March 9, 2004
As Stewart Attends Hearing, Company Studies Options
By CONSTANCE L. HAYS
artha Stewart returned to the federal courthouse in Lower Manhattan yesterday, this time for a session with probation officers, as her company's board met to consider how the company, Martha Stewart Living Omnimedia, will function after her conviction on criminal charges last week.
The board made no announcement after the meeting. Last week, in a conference call with investors after a disappointing earnings announcement, company executives said they had "contingency plans" in case Ms. Stewart was convicted but did not describe them in any detail.
Ms. Stewart, a director and the former chairwoman of the board, will most likely have to give up her positions at the company as a result of her conviction. Reuters reported yesterday that she stepped down as a director of Revlon Inc., the cosmetics company, but Revlon spokeswomen did not return calls seeking comment.
Ms. Stewart spent about an hour in the probation office on the seventh floor of the federal courthouse, where she submitted to questions that will form part of a presentencing report to be delivered to Judge Miriam Goldman Cedarbaum before Ms. Stewart's sentencing on June 17.
As she left the courthouse in a snow shower, accompanied by her lawyers, Robert G. Morvillo and Rebecca A. Monck, Ms. Stewart was asked by reporters whether she had anything to say. She replied: "I want to thank my readers, my viewers and the Internet users. I just want to thank everyone for their support."
Ms. Stewart's finances will be included in the report, as will "information concerning any harm, including financial, social, psychological and physical offense, done to or loss suffered by any victim of the offense," according to the sentencing rules of the court system.
In addition, Mr. Morvillo, will have an opportunity to speak on her behalf, and Ms. Stewart will also have the right to address the court before the sentence is imposed.
She faces a sentence of 10 to 16 months in prison, people who have worked in the federal courts say, and it is possible for the judge to add or subtract from that as she sees fit.
Some experts believe that Ms. Stewart will serve at least half that time in a prison, with the rest to be spent in a halfway house or under house arrest.
Some changes did go into effect as a result of the verdict against Ms. Stewart, who was found guilty last Friday of lying to government investigators after a six-week trial. A spokeswoman for The New York Times Company said two columns that The New York Times Syndicate distributes would be renamed and written by people other than Ms. Stewart, starting immediately.
The weekly "AskMartha" column on housekeeping and entertaining will be written by various editors from Martha Stewart Living magazine, the syndicate said in a statement, and known simply as "Living."
A second column, "AskMartha Weddings," which specializes in advice to prospective brides and grooms, will be written by Darcy Miller, the editorial director of Martha Stewart Weddings magazine and author of its advice column. The syndicated column will be renamed "Weddings."
The Times Company spokeswoman, Catherine J. Mathis, said the syndicate worked out the changes in collaboration with Ms. Stewart's company, believing "that it is in the best interests of its clients to have these popular columns handled by other editors as Ms. Stewart concentrates on her appeal."
How the other businesses Ms. Stewart nurtured as part of her media company will function remains unclear.
"Her ad pages and her revenue have been going down for the last year, and now that she has been found guilty, it is going to be hard to bring a resurgence back to the brand," said Brad Adgate, a senior vice president and director of research at Horizon Media, which buys advertising space. "It is a particularly difficult issue for them. I think that everyone knows that people cheat in the stock market, but when you are found guilty of lying, it becomes more personal."
Shares of Martha Stewart Living Omnimedia suffered a slight drop yesterday, falling 8.8 percent to close at $9.90. In a note published yesterday, an analyst from Morningstar Inc. wrote that the conviction of Ms. Stewart "permanently impairs" the competitive advantage that Ms. Stewart had given her company. "While we do not believe that the guilty verdict will sink the company overnight," the analyst, T. K. Mackay, added, "our growth and profitability assumptions for the long term remain pessimistic."
Ms. Stewart's co-defendant, Peter E. Bacanovic, was found guilty of conspiracy, obstruction of justice and false statements, as well as a charge of perjury. He also went to the probation office yesterday.
Both say they plan to appeal the verdicts, although experts on federal prosecutions say the chances of having the convictions overturned are slim.
Truth is stranger than fiction, because fiction has to make sense
