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9-501-080 REV: JULY 30, 2002
SUSAN FOURNIER, KERRY HERMAN,
LAURA WINIG, ANDREA WOJNICKI Martha Stewart Living Omnimedia (A)
Aretha Jackson, president of a private investment firm, put the phone down. It was Thursday, May 4, 2000. A client had scheduled the late evening call to ask her advice on investing in Martha Stewart Living Omnimedia (MSLO), an integrated content and media company dedicated to the business of homemaking. Jackson logged onto Yahoo.com to check MSLO’s stock performance. Noting the steady downward plunge since MSLO went public in October 1999, Jackson reminded herself that this was not an unusual post-IPO pattern. Maybe the old adage “buy low, sell high” might apply. But, what if the spiral signaled some fundamental problem? Jackson downloaded a copy of MSLO’s S-1 filing from July 29, 1999, and went to the “Risk Factors” section. One paragraph looked alarming, with the first sentence set off in caps:
THE LOSS OF THE SERVICES OF MARTHA STEWART . . . WOULD MATERIALLY ADVERSELY AFFECT OUR BUSINESS. . . . We are highly dependent upon our founder, chairman and chief executive officer, Martha Stewart. Martha Stewart’s talents, efforts, personality and leadership have been, and continue to be, critical to our success. The diminution or loss of the services of Martha Stewart, and any negative market or industry perception arising from that diminution or loss, would have a material adverse effect on our business. . . Martha Stewart remains the personification of our brands as well as our senior executive and primary creative force.1
Jackson read on. In addition to the boilerplate legalese and standard qualifier noting competitive vulnerability, three other risks caught her eye:
1. Our business would be adversely affected if our licensees were to diminish the quality of our brands;2
2. The termination or impairment of our relationships with a small number of key licensing and strategic partners could adversely affect our revenues;3
1 Martha Stewart Living Omnimedia, Inc., 29 July 1999 S-1 (New York: Martha Stewart Living Omnimedia, 1999), p. 7. 2 Ibid., p. 8. 3 Martha Stewart Living Omnimedia, Inc., op. cit., p. 8. ______
Research Associates Kerry Herman, Laura Winig and Andrea Wojnicki prepared this case under the supervision of Professor Susan Fournier. This case was developed from published sources. HBS cases are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management. Special thanks are extended to Grant McCracken, who helped conceptualize the material, and to the students who shared their class papers on Martha Stewart: Jinee Kim, Anna Liao, and Sandra Se.
Copyright © 2001 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-7685, write Harvard Business School Publishing, Boston, MA 02163, or go to http://www.hbsp.harvard.edu. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permission of Harvard Business School.
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501-080 Martha Stewart Living Omnimedia (A)
3. If we are unable to predict, respond to and influence trends in what the public finds appealing, our revenues will be adversely affected.4
Jackson knew little about MSLO aside from its content focus on Stewart’s own homemaking advice and ideas. She realized that in order to make an investment recommendation, she’d need more information on how MSLO created and captured value in the marketplace. The S-1 implied that an understanding of the Martha Stewart brand lay at the crux of this analysis: “Our success depends on the value of our brands, and if the value of our brands were to diminish, our business would be adversely affected.”5 But the value of the Martha Stewart brand was integrally linked to Martha Stewart the person, as the S-1 plainly noted as well: “Our business would be adversely affected if Martha Stewart’s public image or reputation were to be tarnished. . . . Our continued success and the value of our brand name therefore depends, to a large degree, on the reputation of Martha Stewart.”6 How this person-brand dynamic affected things exactly, Jackson just was not clear. She e-mailed Kate Prescott, director of Research, and asked her to come by the next day. Kate would have one week to generate the reports that would help Jackson assess the risks of investing in MSLO.
The MSLO Reports
Prescott delivered three reports to Jackson: one on the MSLO business model, one concerning the company’s core competitors, and one detailing consumer attitudes and behaviors. “One other thing,” Prescott said. “This may very well have no bearing on your analysis, but I kept stumbling onto stories about Martha Stewart’s personal life when conducting my research. Their sheer frequency and omnipresence suggested to me that this was something you should at least know about. I’ve included this information where it seemed appropriate throughout the reports. I’ve also prepared this,” she added, handing Jackson a chronology of events in Stewart’s life (see Exhibit 1). “I know,” she continued when she saw Jackson’s puzzled look. “It’s strange ‘data,’ isn’t it? You should also be aware that some of this source material is unusual for us: there’s data from talk shows, journalist critiques, and even an unauthorized biography. You’ll have to decide if this meets our standards, of course, but first you’ll have to settle on whether it’s even relevant to begin with.” Jackson paged through the reports and shrugged; she’d decide on that later. She pulled out Report #1 and began to read.
Report #1: The MSLO Business Model
On October 19, 1999, Martha Stewart Living Omnimedia (MSLO) went public (see Exhibits 2 and 3 for financials).7 Stewart served a breakfast of brioches and freshly squeezed orange juice outside the Exchange that day, and ceremoniously rang the bell to commence trading. At the close of business, shares traded at 35 9/16, up from the IPO price of $18, reaching a market value of $1.73 billion and a stake for Stewart worth $1.21 billion.8 That evening on The Charlie Rose Show, Stewart reflected on her core value proposition:
4 Ibid., p. 12. 5 Ibid., p. 7. 6 Ibid., p. 7. 7 Rewarding staff was, according to Stewart, a primary motive in going public. (Source: Diane Brady, “Martha Inc.,” Business Week, 17 January 2000, p. 66). 8 “Martha Stewart, WWF Rise in IPOs,” The Record, Northern New Jersey, 20 October 1999.
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Martha Stewart Living Omnimedia (A) 501-080
I was serving a desire, not only mine, but every homemaker’s desire, to elevate that job of homemaker. . . . It was floundering I think. We all wanted to escape it, to get out of the house, get that high-paying job and pay somebody else to do everything that we didn’t think was really worthy of our attention. And all of a sudden I realized: it was terribly worthy of our attention.9
MSLO described itself as a “branded and highly integrated content company dedicated to helping people improve the quality of living in and around the home.”10 MSLO sought “to turn dreamers into ‘doers’ by offering them the information and products they needed for do-it-yourself ingenuity ‘the Martha Stewart way.’”11 Broadening MSLO’s reach was one of the company’s primary goals, leading Stewart to define a homemaker audience of “males, females, children, and adults . . . the rich and not- rich,”12 and a potential market “as big as everyone who has a house.”13
MSLO produced original how-to information and related products in seven core content areas. These content areas served as the center of the MSLO business model and organizational structure:14
1. Home: decorating, restoring, renovating, collecting items for use and display in the home 2. Cooking and Entertaining: cooking, recipes, indoor and outdoor entertaining 3. Gardening: gardening, planting, landscape design and maintenance 4. Crafts: craft projects and similar family activities 5. Holidays: celebrating special occasions through food, gifts, decorating, entertaining ideas 6. Keeping: housekeeping maintenance, organization and planning, including homekeeping, petkeeping, recordkeeping and clotheskeeping 7. Weddings: all aspects of planning and celebrating a wedding
According to 60 Minutes, Stewart sold “that most indefinable and ambiguous of all products: taste.”15 Stewart’s ideas for “evergreen material,” things of everlasting value, originated in exacting research and intuition.16 “I can sense a void in the culture,” Stewart said.17 ”I think I know what women really want.”18 Stewart continued: “The company bases everything we do on the way I feel about things. I don’t consider myself either above or below my readers. Something I need will also connect with what many others feel and care about at the same time. The quest is to produce things that are kind of missing from life. People are trying to master small things in areas that they know
9 Joan Didion, “Everywoman.com,” The New Yorker, 21 and 28 February 2000, p. 270. 10 Martha Stewart Living Omnimedia, Inc., 1999 Annual Report (New York: Martha Stewart Living Omnimedia, Inc., 1999), p. 3. 11 Ibid., p. 3. 12 Micki Moore, “Marvelous Martha: She’s a Good Thing,” The Toronto Sun, Lifestyle, 10 December 1995. 13 Brady, op. cit., p. 64. 14 Martha Stewart Living Omnimedia Inc., 30 March 2000, 10-K405 (New York: Martha Stewart Living Omnimedia Inc., 1999), p 1,<
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about.”19 Sharon Patrick, MSLO president and COO, concurred: “We’ve made a business out of Martha’s life.”20
Four business segments, organized into three platforms, leveraged MSLO’s content investments:21
Business Segments and Platforms 1999 Revenue % of Revenue
I. Omnimedia Platform 1. Publishing $145 million 63% 2. Television 31 million 13 II. OmniMerchandising Platform 20 million 9 III. Internet/Direct Commerce Platform 36 million 15
MSLO referred to its strategy of leveraging content investments across media, retail channels, and distribution platforms as the “multiplier effect,” which was credited with creating favorable economies of scale through cost-sharing, cross-promotion, and cross-selling.22
Omnimedia Platform
MSLO’s omnimedia platform allowed it to “develop any how-to idea, for any core content area, and drive it through a broad range of media outlets: magazines, books, newspaper columns, radio shows, and television programs.”23 By Spring 2000, MSLO’s omnimedia platform had developed an extensive library of assets, including more than 10,000 pages of editorial content, 2,300 radio and video segments, over 160,000 photographs, and more than 6,000 original recipes.24
1. Publishing
The flagship of the MSLO business model and foundation of the publishing business was Martha Stewart Living magazine (MSL), launched in 1991.25 MSL contained reference-quality, original how-to information in an “upscale editorial and aesthetic environment.”26 Its mission statement read:
MSL raises the standard and arouses a passion for everyday living. Edited for discerning, quality-conscious readers, its goal is to inform and inspire, to teach and de-mystify a broad range of subjects. Combining great style and useful information, the magazine celebrates the
19 “The Empress of Domesticity,” op. cit., p. 79. 20 Martha Stewart and Sharon Patrick, "Keynote Address," Women Enriching Business, The 8th Annual Women’s Business Leadership Conference, Harvard Business School, 23 January 1999. 21 Martha Stewart Living Omnimedia, Inc., 1999 Annual Report, op. cit., p. 6. 22 Ibid., p. 3. 23 Ibid., p. 3. 24 Ibid., p. 3. 25 MSL was originally launched through Time Publishing Ventures, Inc., with Stewart serving as editor. The idea for the magazine was generated in 1989 in collaboration with S.I. Newhouse, Jr., who helped Stewart develop the prototype for an upscale how-to magazine but later decided not to publish it. (Source: Brady, op. cit., pp. 68 and 70.) 26 Martha Stewart Living Omnimedia, Inc., 29 July 1999 S-1, op. cit., p. 40.
