: You feel it?

STEWART: No. No.

KING: You never felt older, did you?

STEWART: No. I didn't. I don't.

KING: Do you -- you look at your life, what you've become -- I mean this little girl from little town.

STEWART: Look at you. Who's talking. KING: Well, I'm leading up to something. I pinch myself every day. I pinch myself every day. I consider myself lucky.

STEWART: Well, sure, you are lucky. I'm lucky.

KING: Any successful...

STEWART: And I'm just having an unlucky period right now.

KING: That's the way to look at it right?

STEWART: Yes.

KING: Because Paul Newman once said any successful person who doesn't use the word luck is lying.

STEWART: Well, I've usually been in the right place at the right time.

KING: That's right. Things happen to lucky people.

STEWART: Mm-hmm. Well, things happen to everyone. And like my friend Carolyn, I said in my letter to the judge, Carolyn can no longer dream, create, do. I can. Right?

KING: Yes. So you consider yourself blessed?

STEWART: Of course I'm blessed. Not right this minute. Generally, very blessed.

KING: We'll be back with more of Martha Stewart, more of your phone calls. Don't go away.

(COMMERCIAL BREAK)

KING: We're back with Martha Stewart. By the way, is there an heir apparent? Is there someone in the wings who, in case you don't run the company, will run the company?

STEWART: Oh, the company is very well run. We have a whole management team there that is doing as good a job as I could hope for under the circumstances. And so the company, the brand, can certainly exist without me. It's been designed to exist without me.

KING: Is there -- have you seen another Martha Stewart on the horizon?

STEWART: Well, I'm always looking.

KING: Are you?

STEWART: Oh, yes. And I -- you know, you think you have somebody in mind, not just to replace me because, you don't want to replace yourself. You want to build another person. Or another group of people.

KING: Sure.

STEWART: I mean if -- the one way to grow our company is to grow more brands around other people. We have Marc Marone (ph) our pet- keeping guy. We're working with him very closely on a lot of things. We have our "Everyday Food" magazine now.

KING: So you wouldn't mind if another woman emerged in the company and got well-known?

STEWART: Absolutely not. I might be able to take a vacation.

KING: Downey, California. Hello.

CALLER: Hi.

KING: Hi.

CALLER: Thanks for taking my call.

KING: Sure.

CALLER: First, Martha, I've never bought a magazine from you, I never saw your shows but I am totally in awe of how well you handled yourself and you are an inspiration. I know what you feel like, I think. I had a similar situation. My question to you is -- but I will buy your magazine. I will support.

STEWART: Thank you very much.

CALLER: I'm just so sorry that happened to you. My question is, when that movie with Cybill Shepherd portraying your life, did that hurt you very badly?

STEWART: All those things that are so exaggerated, and so almost parody-like, hurt a little bit. And especially when they bring up things in the past and quotes from people who haven't seen me in 17 to 20 years. There's nothing fresh in those shows. Nothing. And I always like to say, I'd rather do my own show.

KING: Was it weird to see yourself played?

STEWART: I didn't watch the whole show.

KING: You didn't?

STEWART: No. No! I couldn't.

KING: You were bored?

STEWART: No. I mean, it's similar in a way, you know. Cybill Shepherd with a tire around her waist, you know, trying to look really fat. Maybe, you know -- no, I can't watch things like that. I just can't.

KING: Do you read bad stories?

STEWART: About me?

KING: Yes.

STEWART: Well, I try to read, keep current with what the press is saying, just in case I meet somebody on the street some day.

KING: Even if it's vicious, you read it?

STEWART: Well, yes. Not with any sense of enjoyment, by the way.

KING: Of course.

STEWART: Of course not.

KING: To Mesa, Arizona. Hello. Mesa, are you there?

CALLER: Yes, hello.

KING: Go ahead. Hi.

CALLER: How many employees have lost their jobs with your company since this has started?

STEWART: In 2001, we had about 650 employees. And as a result of this situation, and just some other -- and the Internet crisis we have about 470 employees now. So quite a few have lost their jobs. But, I must say that I'm so sorry for all that. This has been a very painful experience for those people, for their families, and of course for me.

