By Keith Naughton
Newsweek
Feb. 27, 2006 issue - When Martha Stewart's people first approached KB
Home CEO Bruce Karatz last May about building mini-versions of Martha's
mansions, he was skeptical. After all, Stewart was still under house
arrest for her conviction in the ImClone stock scandal. "There was a
little risk that the public might not forgive her," says Karatz. But
Stewart laid out an enticing deal to design Martha manses for the masses,
priced between $200,000 and $450,000, that can be tastefully decorated by
you-know-who. So Karatz agreed to an experiment: he'd build 650 Martha
homes in Cary, N.C., and see how it went. The reaction: 3,800 home buyers
wanted in. And Martha sent each of them a hand-signed thank-you note. If
she's going to keep that up, she'd better be ready for writer's cramp.
This week, KB will announce plans to build "Marthavilles'' in seven more
cities, from Orlando to L.A.
One year out of the big house, Martha Stewart is finally starting to
rebuild her own house of style. Oh, sure, there have been plenty of
setbacks: Her "Apprentice" show flopped and her stock is down by more
than half over the past year. But there are signs that the worst may be
over. This week, Martha Stewart Living Omnimedia is expected to post its
first quarterly profit in two years—albeit a skimpy $7 million.
Advertisers and subscribers are now flooding back, with ad pages in her
magazine doubling in the last three months. And she's spinning out reams
of new projects, like a Sirius satellite radio show and a new magazine,
Blueprint, aimed at young nesters. "The company is at an inflection
point," says analyst Robert Routh. "The public has forgiven or
forgotten."
But even Martha Stewart isn't ready to declare her comeback complete. In
an interview with NEWSWEEK, she said her business is back to her
preconviction days of two years ago, but not yet at the pre-scandal glory
days of 2001. "Maybe our revenues aren't as high," she says, "but we're
back in spirit and in business dealings." Last month Stewart lost her
appeal, putting an end to the four-year criminal case. "I'm not happy
about the appeal. I'm not happy about the entire situation. I never will
be," she says. "But you just have to do what you have to do and get on
with it."
With her courthouse battles over, Stewart is returning to what made her a
household name: the household. Three days a week, she's in her TV kitchen
filming her daily "Martha" show in front of a live audience, which, after
a rocky start, is being picked up for a second season. Meanwhile, her
CEO, Susan Lyne, is working to expand the reach of her stylish Kmart
housewares. By now, most analysts expected Martha's merchandise to be
lining the shelves at Sears, which merged with Kmart a year ago. But so
far, Sears Holdings' hard-bargaining chairman, Eddie Lampert, hasn't
agreed to a deal. So she's taking her new wares elsewhere. A new
scrapbooking line will be sold in craft stores. And those Martha
mini-mansions will be outfitted with Martha cabinets, lighting and
flooring.
The biggest mark on Martha's rep these days is her prime-time failure on
"The Apprentice." Martha blames it on "Apprentice" overload. She says she
was supposed to have started out by firing Trump on the air, clearing the
way for her show to be the sole "Apprentice." "Having two 'Apprentices'
was as unfair to him as it was unfair to me," she says. "But Donald
really wanted to stay on." "Apprentice" producer Mark Burnett admits that
dumping the Donald was suggested, but adds: "Thank God that didn't
happen." (Trump didn't respond to an interview request.) Burnett, also
producer of her daily show, says Stewart's version of "The Apprentice"
just didn't "ignite viewer interest." Some found her unnaturally
saccharine, particularly when she wrote thank-you notes to contestants
she just fired. "That was all Martha's idea," says Burnett. "Maybe Martha
was a little concerned about coming out of jail, getting a second chance,
and she softened a bit."
Martha never goes soft in the face of adversity, and she says that's what
will keep her nascent comeback going—despite the recent stumbles. "People
certainly appreciated the way that I handled myself through this very
intolerable situation," she says. "To not whine and not complain and not
kvetch." They also admired her sense of humor. Asked if her latest burst
of creativity suggests she's feeling, pardon the pun, untethered, Stewart
laughs and embellishes the joke. "I still have 12 months of probation to
live through," she says. "So there's still a slight little tether there."
--
It is simply breathtaking to watch the glee and abandon with which
the liberal media and the Angry Left have been attempting to turn
our military victory in Iraq into a second Vietnam quagmire. Too bad
for them, it's failing.
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