INTERNATIONAL NEWS: Experts say Stewart must design new crisisstrategy

NEW YORK: Crisis PR and brand consultants have given the doyenne of domesticity Martha Stewart low grades for her handling of the media controversy swirling around her stock dealings.

NEW YORK: Crisis PR and brand consultants have given the doyenne of domesticity Martha Stewart low grades for her handling of the media controversy swirling around her stock dealings.

The uber homemaker became ensnared in a media firestorm resulting from the indictment of her friend, former ImClone chief Sam Waksal, on insider trading charges. Waksal is charged with tipping off family members about the fact that one of his biotech firm's key drugs was about to be rejected by the Food and Drug Administration. Stewart, a close Waksal friend, reportedly liquidated her entire stake in the company just one day before the FDA announced its decision last December.

As of the middle of last week, Stewart had issued two terse written denials of wrong doing, but had otherwise kept mum on the matter. Although the legal implications of the trading could be potentially grave for Stewart, some experts say she is making a mistake if she's letting her legal strategy double as her PR strategy.

"The smart lawyer understands that there is almost always a way to communicate without risking your legal position, said Jonathan Bernstein, crisis PR consultant with Bernstein Communications. "If she just stuck to two or three points, she would avoid endangering herself legally."

Experts were unanimous in their appraisals about what is at stake for Martha Stewart Living Omnimedia. "Her business entities are tied directly to her persona, said Steven Fink of LA-based crisis firm Lexicon Communications.

"People are buying her products because they have a positive impression of the public image of Martha Stewart. If that image becomes damaged, it can hurt her business in a serious way."

Shares of Martha Stewart Living Omnimedia have tumbled as much as 20% from their close the day before Waksal's arrest.

Experts say the stock's value is unusually vulnerable because of how Stewart built her brand.

"The problem now is that there's absolutely no separation, so what happens to Martha Stewart the individual directly affects what happens to Martha Stewart the brand, said Cathy Halligan, a director at San Francisco-based brand consultancy Prophet.

And just as the diagnosis was unanimous, so was the prescription.

"What concerns me about how she has handled this is the delay in her responding to all the media attention, said Christopher Bonner, president of crisis communications firm Bonner Consultants. "(Not responding) is taking her reputation out to the cleaners, and she really needs to stop that right away."

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