KING: Did you have normally a lot of longevity at the company?

STEWART: Oh, we do, we do. Many people who are in the management of the company have been with me since we started the magazine. And they're still there. And they're terrific people, and we have a lot of that, yes.

KING: You still do catering?

STEWART: No! No.

KING: Monterey, California. Hello.

CALLER: Hello. My question is about the house arrest portion.

KING: Yes.

CALLER: If she does serve prison and then has five months of house arrest, is she allowed to run her company then?

STEWART: Oh.

KING: Good question.

STEWART: OK. Well, I will be able to work. KING: Out of the house.

STEWART: On house arrest. I was granted, I think, 48 hours a week out of the house.

KING: Where you can go to work.

STEWART: Yes. So that's good.

KING: So you can work. And you can run the company.

STEWART: Well, run the company. Work at the company. Whatever it is.

KING: I guess one of the more curious aspects of the trial is Marianna Pasternak. Your friend, travel with you, testified against you and then on cross-examination seemed to say that she didn't remember. What did you make of all that? What was it like for you to sit and listen to all of that?

STEWART: That gets pretty close to the case so I really am not going to comment on that.

KING: OK, then I'll ask, emotionally, was it difficult to hear a friend talk?

STEWART: Let's say that her two daughters are my godchildren. It's pretty hard to see the whole -- the whole thing.

KING: Do you know your friends in a case like this?

STEWART: Do any of us know our friends in a case like this?

KING: You would think that you'd get to know those who support you and those who cross the street when you walk.

STEWART: I have so many really nice friends, Larry, and I am very grateful for that. They have been very supportive. I have friends who call me each and every day to make sure I'm feeling OK. I have friends to have dinner with on a daily basis. No problem at all.

KING: Why have you been very public?

STEWART: What do you mean?

KING: You go to Yankee games. You go to museums. You go out to dinner. In other words you're not hiding.

STEWART: Well...

KING: A lot of people in that position would, you know, walk quietly into the night and I'll see you later.

STEWART: For 2 1/2 years? At my time of life? With the things I want to do and the things I want to see and learn? I can't hole myself up. I wouldn't. I wouldn't think of it. It's not -- it's not the way I am.

KING: All right, maybe the most difficult thing of all. What was it like to have to be quiet publicly?

STEWART: Difficult. You know that.

KING: You're a public person.

STEWART: Yes. And I'm a communicator.

KING: And a media person.

STEWART: And I am a media person. And I am a journalist, and I am, you know, a visible person.

KING: Mm-hmm.

STEWART: Being on television so many times a week, with programming. On the radio every day. And newspaper columns. All of that...

KING: So what was it like to not have it?

STEWART: Well, that didn't stop. What stopped was I wasn't able to speak on my behalf. Because that is part of the legal system, and the legal way in this country. So, when you are, you know, when you are embroiled in a situation like this, you are advised not to speak about the case.

KING: But look how frustrating that is.

STEWART: Oh, you would be very frustrated. Everyone would be frustrated. Because you want people to know what you think, what the truth is. You want to tell them everything. And you just can't speak about it. Because anything you say might be held against you.

KING: We'll be back with our remaining moments, take a few more phone calls for Martha Stewart. Don't go away.

(COMMERCIAL BREAK)

KING: By the way, because of her pending appeal, Martha is -- there were things she was unable to talk about tonight, specifics of the legal case. We had one item come up that she explained. And she's also speaking for herself, not for Martha Stewart Living Omnimedia.

And we go to Lakeland, Florida. Hello.

CALLER: Martha, I've been following your story on MJ (ph) morning show, and wanted to know how your mother is handling the ordeal?

STEWART: Mom is strong 89-year-old. And it's very hard on her. But she has a great support group at her church, at her senior center. She swims at the Y every other day. And she's still driving herself around, and coping.

KING: She's a nice lady.

STEWART: Yes, she is a very nice lady.

KING: Nashville, Tennessee, hello.