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Martha Stewart Living Omnimedia (A) 501-080
simple things people do in their everyday lives. . . . From how-to information to pure inspiration, we encourage our readers to dream, then show them how to realize their dreams.27
Stephen Drucker, MSL’s editor-in-chief, characterized the typical MSL reader as a “supremely confident 40-year-old woman with a part-time job, a nice house, and a family in the suburbs.”28 The reader’s penchant for purchasing merchandise by telephone and mail was also noted, as was a propensity to try innovative new products (see Exhibit 4 for reader profiles). The uniqueness of MSL’s audience, as defined by readership patterns for competitive publications, was also a publicized strength (see Exhibit 5). The magazine touted high consumer demand as well: among competitive publications, it ranked sixth in percent of subscriptions sold at a basic rate or higher (44%)29 and a sell-through rate at newsstand of 70% (versus 40% on average).30 MSL had been honored with numerous creative awards, including three National Magazine Awards, more than 50 Society of Publication Designers Awards, and the Acres of Diamonds Award for Magazine Development.31
MSL editorial content was diverse: 36% of articles focused on food and nutrition, 23% on the home, 21% on gardening, and 5% on culture/humanities.32 The March 2000 MSL Table of Contents listed articles on baking Irish soda bread, shopping for garden gloves, cooking with tomatoes, and collecting floral china. Drucker noted that MSL “would never include articles on finding a mate, losing weight or styling your hair. One of the things about Martha is self-reliance. It’s not about attitude, it’s about information.”33
In addition to the standard “Editor’s Letter,” Stewart-authored features in MSL included “Martha’s Calendar,” a day-by-day reminder of important tasks and activities for the month, and the “Remembering” column, a reflection piece on a subject of Stewart’s choosing. Through “Martha’s Calendar,” Stewart shared items from her personal to-do list including such tasks as vacuuming and steaming the curtains, washing the cars to remove winter grime, and scheduling manure delivery for her gardens.34 Birthdays and celebrations of family and close friends were also frequently noted, as were professional appearances made by Stewart at conferences and on television.35 The “Remembering” column covered a range of topics from pool garden design to kite flying. Its editorial style was one of personal story telling; the tone was often nostalgic (as with pieces that lamented the loss of special days devoted to laundry and the passing of Sunday mealtime traditions, both of which
27 “Mission Statement,” Martha Stewart Living Media Kit, 1999. 28 Brady, op. cit., p. 66. 29 “Sustained Consumer Demand,” Martha Stewart Living Media Kit, 1999. 30 Sell-through defined as the percentage of magazines delivered to newsstands that were sold. (Source: Jon Fine, “Martha’s World: Brand Burden: Her Empire is Soaring, but that Puts a Lot of Weight on One Woman’s Shoulders,” Advertising Age, vol. 71, no. 43 (16 October 2000), p. 24). 31 Martha Stewart Living Omnimedia, Inc., “MSO: Our Company,” Martha Stewart Living Omnimedia Web page, <
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evoked fond memories from her childhood).36 While the column sometimes adopted a factual “how- to” approach, it was often deeply intimate.37 Examples included Stewart’s reminiscences of a 1960 New Year’s celebration (“I was nervous and spent hours getting ready. I wore my only party dress, a cerise silk-satin dress I had sewn myself, only to discover that I was seriously underdressed and ‘underjeweled.’ I had a private cry in front of my almost–empty closet”),38 and reflections on a high school reunion (“I really do hope the girls come to visit me in Maine. Thanks Mike for doing such a wonderful job getting us all together”).39 Musings from her honeymoon with Andrew Stewart—from whom Stewart was divorced in 1990—were also noted.40 Pictures of Stewart often appeared in MSL magazine, though she no longer graced every cover.41
MSLO’s second magazine, Martha Stewart Weddings, was a quarterly offering dedicated to the art of nuptials, first launched in 1994 as an annual publication. By the end of 1999, newsstand distribution of Weddings reached 650,000 copies per issue and the magazine was published on a quarterly basis.42 Weddings attracted a young, affluent audience of brides-to-be: median age 26, 72% college graduated, 92% employed, median household income of $48,000.43
The publishing segment also produced a steady stream of special interest publications and books. Special publications included Clotheskeeping in 1998 (distribution 750,000), Entertaining in 1999 (distribution 1 million), and Martha Stewart Baby in March 2000 (distribution of 1.3 million copies with a single advertising sponsor, BabyGap.)44 MSLO had also published 31 lifestyle and cooking books, which collectively sold more than 10 million copies.45 Noteworthy titles included Martha Stewart’s Hors d’Oeuvres Handbook (1999), The Martha Stewart Cookbook: Collected Recipes for Every Day (1995, a New York Times bestseller), Martha Stewart’s Gardening Month by Month (1991) and Martha Stewart’s Christmas (1989, also a New York Times bestseller.)46
“Ask Martha,” a New York Times syndicated column that focused on seasonally relevant “intelligent questions”47 submitted by readers, debuted in November 1995.48 As of January 2000, the
36 Martha Stewart, “Remembering: Laundry Day was Monday,” Martha Stewart Living, no. 78, April 2000, p. 320, and Martha Stewart, “Slow-Cooked Sundays,” Martha Stewart Living, no. 76, February 2000, p. 220. 37 A content analysis of 10 “Remembering” columns published in the 10 issues preceding the IPO suggests that details of an intimate, personal nature were revealed in 70% of the articles. Two independent judges coded the data; agreement levels were 90%. 38 Martha Stewart, “Remembering: Ringing Out the Century,” Martha Stewart Living, no. 65, December 1998/January 1999, p. 288. 39 Martha Stewart, “Remembering: High-School Reunion,” Martha Stewart Living, no. 71, July/August 1999, p. 208. 40 Martha Stewart, “Remembering: April in Paris,” Martha Stewart Living, no. 68, April 1999, p. 284. 41 Stewart appeared on the cover of 9 of the first 10 issues of MSL. By 1998, Stewart appeared on the cover of only one issue, and in 1999, Stewart appeared on special issues only. 42 Martha Stewart Living Omnimedia Inc., 30 March 2000, 10-K405, op. cit., p. 3. 43 Martha Stewart Living Reader Survey, Summer 1997, Martha Stewart Living Media Kit, 1999. 44 “The one-time issue, which will focus on caring for babies through their first birthday, is being sponsored by BabyGap. To help in the launch, approximately 800 BabyGap and GapKids stores featured an image of the magazine's cover in their store windows. Free issues were given away to customers who purchased $50 or more in GAP merchandise.” Source: “Baby Magazine by Martha Stewart Rides on Sponsorship from The Gap,” Discount Store News, 20 March 2000, p. 6 and Martha Stewart Living Omnimedia Inc., 30 March 2000, 10-K405, op. cit., p. 4. 45 Martha Stewart Living Omnimedia, Inc., 1999 Annual Report, op. cit., p. 6. 46 Martha Stewart Living Omnimedia, Inc., “MSO: Our Company,” op. cit., 19 December 2000. 47 “A New Approach to an Active Lifestyle,” Martha Stewart Living Media Kit, 1999. 48 Martha Stewart Living Omnimedia, Inc., “MSO: Our Company,” op. cit., 19 December 2000.
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column appeared as a regular feature in MSL magazine and weekly in more than 230 newspapers throughout the United States and Canada.49 The “Ask Martha” 90-second daily radio feature was launched nationally by Westwood One Entertainment in 1997.50 In this program, carried by more than 285 radio stations nationwide, Stewart shared recipes and home and garden tips in a format that, as of January 2000, reached 3,130,400 weekly listeners.51
2. Television
MSLO expanded its reach through its highly visible television shows and specials, which served as “barker[s] for the brand” and helped the company sell magazines, books, and Stewart-branded merchandise.52 Through television, Stewart’s how-to ideas were “brought to life, motivating viewers to pursue our ideas in their own homes.”53
At the forefront was the award-winning Martha Stewart Living television series, which debuted in 1993. The television series brought one of Stewart’s own personal dreams to fruition: “In 10 years I’ve gone from catering to becoming an author and now I hope a television celebrity.”54 The show received six Daytime Emmy Awards including Outstanding Directing in a Service Show and Outstanding Service Show;55 in May 1998, it received the 1998 James Beard Foundation Award for the Best National Cooking Segment.56 By September of 1997, MSL aired daily57 and by January 2000 it was syndicated nationwide to network affiliates in 86% of all U.S. television markets.58 The television series garnered an average rating of 1.8 in 1999, with monthly ratings that ranged from 1.4 to 2.0.59
The Martha Stewart Living television show was filmed in Stewart’s Westport, Connecticut, studio as well as on location in Turkey Hill, Stewart’s local homestead. Turkey Hill had been described as a “lush 6-acre spread that included fruit orchards, gardens, a croquet lawn, a pool, a barn and a ‘palais des poulets’ (chicken palace) for her exotic Araucana hens.”60 “We could never duplicate this place as a set,” said show executive producer Leslie McNeil.61 Oprah Winfrey remarked on the familiarity and power of the Turkey Hill setting upon her arrival there for an interview:
49 Ibid. 50 Ibid. 51 “Martha Stewart Living Omnimedia's ‘Ask Martha’ Radio Show Hits All-Time High,” PRNewswire, New York, 31 January 2000. 52 Melanie Wells, “Overcooked,” Forbes Magazine, 19 March 2001, p. 176. 53 Martha Stewart Living Omnimedia, Inc., 1999 Annual Report, op. cit., p. 6. 54 Dodson, op. cit., p. 93. 55 Martha Stewart Living Omnimedia, Inc., “MSO: Our Company,” op. cit., 19 December 2000. 56 Ibid., 9 April 2000. 57 Ibid. 58 Martha Stewart Living Omnimedia, Inc., 1999 Annual Report, op. cit., p. 6. 59 For comparative purposes, The Oprah Winfrey Show averaged a 6.5 rating in January 2000, Friends garnered a 7.0 rating, and the 2000 SuperBowl a 43.3. One rating point equals approximately 1 million households. (Source: "Top 20 Programs in Syndication," Zap2it.com web site, <
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The first time I walk through Martha Stewart’s kitchen in Westport, Connecticut, I have a weird feeling that I’ve been here. Anyone who has watched her show has seen every inch of the place. Exquisite dish sets line glass cabinets, and copper pots hang from the ceiling . . . Martha and I settle into her kitchen, at the very table where she and a few friends sat in 1988 to dream up her media empire.62
The Turkey Hill chicken coop in particular had become an icon of the brand. Stewart commented: “I will not, I will not, get rid of my chickens because the chickens are such an important part of my life and business. We had [a chicken coop] on the [magazine] cover. . . . Those chickens also become chicken 101—the best roast chicken recipe that you can find. . . . The chicken also appears in our everyday dishtoweling for Kmart. . . . ”63 The farm was also home to Stewart’s four chow-chow dogs (Zu-2, Paw-Paw, Chin Chin, and Empress Wu) and six Himalayan cats (Mozart, Beethoven, Vivaldi, Verdi, Teeny, and Weeny),64 all of whom were, according to Stewart, “very actively involved in all that we do.”65
Several other television offerings rounded out Stewart’s portfolio. From Martha's Kitchen, a half- hour show consisting primarily of food segments taken from Martha Stewart Living, made its debut in September 1999 on The Food Network66 where it aired twice daily. Periodically, CBS and Stewart produced prime-time specials associated with various holiday events, as with the Martha Stewart Christmas event. Stewart also appeared as a lifestyle correspondent in weekly segments of CBS’ The Early Show covering various topics within MSLO’s core content areas. Through this broad portfolio of programs, it was possible to see Martha Stewart on television as many as 21 times weekly in certain markets.67
3. Omnimerchandising
MSLO’s omnimerchandising segment was charged with transforming the company’s core content expertise into the branded products that would turn consumers into “doers the Martha Stewart way.”68 As the Annual Report explained, “Omnimedia creates merchandise demand; omnimerchandising fulfills it.”69 By year-end 1999, the Martha Stewart branded line had grown to 4,000 SKUs70 and included bed and bath products, kitchenwares, paints, textiles, and window treatments.71 In the first quarter of 2000, MSLO added garden products, flowers, and nursery basics to the line and Stewart acknowledged her goal: “We are going to change the way America
62 “Oprah Talks to Martha Stewart,” excerpted from O: The Oprah Magazine, 5 September 2000, <
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gardens.”72 Stewart commented on the implicit lifecycle strategy reflected in her latest category extension: “Once we get you married, then we have to have the babies, of course.”73 Housewares were planned for late 2000.74 Stewart saw no limits to her brand extendibility. “I think there’s no real danger of overexposing. . . . I don’t—I can’t imagine,”75 she said. “That’s one of the mottoes of the business: ‘It’s all limitless.’” 76 The inspiration for many Martha Stewart branded products could be traced to details from Stewart’s own personal life: paint colors were derived from the colors of her Himalayan cat fur and the shells of the eggs from her famous Araucana hens,77 and replicas of Stewart’s spice racks were made for mass distribution.
