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Can Martha's Brand Survive?

Aired June 05, 2003 - 14:02   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.


MILES O'BRIEN, CNN ANCHOR: Martha Stewart is nothing if she is not a fighter and she's coming out swinging. Hours after being indicted and stepping down as the CEO of the company she built, Martha Stewart Living Omnimedia.
Already this morning a full page newspaper ad proclaims her innocence in the "USA Today" and a new Web site outlined in tasteful celadon green provides a place for her millions of fans to post their support, marthatalks.com, by the way.

And with me today to bring us up to date are financial correspondents Mary Snow and Allan Chernoff, and we begin ladies first with Mary.

MARY SNOW, CNN CORRESPONDENT: Hi, Miles. Yes, Martha Stewart taking her case right to the public. As you mentioned, that letter that was published in "USA Today" also on her Web site saying she wants to know, she wants the public to know that she's innocent and that she will fight to clear her name.

She also says she's confident she'll be exonerated and also saying that (UNINTELLIGIBLE) to update and post current information about the case and give - she actually gave supporters a Web site for them to write to.

I also want to point out this cost Martha Stewart $73,000 to take out this ad in "USA Today" and it's also noted that this was a personal statement from Martha Stewart and not from the company.

As for the company, Martha Stewart Living Omnimedia, we are in front of the headquarters here. It is grappling with a corporate image crisis and industry watchers are saying what really the company needs to do now that Martha Stewart has stepped aside as CEO and given that title to Sharon Patrick, although Martha Stewart will remain as creative officer with the company.

What people are saying is that she really - the company needs to distinguish itself from the brand and that is very hard because Martha Stewart is the brand particularly when you look at the K-Mart ads and Martha Stewart was featured in the most recent K-Mart ads for that white sale.

Lately, the company has tried to shy away in terms of the magazine covers have not featured pictures of Martha Stewart but it is not so easy in most cases, particularly her TV show, and some say if there are casualties they believe that the TV show might have to be the first to go. But one analyst that I spoke with who covers this company closely saying that she expects things to get worse before they get better and already this investigation has hurt the company's finances. Martha Stewart Living Omnimedia has posted two consecutive quarterly losses and is expecting a loss for this current quarter, many challenges ahead - Miles.

O'BRIEN: I guess one of the big problems, Mary, there really is no heir apparent. There's never been an attempt to groom a sidekick for Martha.

SNOW: That's right. You know I was talking to somebody who follows the company closely saying that in terms of the show, at times she has brought in celebrity chefs, but no one really to step in in her shadows and that is a vacuum there.

O'BRIEN: All right, Mary Snow, thank you very much.

Let's shift gears now and head over to Allan Chernoff who was there in front of the courthouse yesterday. We brought him inside today. He's kind of tired of the rainy weather in New York and is here to update us more on what lies ahead as far as the criminal matters. Hello, Allan.

ALLAN CHERNOFF, CNN CORRESPONDENT: Hi, Miles. But before we get to the actual court of law, it seems the battle now is in the court of public opinion and clearly Martha Stewart is doing what she can to win public support running the ad today in "USA Today," also this new Web site, marthatalks.com, pledging to update her supporters on the court case and also inviting them to send e-mails to her.

Some attorneys say this will actually have no bearing whatsoever on the legal situation, but others argue that it could possibly affect a jury pool and even affect prosecutors.

(BEGIN VIDEO CLIP)

ROBERT HEIM, ATTORNEY: I think this will have an effect on both the government and the court because the government is really looking for the public interest and to what's right and what's just, and if there is that type of support for Martha Stewart, even if it's subconsciously, it will affect the government and the type of relief it's seeking from a court.

(END VIDEO CLIP)

CHERNOFF: The prosecutors yesterday argued that this case really does not have anything to do with the fact that Martha Stewart is a celebrity. Instead, they say, it's simply a matter of a person lying to federal investigators and also remember lying to Congress because there was a congressional investigation into Martha Stewart way before the Feds got involved on the side of the FBI and also the Securities and Exchange Commission.

Now, the charges against Martha Stewart once again obstruction of justice, false statements, and securities fraud, some attorneys are saying at this point it may turn out that this is essentially going to be a sound byte type of a trial, the prosecutor saying it's just a matter about a person lying, and the defense saying hey, this is a celebrity who is being made into a scapegoat - Miles.