CALLER: Hello, Larry. Thank you for taking my call. Martha, it's an honor to speak to you. My question is, what do you feel is the biggest misconception the public has about you, or doesn't know about you?

KING: Good question.

STEWART: Well, I think that -- I think that there have been so many kind of misrepresentations of me. And...

KING: What's the biggest misconception, do you think?

STEWART: Meany!

KING: Meany.

STEWART: I'm a softie.

KING: How did that begin?

STEWART: I don't know.

KING: Where did that start?

STEWART: Where does stuff like that start? I don't know.

KING: Maybe it's because you're a perfectionist. And perfectionists can get labeled meany because they'll say move that tray, right?

STEWART: Well...

KING: Are you a perfectionist?

STEWART: I am a perfectionist. But I want to make sure that everybody understands that I'm not personally perfect. How's that?

KING: You're not a perfect person?

STEWART: No. Are you?

KING: No. No, but I mean, but you...

STEWART: But I never said I was perfect. I've always said I was a perfectionist, because I'm a teacher. And if teachers don't do it well, who's going to listen to you? Do you want to see me make that flop cake? No. I'm not a comedian. I am a teacher.

KING: Are you very judgmental? STEWART: No, I don't know. I don't know if that's really the right word. Teachers, teachers want to see their students perform as well or better than they. And I love a student that does things better than I do.

KING: You do?

STEWART: Oh, yes. That's what you look for. You look, when you're a teacher, that's -- you're hoping always for somebody who comes along and does it better than you do it. And I always -- I celebrate that. I certainly wouldn't malign it.

KING: You're very hands-on, though, right?

STEWART: Oh, yeah.

KING: Was it difficult for you, therefore, to be told what to do by lawyers?

STEWART: Oh, yeah.

KING: Because you want to run the show?

STEWART: Well...

KING: You're used to running the show.

STEWART: Yeah, but I'm not a lawyer. And you know, I took advice. I made up my mind that I would take the advice of the best lawyers I could find. And that's it.

KING: All right. What kept you going, through it all?

STEWART: My work. My ideas. My creativity. My family. My friends. The constant evolutionary work of our company. I have all that. That's what's so good. That's my support system.

KING: And how about the days you were in court, though? Couldn't run the company those days, you had to be in court all day, right?

STEWART: Yeah. It's a real challenge to set your mind on something else. Something else that, oh, is sometimes so mind- boggling. And it was mind-boggling.

KING: Now, what was it like to know every time you step out of a car, they're all looking at you?

STEWART: Well, you know, in New York, unless there are photographers who are like pushing at you and stuff with the cameras, everybody, the truck drivers, the cab drivers, the passersby on the street, have all been so nice. Really nice. Really supportive.

KING: You haven't run into any situation where someone has accosted you?

STEWART: No.

KING: Come up to you on the street and yelled at you?

STEWART: Not once, Larry. And that's what's so nice. And that's what keeps me going, that I know that I have friends out there.

KING: We only have about 30 seconds left. But when will you be making this decision, do you know, about serving, not serving?

STEWART: I don't know. Don't know. It's a big decision. Can't rush it.

KING: Thank you for coming, Martha.

STEWART: Thank you. And you're a good friend.

KING: I appreciate your coming.

STEWART: Thank you.

KING: Martha Stewart. On Friday, she was sentenced to five months in prison and five months confinement, two years probation after that and fined $30,000. You don't pay that yet, do you?

STEWART: I haven't, no. I was waiting for them to ask me for it. But -- I'm not joking about it.

KING: OK, no jokes.

STEWART: I owe it.

KING: We thank you very much, Martha.

And I'll be back in a couple of minutes and tell you about tomorrow night and the nights ahead. Don't go away.

(COMMERCIAL BREAK)

KING: We wish Martha nothing but the best. We look forward to hearing from her soon. Hope to have her on this show soon. She said she'd be here when she got out. And we expect we'll be letting you know that day when it arrives.

Tomorrow night, a look at the life and times of the late Sandra Dee.

More news ahead on your most trusted name in news, CNN. Good night.

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