Martha Stewart branded products were distributed through a full range of channels, including mass market discounters (through strategic relationships with Kmart stores in the United States and Zellers in Canada), national department stores (through Sears stores in the United States and Canada and Canadian Tire stores in Canada), and specialty retailers (including Calico Corners, Jo-Ann Fabrics and Crafts, and P/Kaufmann).78 Martha Stewart Everyday, a line of affordably priced, high quality, soft and hard goods for home and garden, was available through mass discount channels; the pricier Martha Stewart Paints and Martha Stewart Home lines, “aimed at do-it-yourselfers who want to apply ideas and suggestions in individualized ways,”79 were sold through department stores and specialty retailers.80 In their strategic alliances with manufacturers and distributors, MSLO maintained control of virtually all aspects of the design, quality, advertising, and promotion of licensed products to obtain “a consistent identity for the Martha Stewart brand name across all [product] categories.”81 In addition to royalty payments, these agreements generally required partners to fund product design and development costs as well as advertising.82
Kmart stood as MSLO’s most significant merchandising partner, representing more than 80% of total merchandising revenue.83 Eighty-five percent of the American population shopped at Kmart each year,84 thus offering extraordinary reach opportunities for the Martha Stewart brand. Some felt Kmart’s mainstream clientele also offered the strategic opportunity to dispel perceptions that she was out of touch with everyday people.85 But, with a desired customer group described as “low- and
72 Martha Stewart Living Omnimedia, Inc., 1999 Annual Report, op. cit., p. 1 and Linda Bien, “Marthaworld: Plenty of the Globe Spins Around Martha Stewart,” Herald American, 19 March 2000, p. 3. 73 Martha Stewart, interviewed by Morley Safer, 60 Minutes, CBS News, broadcast 23 November 1999. 74 Martha Stewart Living Omnimedia, Inc., “MSO: Our Company,” op. cit., 15 March 2000. 75 “Martha Stewart Discusses the Business Ventures That Made Her a Billionaire,” Larry King Live, aired 2 February 2000, 9:00 p.m. ET. Available through CNN.com transcripts, <
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middle-income mothers with children living at home,”86 some both within and outside MSLO questioned the fit between the partners. Stewart commented:
You might scoff at Kmart. You might think, oh, how declasse or whatever. That’s what a lot of my editors thought when I brought the idea to them several years ago. But why not take that information that we’re giving to the select few and bring it to the mass market? I just think that. I think everybody should be sleeping on 100% cotton sheets.87
Kmart vice-president for merchandise Steve Ryman recognized that Stewart’s attention to detail had pushed up overall merchandise quality in the chain, but stressed that the customer demographic still influenced what appeared on Kmart shelves. In discussing his rejection of sage green for the Baby line in favor of traditional yellows, blues, and pinks, for example, Ryman noted that “the typical American doesn’t go to Kmart to find avant-garde baby colors.”88
Stewart’s Kmart relationship began in 1987 when the retailer hired her to design a line of glassware, dinnerware and bedding called At Home with Martha Stewart.89 Stewart was frustrated with the relationship (“They were very Midwest. This was Kmart. This was maroon and black and dark green. It was bad,”90) and the line suffered from a lack of advertising support and in-store presence.91 With the installment of a new CEO in 1995 to revitalize the flagging Kmart, Stewart was offered a new contract that promised more support for her line and an “enormous upfront payment of around $16 million.”92 Stewart renewed her Kmart contract again in 2000, ensuring that her lines would remain central to the store through at least 2007.93 The Martha Stewart Everyday line, now merchandised through a store-within-a-store format and strategic placement at the front of 80% of Kmart’s 2,173 stores,94 reached $1 billion in sales in 1999,95 and occupied 61% of the merchandise display space in a typical Kmart home fashion department.96 The line had been credited with at least part of Kmart’s recent revival.97
Recognizing her contributions to corporate performance, Stewart told a reporter, “I’d like to be on the board [of Kmart] someday.”98 Kmart said it avoided having individuals with any type of supplier
86 In 1999, the Kmart shopper demographic profile was as follows: 59% female, average age 46, average income $42,800, 49% employed full time. Source: “Kmart Customer Profile, 1999 Fact Book, Kmart Corporation, p. 7, <
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relationship in advisory capacities. 99 Moreover, Kmart CEO Floyd Hall saw “no pressing reason for enhancing Ms. Stewart’s clout at the company. We’re not leading the charge to profitability with Martha. I feel just as proud of Route 66, an exclusive Kmart brand.”100 Stewart disagreed: “Floyd knows better than anybody else who comes in for Martha Stewart and who comes in for Route 66. The Martha Stewart brand is a big draw.”101
4. Internet/Direct Commerce
Internet/Direct Commerce, MSLO’s second-largest business segment, “leveraged content and merchandising capabilities to create a one-stop, user friendly experience for consumers interested in the domestic arts.”102 The segment included the high-end, specialized Martha by Mail catalog and the marthastewart.com website. The catalog, originally developed to provide the materials necessary to pursue “how-to” projects presented in the various MSLO media, had evolved into an upscale, direct- to-consumer merchandising business. In addition to Stewart-designed merchandise, the catalog included selected products from other designers that were judged to be (a) consistent with Stewart’s brand image and “how-to” philosophy and (b) unavailable through national retail stores.103 Martha by Mail product offerings included a spice rack modeled after the antique in Stewart’s studio kitchen ($325), a Chocolate Tempering Machine ($459.00), snowball maker (“ingenious plastic molds that make perfectly round 3/4” snowballs to stack in beautiful designs,”104 $18), Cookie Decorating Kit ($48.00), and Tassel Making Kit ($68.00). In 1999, eleven editions of the catalog, totaling 15 million copies, were distributed.105
Marthastewart.com was launched in September 1997 with a dual objective of selling merchandise and providing companion content for other MSLO media. As of December 1999, there were more than one million registered users on the website.106 Over time, content had evolved into more community-oriented offerings such as live Q&As at the website’s “Meeting Place.” The controlled environment offered by the Q&A format was chosen over more traditional chat rooms: “[chat rooms] are a waste of time,” claimed Stewart.107 The Q&A sessions were highly successful: Stewart received more than 8,000 questions during the premier of the AskMartha live chat event.108
The MSLO Organization
Stewart was indisputably the center and focus of the MSLO organization. Following MSLO’s IPO in 1999, Martha Stewart controlled 60% of outstanding shares, and approximately 96% of votes.109
99 Ibid. 100 Ibid. 101 Ibid. 102 Martha Stewart Living Omnimedia, Inc., 29 July 1999 S-1, op. cit., p. 47. 103 Ibid., p. 48. 104 Martha By Mail web site, <
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MSLO acknowledged that this granted Stewart “the ability to control the outcome of all matters requiring stockholder approval, including the election and removal of our entire Board of Directors, any merger, consolidation or sale of all or substantially all of our assets, and the ability to control our management and affairs.”110 Stewart’s contribution was so vital to the organization that MSLO took out a $67 million “key executive” life insurance policy and a $55 million disability insurance policy on her to protect the company in the event of any losses.111 While Stewart maintained that the only area of vulnerability was television,112 she remained aware of her importance to the company nonetheless: “If I die, nobody’s going to know about it for at least 10 years. I’ve been posing for pictures for months.”113
Of the 12 most senior managers at MSLO, 8 were women, and 4 men. In addition to Stewart, who operated as chairman, four individuals served on the company board: Sharon Patrick, Charlotte Beers, Naomi O. Seligman, and L. John Doerr.114 Stewart had established long-lasting personal relationships with many of her senior managers and suppliers.115 Of particular note was Stewart’s relationship with MSLO president and chief operating officer, Sharon Patrick, whom she met during a climb to the summit of Mt. Kilamanjaro in 1993.116 After earning her MBA from Harvard Business School in 1978, Patrick had worked as a consultant with McKinsey & Co. and as an executive with Cablevision Systems Corporation.117 Stewart hired Patrick first as a consultant, then brought her on as president in 1997.118 “She took me in a year through Harvard Business School. . . . How to really build a company, taking all my thoughts and ideas and dreams and making them into reality,” said Stewart of Patrick’s role.119 Patrick was also credited as the mastermind behind the buyback of MSL Enterprises120 from Time Inc. in 1997.121 “Without Sharon, there would have been no deal,” said Time’s chief financial officer Joseph Ripp.122 Stewart and Patrick financed the buyback in part with funds secured from re-negotiating Stewart’s Kmart contract.
