About the time Martha Stewart was sentenced to jail last summer, her company's stock was trading for just over $10 per share, her syndicated television show had been canned and a marketing firm found that consumers viewed her brand name more negatively than Enron's.
Now, with Stewart set for release from federal prison in Alderson, W.Va., next weekend, stock of Martha Stewart Living Omnimedia Inc. is trading at more than $36 per share, NBC is hyping her two new television shows and — though public opinion is not back to its all-time high, it's trending there.
Overall, a turn in the pen has turned out to be shrewd strategy for Stewart.
Saving the brand
Stewart is the latest example of a long line of accused celebrities, brand-name characters from Wall Street to Hollywood who have run afoul of the law or social custom in an extraordinarily high-profile fashion. From the Chicago Black Sox accused of throwing the 1919 World Series to "junk bond" king Michael Milken, P. Diddy to Jeffrey Skilling, 50 Cent to Willie Nelson to Hugh Grant and Winona Ryder, each has endured scrutiny and prosecutions that have had an impact on their businesses, for good or bad.
The key, say image and brand experts, is how they've handled the situation.
The smart, like Stewart, seize control and move on, minimizing the damage.
"Consumers want the two C's: closure and some contrition," said Robert Passikoff, founder and president of Brand Keys Inc., a New York research firm that has tracked the marketplace perception of Stewart since 2002, when she was accused of obstruction and lying during an investigation into her sale of shares of ImClone Systems shortly before the FDA rejected one of the company's drugs.
"We had the closure, with the sentencing, and some contrition, given her own particular brand of hubris," Passikoff said.
Reclaiming control
"I must reclaim my good life. I must return to my good works," Stewart said last September when she asked a federal judge to send her to prison right away rather than waiting for the outcome of her appeal.
Once in control, Stewart managed to navigate the five-month minimum-security prison sentence, during which she taught yoga, decorated and crocheted, and emerge with her image enhanced.
Stewart's company has not yet proven as resilient as her image. On Wednesday, the company reported a loss of nearly $60 million for 2004 and predicted another tough quarter ahead.
Passikoff judges the "brand strength" of companies and people by asking customers if they will continue to buy certain brands as they cycle through good and bad news. Neutral brands receive a score of 100; those below have lost customers and typically profits.
Stewart's brand strength peaked at 120 shortly before the ImClone scandal broke. By March of 2004, it was down to 62. In late January, it had risen to 95, according to Passikoff's research.
Greed can kill
Milken followed a strategy similar to Stewart's, accepting setback but refusing to admit defeat. He pleaded guilty to securities fraud in 1990, making his name synonymous with avarice and exploitation. After serving reduced sentence of 22 months in prison and paying $220 million, he became a business consultant. The SEC charged that his new job violated his probation, and he settled for $42 million. He then focused on raising money for cancer research and now is a major investor in early childhood education, buying a chain of day-care centers in December for $1.1 billion.
Milken contemporary Ivan Boesky, who turned state's evidence, fingered Milken and copped a plea, is a good example of the "not" case in image-rehabilitation. Lacking a second act, Boesky is now remembered for saying, "You can be greedy and still feel good about yourself" and being the model for Gordon Gekko, unrepentant raider of the 1987 film, "Wall Street." Same for indicted Enron player Skilling, who so far has appeared defiant — telling Congress he did nothing wrong — and having been taken to a hospital after careering around Manhattan last year, accusing fellow bar patrons of being FBI agents.
Successful business executives less likely to be halted by adversity, as they are not prone to excessive brooding over their troubles, said one business professor.
"You've got to stay on top of what's going on. That doesn't leave time for introspection or reflection," said Stefan Nicovich, assistant professor of marketing at the University of New Hampshire. "It's like a shark — you just keep going forward. If you're one of those navel-gazers, you become an academic," he said, laughing.
Celebrity salvation
In contemporary Hollywood, talent forgives much; witness the continued movie career of Robert Downey Jr., a habitual detox dropout but Oscar nominee. Hugh Grant became America's charming new heartthrob after 1994's "Four Weddings and a Funeral," got caught with a prostitute the next year, sheepishly apologized on "The Tonight Show," went away for a couple of years, then stormed back with "Notting Hill" and a string of successes.
In at least one industry, hard time is nearly synonymous with success. L.A. Crip Calvin Broadus served eight months in prison in 1990 on felony drug charges. Shortly after his release, he was charged but acquitted of murder charges. The next year, his debut rap album, "Doggystyle," went platinum, launching the multimedia career of Snoop Dogg.
Broadus is now a sought-after pitchman and crossover success, appearing in movies such as "Old School," hosting a show on XM Satellite Radio and sitting for a Larry King interview, despite rape allegations stemming from a 2003 guest-hosting stint on the "Jimmy Kimmel Live" late-night talk show. A Dublin music awards show held Thursday night refused to dump Broadus as a performer after some groups objected to his presence. Fellow rap star Eminem never did jail time, but his protege, the often-shot 50 Cent (Curtis Jackson), has.
Country music has its own lawbreakers, and some have profited from their wayward ways, as well. Waylon Jennings pulled a late-career rejuvenation after spending much of the 1970s hooked on cocaine, getting arrested once. Fellow outlaw Willie Nelson turned a $16.7 million delinquent tax bill into a new gig as a self-effacing H&R Block pitchman, thanks to deft image-management.
It's all in the name
Sometimes, a brand-name change is what is needed, along the lines of cigarette-maker Philip Morris becoming Altria Group Inc.
In 2001, rapper Puff Daddy (Sean Combs) was tried and acquitted of gun and bribery charges related to a Manhattan nightclub shooting. Generally not a bad thing in the rap game, but hip-hop critics mocked Combs's "Bad Boy Records" moniker, saying his street cred was soft, and his corporate mindset and Sean Jean clothing line were making him culturally irrelevant.
Like Stewart, Combs is a noted perfectionist who understands the value of a fresh start. After his trial, he changed his name to P. Diddy, turned his back on the critics and expanded his celebrity. Last year, he spearheaded a "Vote or Die" youth-vote campaign and starred in one of this year's most popular Super Bowl ads.
As for Stewart, she has even been embraced by her adopted state. On April 16, the West Virginia Power, a minor league baseball team in the state capital of Charleston, is planning a "Martha Stewart Release Party" before its game.