O'BRIEN: A sound byte trial. Hey, in the final analysis what are - if she was convicted of all the charges there's a fair amount of prison time that is associated with these, right?

CHERNOFF: Right. Well, whenever they issue these charges, bring up these indictments, there is a number attached to every single count. If you add it all up it would come actually to 30 years but that's only a theoretical maximum and if, in fact, she were convicted and we still don't know what's going to happen, if there were to be any jail time it would be a small fraction of that amount.

O'BRIEN: Allan Chernoff, thanks very much, great reporting all throughout this. We appreciate it.

Let's for a moment take on the role of trying to burnish Martha Stewart's image and what we have done is brought in a couple of experts to offer some free advice. We're not certain if Martha Stewart is listening but we're going to submit it nevertheless.

Here in Atlanta Laura Ries, she is a national branding expert in Washington; Eric Dezenhall, who is a found of one of the nation's leading crisis management firms. He's the author of "Jackie Disaster" a novel about damage control and also a book called "Nail 'Em" which actually has some interesting parallels to what's going on here.

I got to ask you about that first. Your novel sort of is similar, right, or explain how this all came to pass?

ERIC DEZENHALL, AUTHOR "JACKIE DISASTER": Well, strangely, the novel deals with a domestic diva who comes under attack and it was written before this scandal but one of the questions that it raises is do we hate her because she's a criminal or do we hate her because she's a successful woman?

And, the problem here is you cannot divorce the legal case from how Martha Stewart is perceived as a human being. The two go hand-in- hand and one of the problems is when a successful man comes under fire, he's still a dude being a dude. When a successful woman comes under fire, she's a witch.

And, if you listen to what the Justice Department is saying, they are very, very concerned about an appearance that they're going to look like they're anti-women and anti-successful women who are celebrities.

O'BRIEN: All right, Laura, is there a double standard out there?

LAURA RIES, NATIONAL BRANDING EXPERT: Well, it's not so much a double standard. It's the price you pay for being a celebrity. When you are a celebrity you're always more scrutinized and if you make a mistake, boy, they're going to come after you and they want to make an example to everyone that you shouldn't be doing, you shouldn't lie to the government and that's really her biggest issue, whether or not...

O'BRIEN: But, Laura, if it was Marty Stewart right now would it be the same story?

RIES: If it was Marty Stewart, oh absolutely.

O'BRIEN: Really?

RIES: You know, someone who presents themselves as being perfect, as being the utmost in perfectionism, oh absolutely. I mean look at Bill Bennett, I mean they certainly went after him when he got busted for his losing $8 million in the slot machines. It's that perfectionism that's really her biggest problem of being a celebrity presenting herself as perfect.

Other celebrities who are, you know, bad boys and whatnot, or bad girls like Madonna, I mean she hasn't even suffered by getting all this bad publicity. She's done even better for it.

O'BRIEN: It's enhanced the image if you will.

RIES: Absolutely.

O'BRIEN: Eric, do you go along with that, by presenting yourself as the picture of perfection the bar is awfully high and therefore you are judged differently than others?

DEZENHALL: Yes. Well, Americans are not offended by dishonesty as much as we are offended by hypocrisy. When your entire brand is "I am perfect and I know how to organize my life and you don't," there is a certain feeling in the public that we want to damage you.

And, what's happening now with the Justice Department is there is a feeling if we can't convict you in a court of law, we could at least ruin you in the court of public opinion, and for somebody like Martha Stewart, what's happened to her over the last year is, in fact, a form of punishment, even if it's not the same as jail time and it's entirely possible to have a very strong legal case but a very weak PR case.

O'BRIEN: Ah, yes.

DEZENHALL: She does not have a strong PR case.

O'BRIEN: And it's tough to do both at the same time. Laura Ries, we were talking about that, how often the lawyers will tell you one thing and the PR people will tell you another.

Now, you were saying the other day before the indictments came out, they were expected but they hadn't come out, you said you know she should do a mea culpa, come out and say you're sorry, admit to some things. Of course, these are serious crimes, so she wasn't willing to do that clearly. What should she do now?

RIES: Well, certainly she shouldn't be running full page ads. She should be getting her voice out to the people and not through a written statement in an advertisement. She should actually talk. It's almost ironic she calls the Web site Martha Talks. She's not talking. We haven't seen her in months.

O'BRIEN: That's right.