110 Ibid. 111 Ibid, p. 59. 112 Martha Stewart, interviewed by Morley Safer, 60 Minutes, CBS News, broadcast 3 December 1995. 113 Michael Bellavia, “Martha Stewart is a Beech,” The Bottom Line Online, 9 April 1998. <
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Although Stewart headed up the organization with Patrick, there had been shifts in their relative responsibilities over the years. In 1997, Patrick was appointed as CEO of MSLO but was re-named president and COO when Stewart reclaimed the chief executive title three months later.123 Patrick owned 5% of the shares of MSLO.124
In addition to her board members, Stewart acknowledged an accomplished team of creative personnel that had gained increasing prominence as MSLO-affiliated experts in their respective fields.125 There were approximately 420 people at MSLO,126 all “inculcated with a sense of both the brand and the customer.”127 Each of the seven core content areas was managed by its own team.128 The team leaders were expected to be “equal parts writer, product designer and, increasingly, TV personality.”129 The experts were described as “a rising army of mini-Marthas . . . who skate across different media and merchandising channels with the ease of their famous boss.”130 MSLO actively sought to develop “team-based content and reduce dependence on [their] founder”131 so as to “provide additional brand durability, increased growth opportunities and a broader recognition of a new generation of Martha Stewart Living experts.”132 By 1999, MSLO more prominently featured its editors, showcasing garden editor Margaret Roach’s home in the September issue and using style editor Stephen Earle to demonstrate how to build a pergola.133 Increasingly, guest designers, cooks, gardeners and craftspeople were also tapped to contribute their expertise to MSLO.134 Stewart, however, acknowledged that her role in creative inspiration remained central: “These are all my ideas, and I set all the direction.”135
Stewart’s family members also played an increasing role in her company’s activities.136 According to Stewart: “Mom is a regular contributor as are many of my nieces and nephews. Nephew Christopher has been on those Kmart commercials. We’re very family kind of people.”137 Stewart’s daughter Alexis, who possessed a style very different from Stewart’s (one with minimalist and simple undertones that were characteristic of “banks and corporate lobbies”)138 has a less visible role in
123 Ibid. 124 Brady, op. cit., p. 66. 125 Martha Stewart Living Omnimedia, Inc., 29 July 1999 S-1, op. cit., p. 38. 126 Martha Stewart Living Omnimedia, Inc., 1999 Annual Report, op. cit., p. 9. 127 Brady, op. cit., p. 66. 128 Ibid. 129 Ibid. 130 Ibid. 131 Martha Stewart Living Omnimedia, Inc., 29 July 1999 S-1, op. cit., p. 38. 132 Ibid., p. 38. 133 Bien, “Marthaworld: Plenty of the Globe Spins Around Martha Stewart,” op. cit., p. 3. 134 Only one expert appeared on Stewart’s television Thanksgiving and Christmas Specials in 1998, for example, while four were in attendance in 1999. 135 Dugan, op. cit., p. 58. 136 For example, Stewart made four explicit references to family members in her 1999 Christmas and Thanksgiving television specials, while no such mentions were made in the corresponding 1998 programs. 137 “Martha Stewart Discusses the Business Ventures That Made Her a Billionaire,” op. cit., 3 April 2001. 138 Alexis’s apartment, a “stark, grey loft” that was “180 degrees from mommie dearest” was described in Linda Bien, “Perfection a Tradition for Stewarts,” The Post-Standard (Syracuse), 2 September 2000, p. E4. See also Martha Stewart, “Remembering: Alexis Stewart to John Cuti, New York, New York 9.26.97,” Martha Stewart Living Weddings, Winter/Spring 1998, p. 376. See also Celia Barbour, “A Measured Calm,” Martha Stewart Living, September 2000, p. 295.
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MSLO activities. Stewart said, “Alexis you don’t know about her. You don’t see her [but] she’s a very big contributor.”139 Alexis is listed on the MSL masthead as a contributing editor.
Report #2: Analysis of the Competition
MSLO defined its competition based upon major and emerging players in the four business segments in which it operated. While not explicitly considered in official company documents, acknowledgement of the emergence of a fifth competitive domain—personality-driven multimedia empires such as that orchestrated by Oprah Winfrey—seemed warranted as well.
Publishing
MSLO books, magazines, and related publishing products faced intense and multifaceted competition based on price, editorial content, and aesthetic quality. According to the company’s 1999 Annual Report, MSL magazine competed for advertising dollars with Ladies’ Home Journal, McCall’s, and Redbook in the women’s service magazine category.140 The magazine also competed for readership and advertising dollars with titles in the decorating, cooking, and lifestyle magazine category including Architectural Digest, Metropolitan Home, Bon Appetit, Food & Wine, Country Living, Gourmet, Southern Living, and Better Homes & Gardens,141 as well as O: The Oprah Magazine and Real Simple, which had recently debuted. Martha Stewart Weddings competed for both readers and advertising dollars with Bride’s Magazine, Modern Bride, Bridal Guide, and Elegant Bride.142 General competition with “other types of leisure activities” was also noted in the segment.
Former model and restaurateur B. Smith announced her entry into the magazine publishing world in May 1999 when AMEX Publishing Corporation launched B. Smith Style, a lifestyle magazine aimed at women with a median age of 35.143 Smith “infused her magazine with a decidedly multicultural look and feel,”144 and used her own image to grace its cover. Smith was frequently called “the black Martha Stewart.”145 Collecting recipes from her travels and own restaurant offerings, Smith published B. Smith’s Cooking and Entertaining for Friends in 1995, and in 1997 launched a syndicated weekly TV show “B. Smith With Style.”146 Smith explained:
I try not to watch what [Stewart] is doing. I want to make sure I have my own style. [People] say they like what I’m doing because they can take it and use it in their own lives. . . . I think I’ve shown millions . . . that they can be attractive, have style, be a minority and a purveyor of style so that others can learn from what they do. The truth of the matter is that there’s Martha, but . . . what I do . . . is lifestyle with doable, usable information.147
139 “Martha Stewart Discusses the Business Ventures That Made Her a Billionaire,” op. cit., 3 April 2001. 140 Martha Stewart Living Omnimedia Inc., 30 March 2000, 10-K405, op. cit., p. 8. 141 Ibid., p. 8. 142 Ibid. 143 Lisa Granatstein, “To B., It’s Not to Be Martha,” Mediaweek, vol. 9, no. 14 (April 5, 1999), p. 58. 144 Ibid. 145 Judith Sutton, “B. Smith: Rituals and Celebrations,” Library Journal, vol. 124, no. 15 (15 September 1999), p. 107. 146 As of April 1999, “B. Smith With Style” was syndicated in over 200 U.S. markets and 22 countries. (Source: Granatstein, op. cit., p. 58.) 147 Elissa Elan, “Barbara Smith,” Nation’s Restaurant News, vol. 33, no. 4 (January 1999), p. 196.
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MSLO did not list B. Smith Style as an MSL competitor. Stewart commented: “A copier. Not an original. I look at it and say ‘Why?’”148
In late March 2000, People Magazine Group of Time Inc. announced the launch of its contender to Martha Stewart Living, the magazine Real Simple. Described as “Martha Stewart for the time pressed,” the lifestyle magazine “hoped to provide the overextended woman with solutions to streamline her busy life.”149 An article in Real Simple about decorating with flowers advised, “It’s not all that hard, just get a few and stick them in a jar.”150 The magazine’s managing editor, Susan Wyland (who served previously as editor at Martha Stewart Living) claimed that the publication was not about “the denial” of stress in everyday life: It’s about personal satisfaction, not perfection.”151 Wyland saw the magazine’s value proposition as delivering on a deeply felt consumer need: “People see the ability to control your life as a sign of success.”152 Real Simple targeted college-educated working women and mothers with a median age of 36 and was described as “a hybrid, combining the lifestyle approach of Martha Stewart Living, the commonsense housekeeping guidelines of Good Housekeeping, [and] the shopping opportunities of In Style.”153 Sample articles from the premier issue included titles such as “Systems. Simpler Record keeping: The only things you really need to save”[Life section], “Clean Sweep: the Fastest and Easiest Way to Clean your Bathroom,”[Home section], “Stress Reduction. The 75% Solution,”[Body section] and “Rituals. Creating Special Moments that Enhance and Enrich your Life,”[Soul section]. Robert Valentine, a creative consultant who developed early issues of MSL magazine, designed the magazine.
Stewart wasn’t concerned about Real Simple’s competitive clout: “The first issues of Time Inc.’s Real Simple? I thought it was a disaster. A real stupid move. Write that down.”154 (To which Sharon Patrick added, “and erase it.”155)
Another high profile contender was Oprah Winfrey’s magazine O: The Oprah Magazine, backed by The Hearst Corporation and launched in April 2000. Winfrey described O as a “personal growth guide for women aged 25 to 49.”156 Subscription card inserts promised ”Positive Energy for Only $1.00 a Month!” According to Roberta Garfinkle, director of advertising at McCann-Erickson, “She is what every woman wants to be when they grow up. She transcends race and class.”157
The magazine was filled with pictures of a smiling Oprah, who also adorned its cover. Winfrey’s vision for the magazine was very reader-focused, and included a table of contents, for example, on the first and second pages of the book, rather than 20-or-so pages in, as was customary with advertiser-focused publications. Illustrative articles from the premier issue of O included:
148 Fine, op. cit., p. 26. 149 Ann Christine P. Diaz and Ann Marie Kerwin, “’Simple’ Debut is Time’s Biggest Ever,” Advertising Age, vol. 71, no. 12 (20 March 2000), p. 22. 150 Stuart Elliot, “Time Inc. Decides a magazine about Simplifying Life Might Strike a Chord Among Harried Readers,” The New York Times, 18 February 2000. 151 Julie V. Iovine, “Is Simplicity a Grand Illusion or Grand Plan?” The New York Times, 23 March 2000, p. D1. 152 Elliot, op. cit. 153 Alex Kuczynski, “Glimpse of the AOL-Time Warner Future,” The New York Times, 12 March 2000, p. C1. 154 Fine, op. cit., p. 26. 155 Ibid. 156 Alex Kuczynski, “Winfrey Breaks New Ground with Magazine,” The New York Times, 3 April 2000, pp. C1-15. 157 Ibid.
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“Make Your Dreams Come True. A Step-by-Step Planning Guide,” by Phoebe Kest “Let’s Talk. Become More of Who You Are,” by Oprah Winfrey “The Working Spirit. Why do We Work so Hard?” by Peggy Noonan “When Less is Really More,” by Rachel Naomi Remen, PhD “Connect with Your Friends This Weekend,” by Veronica Chambers “Phenomenal Woman; Her Journey Back to Honor,” by Elizabeth Kim “Sunday: The Day Just For You,” by Oprah Winfrey
Winfrey acknowledged that Martha Stewart Living served as a model for O:
I aspire to have pages as beautiful as Martha’s. But Martha and I are not in competition with each other because Martha is the queen of external creations, which I am not. I am really more interested in getting them to look inside themselves and to try to excavate, pull back the layers of their lives. . . . 158
Winfrey reported on the difficulties she experienced with her editorial board at the launch:
The problem has been that we are on a learning curve . . . I had to say to them, “Look, I know that to you guys the Oprah name is a brand. But for me, it’s my life, it’s the way I live my life and the way I behave and everything I stand for. . . .”159
Television
Similar to publishing, MSLO defined its television competitors in terms of viewer demographics and advertising dollars. “Our television programs compete directly for viewers and advertising dollars with other how-to television programs, as well as with general programming on other channels.”160
One of the original purveyors of “how to” information was Julia Child, whose books (Mastering the Art of French Cooking in 1961) and television shows (The French Chef, which first aired in 1963 and subsequent extensions, including Master Chef and Baking at Julia’s) introduced Americans to French cooking. Child, a 49-year-old housewife with negligible training in cooking, “started a minor revolution in an American culture still reveling in the convenience of canned soup, frozen vegetables, and TV dinners.”161 Child commented on her approach: “Many recipes didn’t tell you how far the chicken should be from the flame, how often to baste it, when it is done. My idea was, if you read one of my recipes, you would really know how to do it.”162
Julia Child was “a natural teacher and comedian.”163 One reporter commented:
Part of the entertainment came from her voice alone, . . . she also had an exceptional presence, a keen sense of timing and drama, and a superb instinct for what’s funny. Most
158 Mitchell Fink with Lauren Rubin, “Oprah: New Magazine Won’t be Star-Struck,” Daily News, 19 April 2000, p. 19. 159 Kuczynski, “Winfrey Breaks New Ground with Magazine,” op. cit., pp. C1-15. 160 Martha Stewart Living Omnimedia, Inc., filed 31 December 1999, 10-K (New York: Martha Stewart Living Omnimedia, 1999), pp. 9-10. 161 Karen Lehrman, “What Julia Started,” U.S. News & World Report, 22 September 1997, p. 56. 162 Ibid. 163 Ibid.
