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Thu, Feb 24, 2005 - Page 12 News List

Stewart faces vastly improved prospects after prison

COMEBACK KID?The outlook for the multimedia firm Martha Stewart founded is brighter today than when she was convicted, while her TV career is being revived

AP , NEW YORK

When Martha Stewart is released from prison next week, the doyenne of domesticity will find the multimedia company she founded faces a much brighter outlook than when she was convicted of lying about a stock sale only a year ago.

Back then, Martha Stewart Living Omnimedia Inc's future looked gloomy. Stewart's syndicated daily TV show was placed on hiatus. The company's stock dropped 23 percent, hitting US$10.86 on March 5 -- the day of her conviction -- and sank further over the next few days. Some even predicted the death of the brand.

Now, Martha Stewart Living's shares stock has more than tripled, trading on Tuesday at US$34.48 on the New York Stock Exchange, at the high end of its 52-week range of US$8.25 to US$36.53 per share.

Ad executives were more upbeat after Stewart started her five-month sentence last October. And Stewart's TV career is also being revived through two deals struck with reality TV guru Mark Burnett. One is a revision of her daily homemaking show; the other will have Stewart star in her own version of Donald Trump's The Apprentice.

The company, meanwhile, is hiring again after paring its work force, and has continued to diversify beyond the Martha Stewart name.

But while Martha Stewart Living Omnimedia is showing signs of a comeback, the question is whether the recovery can be sustained. The company has reported a string of quarterly losses and reduced revenues as advertisers have fled.

The primary challenge is restoring the luster to the Martha Stewart brand, which was built on perfect living and stamped on all sorts of products from sheets to magazines and has suffered since its namesake's personal legal problems began almost three years ago.

Seth Siegel, co-founder of The Beanstalk Group, a trademark licensing agency, and other brand consultants believe the TV deals, in particular, will improve Stewart's image and breathe new life to her merchandise and magazines.

"I'm going to be very surprised that there isn't a rebound and recovery back to the days before Martha had any problems and her legal problems will not result in any long-term decline in product and publishing," Siegel said.

Wall Street analyst Dennis McAlpine of McAlpine Associates is wary, dismissing the stock price's rise as pure short-term hype.

"I think the stock is overpriced. Ultimately, it will catch up" with the company, he said.

Stewart is scheduled for a March 6 release from prison. After that, she will serve five months of house arrest, though she'll be allowed to work outside her home for 48 hours a week.

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