RIES: And, you can't do it with advertising, with running this, you know the lawyer looked at everything that's on this Web site and cleared it to go. She's got to do, she's got to go on "60 Minutes," something really high profile.

Look at what President Clinton did before he was president. The candidate was brilliant. He had the Jennifer Flowers problem, boom, he was on "60 Minutes" taking the tough questions and he ultimately won the presidency.

O'BRIEN: That's a high risk move going on "60 Minutes."

DEZENHALL: Yes.

O'BRIEN: Eric, would you recommend that one?

DEZENHALL: I probably would go a different route. Here's the problem. So much of damage control comes down to your personal likability. The thing about Bill Clinton is when he said, "I did not have sexual relations with that woman," we liked the guy. We wanted him to win. The biggest problem, and Ronald Reagan had that same thing. When he would mess up, people would go so what, same with George Bush.

O'BRIEN: It's the Teflon factor, right? There's no Teflon here is there?

DEZENHALL: Well, but it comes down to likability. When Martha Stewart in a perfect world, yes she should go on TV and do a mea culpa, but it's not a perfect world.

There are two problems. Number one, there's a serious legal case against her where she can't talk because it could be used against her. And second, she is not a cuddly personality, and one of the problems that somebody like me has is what happens when you get a client who is simply not likable.

I would love it if every client were like Bill Clinton or Ronald Reagan but they're just not and a lot of people look at her and they see all of their own failures every time she opens her mouth.

O'BRIEN: Oh, boy, that gets ugly. Laura, go ahead, final word.

RIES: She's got to work on that. She's got to be more likable and it's only going to get better through experience. Hiding out, hiding behind the lawyers is just not going to work. We need to see, we need to hear from her and I think in the end people want to like her. They're going to give her a chance. They're going to forgive her but they've got to hear from her.

O'BRIEN: All right, Laura. The only thing I want to quibble with is I think if she's going to do an interview, it's got to be on LIVE FROM, right here on CNN, all right.

RIES: It's got to be with Miles O'Brien, my favorite host.

O'BRIEN: Martha Ries, Eric Dezenhall, thanks for the free advice. We don't know if Martha was listening but we found it interesting. Thank you very much for being with us on CNN'S LIVE FROM.

DEZENHALL: Thank you.

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 June 5, 2003 - 14:02   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
MILES O'BRIEN, CNN ANCHOR: Martha Stewart is nothing if she is not a fighter and she's coming out swinging. Hours after being indicted and stepping down as the CEO of the company she built, Martha Stewart Living Omnimedia.
Already this morning a full page newspaper ad proclaims her innocence in the "USA Today" and a new Web site outlined in tasteful celadon green provides a place for her millions of fans to post their support, marthatalks.com, by the way.

And with me today to bring us up to date are financial correspondents Mary Snow and Allan Chernoff, and we begin ladies first with Mary.

MARY SNOW, CNN CORRESPONDENT: Hi, Miles. Yes, Martha Stewart taking her case right to the public. As you mentioned, that letter that was published in "USA Today" also on her Web site saying she wants to know, she wants the public to know that she's innocent and that she will fight to clear her name.

She also says she's confident she'll be exonerated and also saying that (UNINTELLIGIBLE) to update and post current information about the case and give - she actually gave supporters a Web site for them to write to.

I also want to point out this cost Martha Stewart $73,000 to take out this ad in "USA Today" and it's also noted that this was a personal statement from Martha Stewart and not from the company.

As for the company, Martha Stewart Living Omnimedia, we are in front of the headquarters here. It is grappling with a corporate image crisis and industry watchers are saying what really the company needs to do now that Martha Stewart has stepped aside as CEO and given that title to Sharon Patrick, although Martha Stewart will remain as creative officer with the company.

What people are saying is that she really - the company needs to distinguish itself from the brand and that is very hard because Martha Stewart is the brand particularly when you look at the K-Mart ads and Martha Stewart was featured in the most recent K-Mart ads for that white sale.

Lately, the company has tried to shy away in terms of the magazine covers have not featured pictures of Martha Stewart but it is not so easy in most cases, particularly her TV show, and some say if there are casualties they believe that the TV show might have to be the first to go. But one analyst that I spoke with who covers this company closely saying that she expects things to get worse before they get better and already this investigation has hurt the company's finances. Martha Stewart Living Omnimedia has posted two consecutive quarterly losses and is expecting a loss for this current quarter, many challenges ahead - Miles.