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importantly, she lacked pretension: she played herself. She made noises (errgh, oomph, pong), called things weird or silly, clashed pot lids like cymbals, spilled things, knocked things over, and in general made quite a mess. . . . Julia knew she was one of us . . . [She] could get Americans to believe that they could cook like the snobby French only if she represented herself as the supreme anti-snob. People looked at her and said, “Well, if she can do it, I can do it.”164
In addition to Child’s cooking series, Stewart’s TV productions ran head to head with fellow Food Network chef Emeril Lagasse’s two cooking shows: Essence of Emeril (launched in 1994) and Emeril Live (1997). Lagasse, who spoke in catch-phrases (“Bam!”) “with a strong New England accent,” and “copped a Brooklyn attitude in the kitchen,”165 rode his appeal as “sitcom Talk show host”166 to become Food Network’s highest-rated program.167 B. Smith with Style and Bob Vila’s Restore America also ran in syndication against Stewart’s cooking-oriented television productions and PBS’s The Victory Garden offered competition in the gardening segment.
A very different “how-to” model was seen in The Oprah Winfrey Show. Oprah was positioned as a “how-to” guru whose advice focused on ways to live through adversity, with strategies for becoming empowered through personal challenges. Winfrey transformed the talk show format from its focus on information—what Deborah Tannen, professor of Communications at Georgetown University, called the “report talk” of Phil Donahue’s pioneering style (roaming with mike in audience)—to “rapport talk,” which mimicked the “back and forth conversational style that is typically the basis of female friendship, with its emphasis on self-revealing intimacies.”168 Winfrey’s television talk show reached an estimated 22 million viewers weekly in the United States, and aired in over 119 countries.169 Winfrey had been credited with increasing literacy rates, and through the Oprah Book Club, with returning serious literature to the bestseller lists.170
Merchandising
MSLO’s partnership with Kmart brought the firm into direct competition with other big-box retailers (Target, Wal-Mart, Home Depot, among others).171 Retailers that had established relationships with contract designers were especially noteworthy, as was the case with Target.
Target Corporation in 1999 established a partnership with architect Michael Graves, who had designed scaffolding for the famous Washington Monument renovation. Through a product line that included tea kettles, picture frames, and cordless phones, the partnership heralded a “democratization of chic,” a “conversion of style from class to mass.”172 Graves argued that he and Target were “doing more to elevate popular taste than another, better known purveyor of ‘good
164 Ibid. 165 Dirk Smillie, “Humor is the Key Ingredient at Lively Food Network,” The Christian Science Monitor, 24 July 1997, p. 13. 166 Amanda Hesser, “Under the Toque; Here’s Emeril! Where’s the Chef?” New York Times, 4 November 1998. 167 Smillie, op. cit., p. 13. 168 Deborah Tannen, “The TV Host: Oprah Winfrey,” Time, vol. 151, no. 22 (8 June 1998), p. 196. 169 Kuczynski, “Winfrey Breaks New Ground with Magazine,” op. cit., pp. C1-15. 170 Maria Simson, “Oprah's Tender Takeover of Trade Paperbacks,” Publishers Weekly, vol. 245, no. 12 (23 March 1998), p. 56. 171 Martha Stewart Living Omnimedia, Inc., filed 31 December 1999, 10-K, op. cit., p. 11. 172 Roger Yee, “Right on Target,” Contract Design, vol. 41, no. 4 (April 1999). <
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things’ whose Kmart collections represent endorsements rather than designs.”173 Analysts speculated that Graves offered Target an opportunity to bridge the gap between the discounter’s traditionally price-sensitive audience and a new, more affluent customer,174 perhaps by targeting “the crossover consumer who shops Target for everyday goods and Nordstrom's for ‘important’ purchases.”175
Lifestyle brands could also be highlighted for their competitive significance. Ralph Lauren presented perhaps the most direct competition to the Martha Stewart product line through his own signature collection of lifestyle merchandise. Launched in 1967 with an instantly successful line of ties that quickly became status items, the Polo brand captured the “world of discreet elegance and classic style” embodied in the equestrian sport.176 Throughout the 1970s and 1980s Lauren broadened his line to include menswear, womenswear, bedding, towels, furniture, and lighting.177 Lauren competed in the home products market as well, with a full line of furnishings and a paint collection from Sherwin Williams, Stewart’s own contract manufacturer, which was sold through Home Depot outlets. Paints in Lauren’s 400-color designer collection were grouped by lifestyle: Thoroughbred, Country, Santa Fe, Safari, and Sport. Selecting a color from the line was not necessarily easy, as Martha Stewart explained: “He has so many whites. Do you want to know what that does to me? Drives me crazy. What I want to do is, if there is a white we love, to offer that white. The consumer’s gonna say, ‘Well if Martha thinks this is the best white, it must be the best white.’”178
Internet/Direct Commerce
MSLO, with its catalog and websites, noted numerous retail competitors including Williams- Sonoma, Pottery Barn, Plow & Hearth, Chef’s Catalog, Eddie Bauer Home, and Crate & Barrel, among others.179 When MSLO augmented its offerings with interactive Q&A hours, MarthaStewart.com also found itself in direct competition with pure-play internet sites such as iVillage.com and Women.com—content-heavy, demographically focused communities for women.180
The New Multimedia Personality Models
One of the notable marketing trends of the late 1990s concerned the leverage of “personality power” into broad, multimedia ventures. In 1999, Oprah Winfrey lent her celebrity to women- targeted Oxygen Media Inc. The network married its cable television programs to its 13 online sites that served as way stations, posting useful information, and allowing viewers to interact with the network’s shows, thus providing feedback to Oxygen executives.181 Critics were skeptical of Oxygen’s stated desire for consumer co-creation of the brand:
173 Ibid. 174 Ibid. 175 “Michael Graves Polishes Target's Upscale Image,” Discount Store News, vol. 38, no. 3 (8 February 1999), p. 1. 176 “The History of Polo Ralph Lauren,” Polo Ralph Lauren web site <
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For all its “we celebrate you” crap, Oxygen is a monument to conformity. [It] pays lip service to the many roles women play, but is really only interested in one of those roles: shopper. The network is like a pep rally in reverse, exhorting women to give three cheers if they're miserable. And what do women do when they're miserable? Shop!182
In February 2000, Oxygen’s cable network was available to 10 million cable homes.183 Annual sales for 2000 were projected to be $16 million.184 By year-end 1999, the company had about 560 employees and a $450 million cache for original program development.185 AOL invested in the company.186 In 1999, TCI the nation’s No. 2 cable operator, pledged to deliver seven million cable subscribers over two years.187
In the first quarter of 2000, Ralph Lauren entered the fray with RL Media, a joint venture with NBC. One reporter noted: “He wants a multimedia presence like Martha Stewart, the omnipresent home guru.”188 Lauren recognized the opportunities the new media presented to “create a singular lifestyle destination that reflects the aspirational qualities that have always been [my] message.”189
Report #3: Consumer Attitudes and Behaviors
The Martha Stewart brand elicited strong feelings and reactions from adults on both ends of the scale. (See Exhibit 6 for consumer indicators of the strength of the Martha Stewart brand.) At book signings, fans turned out en masse to support Stewart, often bearing flowers and seeking autographs.190 Admirers routinely set a place of honor for Stewart at their dinner parties.191 They bought tickets to spend “A Day with Martha.”192 Camille Paglia, professor of Humanities at the University of the Arts and frequent cultural critic, commented: “Anyone who saw [Stewart’s] appearance on The Oprah Show about two years ago had to be stunned by the intensity of the adulation coming from the working-class and middle-class women. This is a woman who has had an enormous influence.”193 Martha Stewart Fan Club president Alice Probst shared signs of her loyalty on that Oprah Show segment and narrated a home video that she offered as proof:
182 Joyce Millman, “Airheads,” Salon.com, 22 February 2000. <
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Come look at what I’ve learned from Martha. Martha has showed me that your house should reflect the seasons. This is called bittersweet. It’s pretty popular on the island. It’s done with dried flowers, which Martha is very big on. It gives a nice, live effect, even if they are dried. . . . Instead of having salt and pepper shakers and you never really know how much salt and pepper, what she does is she keeps a fresh supply on the counter, so when you cook you just take a pinch of something. . . . This is something I started with Martha—I grow my own herbs. . . . Of course, I have Martha sheets on my bed. And Martha pillows. And this is— every house has to have this if you like Martha, and that’s a hot glue gun. . . . This here [pointing to a picture of her family] is my family. This is my children and my grandchildren. And part of my family is Martha. You know, we have her—she’s right up there with them. As you can see, Martha has a lot of influence in my life, right up into my bedroom.194
Consumers offered many reasons for their devotion to the Stewart branded lifestyle:
All of my friends work. None of us cooks on a daily basis . . . but that’s the whole reason we need Martha Stewart: not because we’re so involved in homemaking; because we’re not and we need good ideas when it’s time to entertain.195
I like Martha Stewart. Women from my generation like to think of themselves as above the kitchen, but I think you get a wonderful feeling from putting together a good meal for your family.196
She treats us as though we are intelligent people. She gives us information. She empowers people by treating them with respect. . . . I just find her basic concepts and basic values extremely useful.197
I love that calendar [in the magazine]! I tell you, I never put down my storm windows until spring. You know, I would forget. And the calendar is like “Oh, I should give that more thought.” I needed to be organized. I even have on it now when my vacuum cleaner has to go for its belts.198
I am going to give you a testimonial from a husband whose life has been directly affected by Martha Stewart. About 15 years ago I gave my wife a book. It tapped something very deep within her. She just blossomed.199
I had a discussion with my 16-year-old daughter in which she confessed that she is a closet Martha Stewart fan—as are many, many of her girlfriends whose mothers I know are what we
194 “Martha Stewart's Wannabees & Wannanots,” The Oprah Winfrey Show, Harpo Productions Inc., broadcast 2 February 1994. 195 Sydne Siefert, a fan, as cited by Florence Shinkle, “On Martha’s Menu; Books, Magazines, Television Shows and, of course, Gold Leaf,” St. Louis Post Dispatch, p. 1D, 22 November 1994. Available from Lexis-Nexis Academic, <
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would consider wonderful role models as working, self-sufficient women. These girls are at a stage where they are trying to find role models of femininity as well as feminism.200
I don’t feel I have to apologize about wanting her to tell me what to do with some things. I buy cookbooks after all. Do we all have to be original Leonardo da Vincis or something?201
Janie Norris of Virginia called Stewart “inspirational”; her aunt agreed, and taped every television program on which Stewart appeared.202 “I never liked Martha Stewart until I started watching her on Sunday mornings. I turn on the TV, I’m in my pajamas, still in this place between sleep and reality, and she’s showing you how to roll your tablecloths in parchment paper. She’s like a character when she does her crafts. She reminds me of Captain Kangaroo. . . . It’s like she brings out this great meditative focus and calm.”203
