Henry Blodget, a former securities analyst, lives in New York City. Read his full-disclosure statement about his potential conflicts of interest in covering the Martha Stewart trial
Likelihood the conviction will stand
Wednesday, Sept. 15, 2004: 98 percent
Martha Stewart decided to serve her jail sentence while continuing her appeal, a smart move for herself, her company, and her stock. The chance that her conviction will stand remains at 98 percent, although her legal team is decidedly more optimistic.
In classic fashion—clothes, style, and attitude—Martha Stewart began today's press conference by welcoming guests to a "beautiful, light-filled floor" in the downtown offices of Martha Stewart Living Omnimedia, a "wonderful New York space" in an old Chelsea building that she and her colleagues "found" and "transformed" into a "bright and useful work space." (CNN, which broadcast the press conference, didn't pan back to give viewers a sense of the place, but Stewart observed that it featured glass walls so clean that a board member had just walked into one.) For Stewart, life is what you make it—her company's new tag-line is "the leading provider of 'how-to' information that turns dreamers into doers"—and today's announcement exemplified this.
In deciding to go to jail without waiting for a ruling on her appeal, Stewart regained some control over a process in which, until now, she has had almost none. She established a time—next spring—in which this chapter of her life will be over and the only future legal news should be good. (If the conviction is upheld, she can just say that she is disappointed and say it from her boardroom; if she is vindicated, she can have a bash that makes her New York Stock Exchange IPO celebration of 1999 look like a tea party.) She seized control over the time it will take to vault this "last hurdle," and, in so doing, paved the way for her and her company to begin fixing the damage. Psychologically, she also restored herself to the position in which, for better and worse, she clearly feels most comfortable: in charge. If the hatchet-job biographies have a basis in fact, Stewart has made the best of situations that could have scarred her more deeply than five months in jail, and one suspects that, from here on out, as she has with the rest of her life (and work spaces), she will find a way to transform the ordeal into something "bright and useful."
From a business and stock-price perspective, the decision was smart. (The stock rose only modestly today, perhaps because the decision was expected.)The stock market can overlook near-term turbulence as long as there is clear air on the other side, and next spring, when Stewart returns, the air ought to be clear. When companies face legal or operational problems, their stocks take it on the chin before the trouble hits the financial statements. The day a company "takes a charge" against earnings, however—a charge that, in many cases, lops a startling amount of value off the books—is the day that the market considers the issue old news.
The attitude Stewart displayed this morning reveals not only who she is and why she is where she is but why people either love her or hate her. For convicted felons, the quickest way to regain public sympathy is usually to apologize and illustrate (through humility) how much one has learned—not to express confidence that one will eventually be vindicated, dwell on the "nightmare" of being prosecuted, and explain that you are going to jail "voluntarily" to put the "awfulness" behind you and return to your "good life." To some, this attitude is odious. To others, at least in this case, it is inspiring.
And yet, without making too much of it, I would argue that today's comments also suggest that Stewart has learned from the experience. The most offensive stories about her have always concerned a legendary refusal to give credit to others and a bewildering nastiness to people who happen to be doing lesser jobs. ("Like a lion roaring underwater" was Doug Faneuil's description of the noise she made when he couldn't instantly fulfill a request, and "No—she always sounded like that" was the approximate response of Emily Perret, Sam Waksal's secretary, when Bob Morvillo asked whether there was something unusual about Stewart's having been harsh and direct on the phone the day she sold her ImClone stocks.) This morning, in a 10-minute speech, Stewart praised and thanked her colleagues, partners, fans, and supporters more than half a dozen times, ending by saying that she was "eternally grateful." To my ears, anyway, she sounded as though she meant it.
Speaking of the impending incarceration (which will probably begin sometime in October), Stewart also made a remark that clashes with the occasional perception of her as a robotic ice-queen. Saying that she was sad that she would miss the holiday season, she added the following:
And I will miss all of my pets, my two beloved fun-loving dogs, my seven lively cats, my canaries, my horses, and even my chickens. It's odd what becomes of immense importance when one realizes one's freedom is about to be curtailed.
Stewart concluded her remarks with a smile and a joke ("because despite what you all might think, I do have a sense of humor …"). Then she thanked everyone for coming and said, "See you next year."