O'BRIEN: I guess one of the big problems, Mary, there really is no heir apparent. There's never been an attempt to groom a sidekick for Martha.

SNOW: That's right. You know I was talking to somebody who follows the company closely saying that in terms of the show, at times she has brought in celebrity chefs, but no one really to step in in her shadows and that is a vacuum there.

O'BRIEN: All right, Mary Snow, thank you very much.

Let's shift gears now and head over to Allan Chernoff who was there in front of the courthouse yesterday. We brought him inside today. He's kind of tired of the rainy weather in New York and is here to update us more on what lies ahead as far as the criminal matters. Hello, Allan.

ALLAN CHERNOFF, CNN CORRESPONDENT: Hi, Miles. But before we get to the actual court of law, it seems the battle now is in the court of public opinion and clearly Martha Stewart is doing what she can to win public support running the ad today in "USA Today," also this new Web site, marthatalks.com, pledging to update her supporters on the court case and also inviting them to send e-mails to her.

Some attorneys say this will actually have no bearing whatsoever on the legal situation, but others argue that it could possibly affect a jury pool and even affect prosecutors.

(BEGIN VIDEO CLIP)

ROBERT HEIM, ATTORNEY: I think this will have an effect on both the government and the court because the government is really looking for the public interest and to what's right and what's just, and if there is that type of support for Martha Stewart, even if it's subconsciously, it will affect the government and the type of relief it's seeking from a court.

(END VIDEO CLIP)

CHERNOFF: The prosecutors yesterday argued that this case really does not have anything to do with the fact that Martha Stewart is a celebrity. Instead, they say, it's simply a matter of a person lying to federal investigators and also remember lying to Congress because there was a congressional investigation into Martha Stewart way before the Feds got involved on the side of the FBI and also the Securities and Exchange Commission.

Now, the charges against Martha Stewart once again obstruction of justice, false statements, and securities fraud, some attorneys are saying at this point it may turn out that this is essentially going to be a sound byte type of a trial, the prosecutor saying it's just a matter about a person lying, and the defense saying hey, this is a celebrity who is being made into a scapegoat - Miles.

O'BRIEN: A sound byte trial. Hey, in the final analysis what are - if she was convicted of all the charges there's a fair amount of prison time that is associated with these, right?

CHERNOFF: Right. Well, whenever they issue these charges, bring up these indictments, there is a number attached to every single count. If you add it all up it would come actually to 30 years but that's only a theoretical maximum and if, in fact, she were convicted and we still don't know what's going to happen, if there were to be any jail time it would be a small fraction of that amount.

O'BRIEN: Allan Chernoff, thanks very much, great reporting all throughout this. We appreciate it.

Let's for a moment take on the role of trying to burnish Martha Stewart's image and what we have done is brought in a couple of experts to offer some free advice. We're not certain if Martha Stewart is listening but we're going to submit it nevertheless.

Here in Atlanta Laura Ries, she is a national branding expert in Washington; Eric Dezenhall, who is a found of one of the nation's leading crisis management firms. He's the author of "Jackie Disaster" a novel about damage control and also a book called "Nail 'Em" which actually has some interesting parallels to what's going on here.

I got to ask you about that first. Your novel sort of is similar, right, or explain how this all came to pass?

ERIC DEZENHALL, AUTHOR "JACKIE DISASTER": Well, strangely, the novel deals with a domestic diva who comes under attack and it was written before this scandal but one of the questions that it raises is do we hate her because she's a criminal or do we hate her because she's a successful woman?

And, the problem here is you cannot divorce the legal case from how Martha Stewart is perceived as a human being. The two go hand-in- hand and one of the problems is when a successful man comes under fire, he's still a dude being a dude. When a successful woman comes under fire, she's a witch.

And, if you listen to what the Justice Department is saying, they are very, very concerned about an appearance that they're going to look like they're anti-women and anti-successful women who are celebrities.

O'BRIEN: All right, Laura, is there a double standard out there?

LAURA RIES, NATIONAL BRANDING EXPERT: Well, it's not so much a double standard. It's the price you pay for being a celebrity. When you are a celebrity you're always more scrutinized and if you make a mistake, boy, they're going to come after you and they want to make an example to everyone that you shouldn't be doing, you shouldn't lie to the government and that's really her biggest issue, whether or not...

O'BRIEN: But, Laura, if it was Marty Stewart right now would it be the same story?