Some fans went to the extreme, and endeavored to mimic Stewart’s personal life. “A woman wrote me not long ago and asked me to tell her each [of my] cat’s names and breeds,” said Stewart during an interview with Yankee magazine. “She wants to buy six cats exactly like them. Is that weird or what?”204 Others were content to admire her accomplishments: “There has never been anyone like her. Martha has done so much for women. She’s so elegant, yet so down-to-earth. She’s a successful businesswoman. She’s beautiful. She has a perfect home and perfect garden.”205
But criticisms were just as strong. One reporter summarized:
Newsweek accused her of being “perfectly perfect,” joshing that on a typical morning she’s already fed the chickens, built a toolshed, and launched a new business by the time the rest of us are stumbling into the shower. The New Republic made fun of her for owning too many gardening tools, including loppers in three sizes. Critics seize upon her divorce as if it were a smoking gun: Little Miss Domesticity couldn’t keep a husband. They complain about how WASPy she is, or, if they know she’s Polish and Catholic, how WASPy she looks.206
The realities of time and money diminished Stewart’s lifestyle proposition for some. “I don’t watch her show because most of what she does is ridiculously expensive and time-consuming. She is somehow teaching us all upper-class good taste: i.e., a lady knows quality when she sees it, eats it, smells it, touches it. Her mode of work is strictly the kind associated with leisure these days. Her appeal is mostly class-related,” explained Lisa, a 28-year-old doctoral student.207 “I found it very isolating,” commented a lapsed Stewart follower who was “tired of being perfect.” 208 “My children were saying, ‘Come play with me.’ And I was saying, ‘No, no, no, I have to bake a cake,’” she said.209
200 Michelle Moravec, “Martha Stewart Discussion/Dec. 1997”, H-Net, Humanities & Social Sciences Online, Michigan State University, <
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501-080 Martha Stewart Living Omnimedia (A)
“Life isn’t like this!” another woman exclaimed at a 1991 lecture, when Stewart cautioned the crowd to have patience when melting a chunk of white chocolate because “it might take three hours.”210
Sabrina Boehm, who was introduced on Oprah’s Martha Stewart episode with the sub-title “Says She Doesn’t Have Time for Martha’s Lifestyle,” narrated video footage of her home to illustrate the disconnect between Stewart’s branded lifestyle and the realities of her daily life:
This is my vacuum cleaner. It’s been here for about three days now and I keep hoping that I’ll get to it. . . . This shelving? We’ve got the bottom shelf clear because the kids like to crawl through here a lot. . . . This is a wreath that I started making for Christmas. And I’m hoping that I’ll get it done by next Christmas. I’ve got my laundry in various stages of being done. I put it on the couch, and hopefully I can get to it. Like—that was washed yesterday and hopefully it’ll get folded sometime today or tomorrow.211
For many, opposition hinged on the feelings of inadequacy that Stewart’s standards of perfection engendered among them. “Women could not possibly achieve Martha Stewartness. . . . She is setting you up for the fall,” one woman explained.212 “I thought I was doing great,” said another, “and then I saw what Martha’s up to, and I’m overwhelmed. She was doing the five-foot gingerbread replica of her house in Connecticut, and we have an apartment, so that would be hard. And I realized I did not have time before Christmas to go to architectural school, so the whole thing was very frightening to me. . . .”213 Even some supporters found it hard to live up to the standards Stewart set: “I am an admirer of Martha Stewart’s but I do have to say that I don’t allow my cat to read the book any more . . . I thought I could be Martha Stewart until she mentioned she washes her cats once a week and bathes their faces every morning and I knew I would never make the grade.”214
Sabrina from the Oprah Show felt that Stewart “definitely” put pressure on her: “I am not going to hold her personally accountable but I feel she really sets the standards. And when people see her homes, and everything she does in her magazine . . . it makes you feel like a failure.”215 Some felt it wasn’t fair for Stewart to hold out the promise of perfection when professionals—let alone the average fan—could not even come close: “If you have a week to devote to your party and work like a dog, you might be able to pull [her recipes] off. But you might end up in the hospital,” said Jim Maynard, a Washington caterer.216
Stewart was, by her own account, a “maniacal perfectionist.”217 The daughter of parents who were themselves professed perfectionists (“She got it from me, so maybe I am to blame” said Stewart’s mother),218 Stewart’s meticulousness was demonstrated at a very young age: “I recall when I was twelve some of my friends becoming angry because their parents used me as an example of
210 Meryl Gordon, “Heart Shaped Wreaths, Perfume-Sprayed Notepaper, Ribbon-Wrapped Linens—Is This What Women Want?,” Working Woman, 1 September 1991, p. 74. 211 Sabrina Boehm, interviewed by Oprah Winfrey, “Martha Stewart's Wannabees & Wannanots,” The Oprah Winfrey Show, Harpo Productions Inc., broadcast 2 February 1994. 212 Angela from Reading, MA, caller on Martha Stewart: The Connection, op. cit., 7 July 1997. 213 Stephanie, interviewed by Oprah Winfrey, “Martha Stewart's Wannabees & Wannanots,” The Oprah Winfrey Show, Harpo Productions Inc., broadcast 2 February 1994. 214 Carol from Newburyport, MA calling into Martha Stewart: The Connection, op. cit., 7 July 1997. 215 Boehm, op. cit. 216 Koncius, op. cit., p. T14. 217 “Oprah Talks to Martha Stewart,” op. cit., 5 September 2000. 218 “Martha Stewart: The Best of Everything,” op. cit., 4 May 2001.
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Martha Stewart Living Omnimedia (A) 501-080
organization and hard work. Even then, I was wont to pursue a standard of perfection that was peculiarly my own.”219
Perfectionism was a trait that Stewart considered critical to her business success.220 “I have proven that being a perfectionist can be profitable and admirable,” she said.221 Some claimed Stewart was difficult to work for—a perfectionist with a temper.222 Stewart acknowledged that she has often been described as a “slave driver” but maintained that this was the price of an uncompromising dedication to her work and style.223 Stewart commented on the potential consequences of her standards of perfectionism among those in her audience and shared her thoughts regarding these repercussions:
But [you] might [do all of the things I show you], and that’s what [you] are all striving for too. And [you’re] saying, “Boy, I wonder if I can make that.”. . . 224
[Would you be offended if you walked into a kitchen and found the plastic squeeze bottle out on the counter?] No, but I would notice it and make a mental note to send the person a nice soap jar. 225
I never want to make people feel inadequate. My books are meant to bring people up. I could write a book that’s really simple but when I open that book and don’t get a lot out of that book, I feel cheated. I would rather open a book and say “gee, there are so many ideas.” I would rather feel a tiny bit inadequate than feel cheated. . .To even think that you can’t do something is better than not thinking about it at all. I don’t think it makes you feel that bad.226
I'm actually setting all my silverware out backward now! Dyslexic table settings, so some people don't get intimidated.227
Rather than be put off by Stewart’s high standards, some embraced her for just that reason. “I know I am not going to reach perfection, but it’s fun trying, and you learn so much,” explained Mrs. Dupler on The Oprah Winfrey Show.228 One admirer had a different take on this theme: “I’m an ICU nurse in a trauma unit. I love Martha Stewart. I work in a very life and death world and I have children and I know she’s a fantasy, but she lifts me up. She presents something that I’ll probably never have, but so what?”229 Another found it socially commendable: “I don’t think we actually have to do any of it. I think it is a nice thing that she is raising the standards, that she is suggesting there is a better way, that it’s a good thing to have aesthetics in your home, that your tables be set and that
219 Martha Stewart, “The Importance of Being Myself,” Cosmopolitan, vol. 223, no. 1 (July 1997), p. 34. 220 “Martha Stewart Discusses the Business Ventures That Made Her a Billionaire,” op. cit., 3 April 2001. 221 “Oprah Talks to Martha Stewart,” op. cit., 5 September 2000. 222 An ex-co-worker from the catering business had this to say: “To the public she is a charmer. But people who work for her tend to hate her. She can be an incredible dragon. . . . As a result there are lots of stories about her toughness. Not all are true, but some are.” (Source: Dodson, op. cit., p. 93). 223 Stewart, “The Importance of Being Myself,” op. cit., p. 34. 224 Martha Stewart, interviewed by Morley Safer, 60 Minutes, CBS News, broadcast 3 December 1995. 225 Ibid. 226 Martha Stewart, on “Martha Stewart's Wannabees & Wannanots,” The Oprah Winfrey Show, Harpo Productions Inc., broadcast 2 February 1994. 227 Leah Garchik, “Martha Shares a Tip with Oprah,” The San Francisco Chronicle, 23 August 2000, p. B8. 228 Mrs. Dupler, interviewed by Oprah Winfrey, “Martha Stewart's Wannabees & Wannanots,” The Oprah Winfrey Show, Harpo Productions Inc., broadcast 2 February 1994. 229 Karen, from Londonderry, NH, calling into Martha Stewart: The Connection, op. cit., 7 July 1997.
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501-080 Martha Stewart Living Omnimedia (A)
you experience something better than the frozen TV dinner concept.”230 “If half the pleasure of watching and reading her comes from the way she instills in us a luxuriant fervor to say ‘Hey! I want to do that!’” offered a columnist, “the other comes from the lazy satisfaction of sitting back, cracking open a beer, and thinking, ‘That woman must be out of her mind.’”231
Backlash against the feminist cause was also frequently cited as a reason for opposition to the Stewart branded lifestyle:
This “do-it-herself,” Martha’s feminist touch, serves as a bit of a smoke screen for what else is going on. I get the feeling that it is all a gloss, another chapter in that long history of propaganda regarding what makes a woman truly good: she is clean, tidy, keeps a neat house, makes clever things for kids and husband, can even fix a chair leg and wallpaper a room. It serves as brainwashing to keep women stupid and uninterested in larger issues beyond the home.232
What she perpetuates is yet another version of the Superwoman. So let’s see: now we should be at the top of our professions, have fabulous lives, be thin and fashionable, and have homes that look like Better Homes and Gardens. Count me out. But even women who have chosen to stay home will tell you that without Martha’s staff and money, those lovely household projects just don’t happen.233
Stewart claimed that she “wasn’t trying to be a superwoman, she just liked to fill [her] day.”234 Stewart’s sister explained that “being busy was Martha’s way of relaxing.”235
If you get tired of cooking, you can go outside and grow a plant. If you get tired of growing a plant, you can go canoeing. If you get tired of canoeing, you can just make a curtain; you can make a bed; you can paint a table, whatever.236
I am like most of you—really busy, really stressed out at times, anxious to do everything, yet concerned that every day is too short, too filled with obligations and chores, to allow the time to accomplish a special project or find a recipe or read a book or bake a cake.237 . . . [Without all my technological gadgets], I could never get as much done.238 . . . I, as a single human being, have six personal fax numbers, fourteen personal phone numbers, seven car- phone numbers, and two cell-phone numbers.239 . . . I’m finding I just don’t need a lot of sleep.
