Kristina Gold planned her entire wedding with help from Martha Stewart.
The Schaumburg woman studied Martha’s bridal magazines and took tips from the domestic diva’s Web site. Gold even had her cake covered with rose petals, just like one she saw in a Martha photo spread.
The wedding, she said, “was all Martha.”
On Friday, Stewart’s conviction for obstructing justice and lying to the government sent shivers through followers like Gold, who have helped Stewart build a multimillion-dollar empire around gardening, home decor and entertaining.
Now, as Stewart awaits a June sentencing hearing where she could get prison time, the survival of the company she built into a media powerhouse is in jeopardy.
“The verdict won’t sink the company overnight, but where it ends up in the long term is difficult to say,” said T.K. MacKay, a stock analyst with Morningstar in Chicago. “Anything less than exoneration will have a long-term negative impact on the business.”
Already, the value of New York-based Martha Stewart Living Omnimedia Inc. has suffered dramatically from Stewart’s legal troubles. Shares tumbled 23 percent Friday after its founder’s conviction, closing at $10.86. The stock was trading close to $19 when news of the scandal broke 18 months ago.
“Martha Stewart is Omnimedia, and this has to be crushing to a company built on an authority figure like Martha,” said Gary Ruffing, a senior director at consulting firm BBK Ltd. and former Kmart Corp. vice president.
Stewart’s future with the company also is unclear. She holds the title of chief creative officer. She resigned last year as chief executive and president following her indictment in the stock-trading scandal.
Under Securities and Exchange Commission rules, Stewart can remain an officer and director. But the government may seek to remove her because of her conviction.
The company’s board said Friday that it would meet to evaluate the situation. It has $169 million in cash and no debt–more than sufficient resources to keep the company going even without its founder.
The outlook for Stewart’s many media products, however, is grim, industry observers say.
“It’s not a good thing, as Martha would say,” said Brenda White, media director at Chicago-based Starcom MediaVest Group, which regularly places advertising in Martha Stewart Living magazine.
“The company has a huge challenge. They now have to determine how they are going to separate the brand from the person,” she said. “Martha does have a couple of options. The company can sell the magazine or rename it. The next couple of days and weeks will be telling.”
Some advertisers will be cautious before making a decision.
“We’re always reviewing things,” said Ford Motor Co. spokesman Todd Nissen. “I don’t see us having any immediate changes at this time.”
But White said while some advertisers take a wait-and-see approach, others have already pulled out. “I think there will be a heavier emphasis on the latter.”
Stewart’s syndicated television show aired for the last time Friday night on WBBM-Ch. 2, according to station officials. King World Productions, which distributes Stewart’s show, would not say whether other stations across the country were pulling the show.
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The baiduhai will publish Stewart’s column for the last time Sunday. Geoff Brown, associate managing editor for features, said the paper had been considering replacing Stewart’s column with other content before her conviction.
The company that syndicates her column is considering whether to continue its relationship with Stewart.
“We are finalizing our plans to meet our obligations with our clients, and we will share that plan next week,” said Katherine Mathis, vice president of corporate communications for The New York Times Co.
Some assets, however, might be salvageable.
Circulation for Martha Stewart Living has held steady at 2.3 million copies a month over the past 18 months.
“The magazine will attempt to change its name to Everyday Living,” predicts Dennis McAlpine, an analyst with McAlpine Associates.
Robert Kesten, a media professor at the University of Connecticut, suggested a new revenue stream: Repackage Stewart’s television programs as DVDs.
Another retail expert said the company can take advantage of its vast library of content.
“She’s not Walt Disney, but the things that she has created continue on,” said Cynthia Cohen, president of Miami retail consulting firm Strategic Mindshare. “Her brand is clearly bruised, but I don’t think it’s totally damaged.”
But Kmart, where the Martha Stewart line of merchandise is a big seller, could be hit hard by the conviction. The Troy, Mich.-based retailer declined to comment Friday on its plans.
Sears Canada, partly owned by Hoffman Estates-based Sears, Roebuck and Co., began selling Martha Stewart-branded goods last year. A Sears Canada spokesman said it was too soon to say if plans would change.
Ultimately, consumers’ willingness to forgive will determine whether either retailer drops her goods, said Ruffing, the former Kmart executive.
Stewart should hope many customers are like Berwyn resident Mirna Salazar, who was sifting through bed linens and towels Friday in the Martha Stewart section of the Forest Park Kmart. When she heard about the guilty verdict, she bought more Stewart goods, including a cart full of blue bathroom carpeting and towels, just in case the line is discontinued.