RIES: If it was Marty Stewart, oh absolutely.

O'BRIEN: Really?

RIES: You know, someone who presents themselves as being perfect, as being the utmost in perfectionism, oh absolutely. I mean look at Bill Bennett, I mean they certainly went after him when he got busted for his losing $8 million in the slot machines. It's that perfectionism that's really her biggest problem of being a celebrity presenting herself as perfect.

Other celebrities who are, you know, bad boys and whatnot, or bad girls like Madonna, I mean she hasn't even suffered by getting all this bad publicity. She's done even better for it.

O'BRIEN: It's enhanced the image if you will.

RIES: Absolutely.

O'BRIEN: Eric, do you go along with that, by presenting yourself as the picture of perfection the bar is awfully high and therefore you are judged differently than others?

DEZENHALL: Yes. Well, Americans are not offended by dishonesty as much as we are offended by hypocrisy. When your entire brand is "I am perfect and I know how to organize my life and you don't," there is a certain feeling in the public that we want to damage you.

And, what's happening now with the Justice Department is there is a feeling if we can't convict you in a court of law, we could at least ruin you in the court of public opinion, and for somebody like Martha Stewart, what's happened to her over the last year is, in fact, a form of punishment, even if it's not the same as jail time and it's entirely possible to have a very strong legal case but a very weak PR case.

O'BRIEN: Ah, yes.

DEZENHALL: She does not have a strong PR case.

O'BRIEN: And it's tough to do both at the same time. Laura Ries, we were talking about that, how often the lawyers will tell you one thing and the PR people will tell you another.

Now, you were saying the other day before the indictments came out, they were expected but they hadn't come out, you said you know she should do a mea culpa, come out and say you're sorry, admit to some things. Of course, these are serious crimes, so she wasn't willing to do that clearly. What should she do now?

RIES: Well, certainly she shouldn't be running full page ads. She should be getting her voice out to the people and not through a written statement in an advertisement. She should actually talk. It's almost ironic she calls the Web site Martha Talks. She's not talking. We haven't seen her in months.

O'BRIEN: That's right.

RIES: And, you can't do it with advertising, with running this, you know the lawyer looked at everything that's on this Web site and cleared it to go. She's got to do, she's got to go on "60 Minutes," something really high profile.

Look at what President Clinton did before he was president. The candidate was brilliant. He had the Jennifer Flowers problem, boom, he was on "60 Minutes" taking the tough questions and he ultimately won the presidency.

O'BRIEN: That's a high risk move going on "60 Minutes."

DEZENHALL: Yes.

O'BRIEN: Eric, would you recommend that one?

DEZENHALL: I probably would go a different route. Here's the problem. So much of damage control comes down to your personal likability. The thing about Bill Clinton is when he said, "I did not have sexual relations with that woman," we liked the guy. We wanted him to win. The biggest problem, and Ronald Reagan had that same thing. When he would mess up, people would go so what, same with George Bush.

O'BRIEN: It's the Teflon factor, right? There's no Teflon here is there?

DEZENHALL: Well, but it comes down to likability. When Martha Stewart in a perfect world, yes she should go on TV and do a mea culpa, but it's not a perfect world.

There are two problems. Number one, there's a serious legal case against her where she can't talk because it could be used against her. And second, she is not a cuddly personality, and one of the problems that somebody like me has is what happens when you get a client who is simply not likable.

I would love it if every client were like Bill Clinton or Ronald Reagan but they're just not and a lot of people look at her and they see all of their own failures every time she opens her mouth.

O'BRIEN: Oh, boy, that gets ugly. Laura, go ahead, final word.

RIES: She's got to work on that. She's got to be more likable and it's only going to get better through experience. Hiding out, hiding behind the lawyers is just not going to work. We need to see, we need to hear from her and I think in the end people want to like her. They're going to give her a chance. They're going to forgive her but they've got to hear from her.

O'BRIEN: All right, Laura. The only thing I want to quibble with is I think if she's going to do an interview, it's got to be on LIVE FROM, right here on CNN, all right.

RIES: It's got to be with Miles O'Brien, my favorite host.

O'BRIEN: Martha Ries, Eric Dezenhall, thanks for the free advice. We don't know if Martha was listening but we found it interesting. Thank you very much for being with us on CNN'S LIVE FROM.

DEZENHALL: Thank you.

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