230 Susan from Cohasset, MA, calling into Martha Stewart: The Connection, op. cit., 7 July 1997. 231 Mary Elizabeth Williams, “She’s Martha Stewart and You’re Not,” Salon.com web site, <
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Martha Stewart Living Omnimedia (A) 501-080
[Four to five hours, is that true?] Yes, sometimes less. I also am very good at cat napping.240 . . . [Is there anything Stewart can’t do?] Hang-gliding, and I hate shopping for clothes.241
Stewart’s own position on the feminist cause had changed over the years. In 1992 she remarked, “I consider myself one of the original feminists”242 and in 1994 “a modern feminist”243 but by 2000, she had reconsidered: “When people say, ‘are you a feminist?’ I say, ‘no, I’m not.’”244 Some felt the issue was misunderstood: “The dreams and fears into which Stewart taps are not of feminine domesticity but of female power, of the woman who sits down at the table with the men and, still in her apron, walks away with the chips.”245
Public criticism of Stewart was perhaps inflamed by a controversial unauthorized biography titled Just Desserts, written by Jerry Oppenheimer in 1997. The book characterized Stewart as a compulsive, contentious, and controlling fanatic prone to frequent emotional outbursts in her personal and professional spheres. Suggestions were made that Stewart’s Nutley, New Jersey, upbringing was not as blissful as her writings implied, nor were her relationships with daughter and husband as harmonious as her public statements implied them to be. “I’m not disturbed by these stories,” exclaimed Camille Paglia when prompted on the topic. “All great artists have disruptive personal relationships.”246
The book’s author was known as a “literary hatchet man,” having written several “tell-all” books on such celebrities as Rock Hudson, Barbara Walters, and Ethel Kennedy.247 Despite sales that landed Just Desserts on the New York Times and Publisher’s Weekly best sellers lists,248 critics savaged the book. Said Zay Smith of the Chicago Sun-Times, “Too many details are given weight simply because the book, having made up its mind, sees evil lurking in almost every move that [Stewart] makes.”249 Another accused Oppenheimer of “tapping into a mother lode of spite and allowing any anonymous source to unload with impunity.”250 One reviewer wrote: “All of this passionate bashing of Martha Stewart belies an assortment of psychological and sociological pathologies that probably have little to do with Ms. Stewart. Why are people so happy to accept that she is so evil? No one seems to criticize Julia Child for being too good a cook. Nor do we accuse Bob Vila of being too apt a house-fixer. Do people hate her for her wealth, for her aggressiveness, for her opportunistic rise to the top? No one in this country, including countless male millionaire moguls got to where they are by
240 “Martha Stewart Discusses the Business Ventures That Made Her a Billionaire,” op. cit., 3 April 2001. 241 Didion, op. cit., p. 270. 242 Verlyn Klinkenborg, “Martha Inc.: Behind the Turkey in Puff Pastry, Behind the Meticulously Manicured Herb Gardens, Behind the Hand-stenciled Tablecloths Lurks One Shrewd Business Mind—Martha Stewart’s,” Los Angeles Times, 2 August 1992, p. 26. 243 “Martha Stewart's Wannabees & Wannanots,” The Oprah Winfrey Show, Harpo Productions Inc., broadcast 2 February 1994. 244 “Oprah Talks to Martha Stewart,” op. cit., 5 September 2000. 245 Didion, op. cit., p. 270. 246 Martha Stewart: The Connection, op. cit., 7 July 1997. 247 Melinda Bargreen, “Cooking Martha’s Goose: Stewart’s on the Grill in an Unauthorized Bio that’s Less than Flattering,” The Seattle Times, 24 June 1997. 248 “Best Sellers: July 20, 1997,” The New York Times, Section 7, Book Review Desk, 20 July 1997, p. 30. Available from Lexis- Nexis Academic. http://lib.harvard.edu:2052/universe (3 April 2001) and “Performance on Publishers Weekly Hardcover Non-Fiction Bestseller List,” Bookwire web site. http://bookwire.bowker.com/bookinfo/author.aspx?9424 (3 April 2001.) 249 Zay N. Smith, “Mean Martha, Mean Author,” Chicago Sun-Times, 6 July 1997, p. 12. 250 Janet Maslin, “White Gloves Can’t Hide Dirt,” The Tampa Tribune, 20 July 1997, p. 4.
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501-080 Martha Stewart Living Omnimedia (A)
making it a priority to be nice and make friends.”251 Some suggested that the “Martha-bashing” was just sour grapes from people envious of successful women and reflected a cultural penchant to “beat down women who make it to the top.”252 Others suggested that it was not surprising if the private Stewart differed from the public face.253 One fan argued, “. . . who cares whether Martha Stewart really has a perfect house and a perfect family as one might infer from her books and magazines? The woman isn’t running for public office. She isn’t dictating foreign policy. She bakes cakes.”254
Stewart didn’t read Oppenheimer’s book (“I don’t have time to deal with this C-R-A-P. I have so many good things to do.”), and publicly condemned both author and text.255 She shared more general thoughts concerning criticism of her in the public domain:
I don’t know when it was exactly that I became not only Martha Stewart the person but Martha Stewart the brand, a brand equated with the pursuit of a better lifestyle. Nor do I know when exactly I realized that I was living a life that would be critiqued, maligned, and even despised. Yet when I read an article belittling my work, or hear a television correspondent joke about how I shovel snow, it becomes clear to me that homemakers’ work still does not get the kind of respect that it deserves. I realize I still have much persuading to do, and I must do it with earnestness, by which I mean complete honesty.256
How could anyone say anything bad about me? I do only nice things. I make nice recipes. I put out a beautiful magazine. I work on a gorgeous television show.257
Stewart’s persona provided fertile ground for the players of parody. Tom Connor, author of three such books (Is Martha Stuart Living: A Parody, 1995; Martha Stuart is Better Than You at Entertaining, 1996; Martha Stuart’s Excruciatingly Perfect Weddings, 1998) considered his writings a public service: “Whether they are fans or foes they love it. Because Martha is so serious and such an authoritarian, this breaks the ice a little. We get so many calls at Christmas from people thanking us for doing it. It is always enjoyable to laugh at these things we take so seriously. No one is as parodiable as Martha.”258 Several websites (Martha Stewart Parody Links, marthastuard.com) were devoted to the cause. Ana Gasteyer, an actress on Saturday Night Live, created a Martha Stewart impersonation that was woven into several sketches. In one, a semi-naked Stewart, armed with a chain saw, trudged through the forest in search of a perfect Christmas tree.259 Parody products were also available, including holiday cocktail napkins (“All I want for Christmas is to SLAP Martha Stewart,” “Is Martha Stewart Only One Person?”) and decorative signage (e.g., “Martha Stewart doesn’t live here anymore” and “Martha Stewart Doesn’t Knead my Dough”).
Parodies were once a sore point with Stewart. In 1997, when asked if she had seen some of the parodies, Stewart said, “No, they’re not funny,” and added that her “friends could do parodies much
251 Christopher J. Boffoli, “The Origin of All this Hate,” Amazon.com web site (reviewer, Just Desserts: The Unauthorized Biography), 1 August 1997, http://www.amazon.com (3 April 2001). 252 Mona from Maynard, MA, caller into Martha Stewart: The Connection, op. cit., 7 July 1997. 253 Rebecca Freligh, “A Revealing Look at Martha Stewart?” The Plain Dealer, 10 June 1997, p. 2E. 254 Kathleen Parker, “Must we Make Martha Stewart our Whipping Woman?” The Denver Post, 13 August 1997, p. B-07. 255 Martha Stewart, interviewed by Larry King , Larry King Live, CNN, broadcast 16 September 1997. 256 Martha Stewart, “The Importance of Being Myself,” op. cit., p. 34. 257 Moore, op. cit. 258 Martha Stewart: The Connection, op. cit., 7 July 1997. 259 “Martha Stewart X-Mas Promo,” Saturday Night Live, NBC Television, aired 7 December 1996. See also, Kevin Cowherd, “Martha’s Twisted Holiday Special,” The Baltimore Sun, 6 December 2000, Today Section, p. 1E.
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Martha Stewart Living Omnimedia (A) 501-080
better.”260 By February 2000, she had a new outlook to share when King aired a Saturday Night Live parody during their interview: “Today on Living we’ll celebrate what I feel is the real essence of Valentine’s Day: loneliness and shame. A terrific way to combat Valentine’s depression is to treat yourself to an erotic cake. I modeled this almond sponge cake after Michelangelo’s David . . .”261 Did Stewart get a kick out of that? “I had not seen that one but oh yes, my gosh yes. . . . Any kind of good parody is good. . . . [Saturday Night Live has] never asked me to host. I don’t know why.”262
Stewart showed she could poke fun at herself in a 1994 American Express commercial in which she (literally) tiled her swimming pool with credit cards. “[Focus groups] responded incredibly well to her. Their comments were words like ‘believable,’ ‘straightforward,’ ‘friendly,’ ‘credible,’ ‘able,’ ‘approachable,’” said Gail Wasserman, VP for American Express.263 In a second self-parody, Stewart appeared on David Letterman to deliver a Top 10 List entitled “Martha Stewart’s Worst Tips for Living.”264
Decision Time
Jackson closed the final report and put the collection back into the folder. On her desk, a lone article with a paragraph circled in red caught her eye:
[Martha Stewart’s meanings were] . . . not very well understood. There has been a flurry of academic work done on the cultural meaning of her success. The New York Times reported that “about two dozen scholars were producing such studies as ‘A Look in the Linen Closets: Liminality, Structure, and Anti-Structure in Martha Stewart Living’ and locating ‘the fear of transgression’ in the magazine’s recurrent images of fences, hedges, and garden walls.” But there remains, both in the bond she makes and in the outrage she provokes, something unaddressed, something pitched, like a dog-whistle, too high for traditional textual analysis.265
A Post-It® note from Prescott was affixed to the front of the article. “Good luck hearing the whistle,” it read.
260 Martha Stewart, interviewed by Larry King , op. cit., 16 September 1997. 261 “Martha Stewart Discusses the Business Ventures That Made Her a Billionaire,” op. cit., 3 April 2001. 262 Ibid. 263 Anders, op. cit., p. Y6. 264 “Martha Stewart’s Worst Tips for Living,” The David Letterman Show, 25 September 1995. http://www.cbs.com/latenight/lateshow/topten/lists/19950925.shtml (9 April 2001). 265 Didion, op. cit., p. 270.
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501-080 Martha Stewart Living Omnimedia (A)
Exhibit 1 A Chronology of Selected Events in Martha Stewart’s Life
8/3/1941 Martha Helen Kostyra was born in Jersey City, New Jersey, the second child of six. 1944 Kostyra family moved to Nutley, New Jersey where Martha learned gardening from her father, a pharmaceutical salesman, and home-making skills from her mother, a teacher. 1954 Martha Kostyra began modeling for Glamour magazine; appeared in television commercials for Lifebuoy soap, Tareyton cigarettes, Breck shampoo, and Clairol hair care products. 1960 Martha Kostyra enrolled in Barnard College. 1961 Martha Kostyra married Andrew Stewart, a Yale student, and took his name: “Can you imagine my real name, Martha Kostyra? I think it would be very hard to say Martha Kostyra’s Gardening.”a 1963 Stewart earned a bachelor’s degree in history and architectural history from Barnard. 1963/ Thinking that “the stock market would be a good place for someone with my mind-set,”c Stewart became 1968b a stockbroker. “I was outrageous,” she said. “I was one of the few women on Wall Street. I had beautiful long legs. I wore brown velvet hot pants with brown stockings and high heels.”d 1965 Stewart’s only child, daughter Alexis, was born. The press often intimated a rift between mother and daughter, though Stewart flatly denied it.e 1972 Stewart moved to Westport, Connecticut and started the restoration of Turkey Hill. 1970/ Stewart left her Wall Street job. 1973f 1975 Stewart started her own catering business, An Uncatered Affair. 1982 Crown Publishing released Stewart’s first book, Entertaining. 1990 After three years in process, the Stewarts finalized what the press frequently described as an acrimonious divorce. Stewart reflected: “Not my choice. His choice. Now, I’m so happy it happened. I don’t think I would have accomplished what I have if I had stayed married. No way.”g Stewart’s mother commented: “I guess she paid a price. Her family life suffered. Maybe her daughter suffered. Probably did. It’s sad.”h i 1991 Time Inc. forms MSL Enterprises.
Highly-publicized property dispute erupted between Stewart and her neighbor. Newspapers also 1995 published stories about a police complaint filed by a local landscaper, who claimed Stewart allegedly pinned him against a fence with her SUV.
1997 Stewart and Patrick bought back MSL Enterprises from Time Inc. 1999 Martha Stewart Living Omnimedia went public. 2000 In an article for the New York Times, Stewart described her decision to leave Westport, saying the town had changed and she no longer felt connected to the community. Stewart explained that she felt isolated and, despite her best efforts, she was unable to garner new friendships in Westport.j
aDeirdre Donahue, “Stewart’s Golden Touch; She Turns Home and Hearth into an Empire; A Multimedia Hostess with the Mostest,” USA Today, p. 1D, 18 December 1989. bThrough Stewart’s own writings, the timeframe of this early career is unclear. See Martha Stewart, “Remembering: My First Real Job,” Martha Stewart Living, no. 73, October 1999, p. 300. See also, “Martha Stewart: The Best of Everything,” op. cit., 4 May 2001. cStewart, “Remembering: My First Real Job,” op. cit., p. 300. d“Cocktails at Charlotte’s with Martha and Darla,” Fortune, Vol. 134, No. 3, 5 August 1996, p. 56. e“Martha Stewart Discusses the Business Ventures That Made Her a Billionaire,” op. cit., (3 April 2001). fAs previously noted, the date her employment began is unclear. g“Cocktails at Charlotte’s with Martha and Darla,” op. cit., p. 56. h “Martha Stewart: The Best of Everything,” op. cit., 4 May 2001. iMSL Enterprises initially consisted of MSL magazine but, by 1997, grew to encompass the rights to any MSL publications, Martha Stewart-related television programs, and the Martha by Mail catalog business. Martha Stewart Living Omnimedia, Inc., 1999 Annual Report, op. cit., p. 37. jMartha Stewart, “Martha Stewart Leaving,” The New York Times Magazine, 9 April 2000, Section 6, p. 63.
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Martha Stewart Living Omnimedia (A) 501-080
Exhibit 2 MSLO Share Value Summary
2000 2001 Measure 1998 1999 (est.) (est.)
Revenue (million) $180.0 $232.3 $269.7 $299.2 EBITDA (million) $32.9 $28.9 $23.3 $39.9 Number of shares (million) NA 49.6 50.1 50.1 Earnings per share NA $0.24 $0.15 $0.30-0.3 Share price NA $21.88 $21.88 $21.88 Price to equity ratio NA 96.6x 154.6x 71.3x Equity value (million) NA $1,085.0 $1,096.8 $1,116.4 Net debta (million) NA ($154.8) ($120.0) ($125.6) Market capitalization (million) NA $930.2 $976.8 $990.8
Source: Adapted from: Merrill Lynch, "Comment. Martha Stewart Living Omnimedia Inc.," 4 April 2000, pp. 1-4. aNote: MSLO’s long-term liability as a percent of capital as of April 4, 2000 was 6.8%.
Exhibit 3 MSLO Financials—Historical Income Statement
1997 1998 1999 2000 (est.) 2001 (est.)
PUBLISHING Revenues $108.7 $127.0 $145.5 $158.7 $166.6 EBITDA 33.1 42.7 48.5 51.2 53.1 TELEVISION Revenues 12.4 23.4 30.6 33.1 34.4 EBITDA 0.8 5.2 6.3 7.1 6.7 MERCHANDISING Revenues 6.9 15.0 20.2 23.3 26.8 EBITDA 6.6 15.3 20.0 23.1 26.5 INTERNET/DIRECT COMMERCE Revenues 4.8 14.7 36.0 54.5 71.4 EBITDA (1.2) (5.0) (14.8) (28.9) (16.5) TOTAL Revenues 132.8 180.0 232.3 269.7 299.2 EBITDA 20.5 32.9 28.9 23.3 39.9 Income From Operations 16.6 27.4 22.3 14.2 28.0 Net Interest Expense 2.2 2.2 (0.5) (5.0) (4.9) Pretax Income 14.4 25.1 22.8 19.2 32.9 Tax Provision 0.5 1.3 (2.7) 10.5 16.1 Reported Net Income 13.9 23.8 25.6 8.6 16.8
Source: Adapted from: Merrill Lynch, "Comment. Martha Stewart Living Omnimedia Inc.," 4 April 2000, pp. 1-4. aEBITDA includes earnings from four business segments less “corporate charges.”
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501-080 Martha Stewart Living Omnimedia (A)
Exhibit 4 Martha Stewart Living Magazine Reader Profiles
Demographic Profile MSL Readers
Audience 3,710,000 Female 76% Age (median) 42 25-39 45% 18-49 72% 25-54 84% Household Income (median) $100,000 $75,000+ 87% $100,000+ 50% Married 87% Own Principal Residence 93% Median Total HH Asset Value $702,800 Own 2+ homes 30% Professional/Managerial 47% College Degree or beyond 51% Any College 75%
Source: “Reader Profile: The Mendelsohn Affluent Survey 1998,” Martha Stewart Living Media Kit, 1999.
MSL Readers Index Psychographic Profile Versus Totala
Women who strongly agree that: I’m a “spender” rather than a “saver” 161 If a product is made by a company I trust, I’ll buy it even if it is more expensive 157 I buy brands that reflect my style 176 I buy based on quality, not price 175 I am influenced by what’s hot and what’s not 166
Source: MRI Spring 1998, Martha Stewart Living Media Kit, 1999.
Audience MSL Readers Index Behavioral Profile Rankb Versus Totala
Propensity to try innovative new productsc 3NA Ordered selectedd merchandise by mail 3 116 Ordered selectedd merchandise by phone 2 157 Ordered selectedd merchandise by mail or phone 2 133 Spent $100+ by mail or phone 1 153 Spent $200+ by mail or phone 1 180
Source: MRI Fall 1998, Martha Stewart Living Media Kit, 1999. aIndex calculated versus Total Adults (whose Index=100). MSL Index 161 for spender versus saver item to be read as follows: MSL readers are 61% more likely than total adults to be spenders rather than savers. bAudience rank among 200+ competitive lifestyle, home, travel, and cooking magazines measured by MRI. cDefined as those who qualify as innovators in three of five product categories: home appliances, financials, food, leisure, electronics. dSelected merchandise includes: cheese, china/crystal, coffee & tea, collectibles, CDs, cookware/kitchen accessories, cosmetics/toiletries, fruit, hobby/craft supplies, home furnishings, housewares, jewelry/watches, records/tapes/cassettes, sewing or needlework supplies, shoes or clothing, seeds/plants/garden supplies, small appliances, workshop tools, vitamins.
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Martha Stewart Living Omnimedia (A) 501-080
Exhibit 5 Martha Stewart Living Magazine Unduplicated Audience
Percentage of Martha Stewart Living readers who don’t read each of the following:
%%
New Yorker 97 Home 89 Mirabella 95 Bon Appetit 87 Condé Nast Traveler 95 Gourmet 86 Allure 94 Parents 86 Harper’s Bazaar 94 Cooking Light 86 Colonial Homes 93 Vogue 84 Elle 93 House Beautiful 83 Metropolitan Home 93 Country Home 82 Town & Country 92 Glamour 82 Travel & Leisure 92 Redbook 81 Traditional Home 91 McCall’s 81 Food & Wine 91 Country Living 78 Architectural Digest 90 Ladies Home Journal 78 Mademoiselle 90 House & Garden 78 Victoria 90 Southern Living 77 Parenting 90 Woman’s Day 70 Sunset 89 Family Circle 70 InStyle 89 Good Housekeeping 69 Vanity Fair 89 Better Homes & Gardens 54
Source: 1999 Spring MRI, Martha Stewart Living Media Kit, 1999.
Note: % Composition based on total adults.
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This document is authorized for use only by Emilia Pepanyan in Acct 4950-Dr. Richard Lau taught by TINWAH RICHARD LAU, California State University - Los Angeles from Dec 2020 to Jun 2021. For the exclusive use of E. Pepanyan, 2021.
501-080 Martha Stewart Living Omnimedia (A)
Exhibit 6 Consumer Indicators of Martha Stewart Brand Strength
Awareness and Knowledge %
Total Awareness 87 Seen in News or as TV Guest 66 Ever Watched TV Show 52 Ever Read Her Magazine 28 Heard Radio Broadcast 9
Opinion of Martha Stewart %
Favorable 56 Unfavorable 19 Neutral 21 Mixed 4
Person with whom would most like to spend a day %
Julia Roberts 26 Oprah Winfrey 23 Rosie O’Donnell 18 Hillary Clinton 9 Martha Stewart 9 None of the Above 14
Think $1000 investment in Martha Stewart Living Omnimedia is: %
Good idea 41 Bad idea 37 Don’t Know 22
Source: Public Opinion Online, Gallup, CNN, USA Today Poll, 24 October 1999. Adult population, N=1005.
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This document is authorized for use only by Emilia Pepanyan in Acct 4950-Dr. Richard Lau taught by TINWAH RICHARD LAU, California State University - Los Angeles from Dec 2020 to Jun 2021.