Martha Stewart: Whipping Up a Storm (a)
9 Pages Posted: 21 Oct 2008
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Martha Stewart: Whipping Up a Storm (a)
Martha Stewart: Whipping Up a Storm (a)
Abstract
Sixty-year-old Martha Stewart, founder and former CEO of Martha Stewart Living Omnimedia Inc., was charged with four legal actions alleging she breached her fiduciary duties to MSO when she made “materially false and misleading statements” about her involvement in trading ImClone stock. Although Stewart's firm was not accused of any crime, she and her company were being likened to corporate villains such as Enron and WorldCom. The A case outlines events and Stewart's initial reactions, providing students an opportunity to examine issues of crisis containment and communication. Through the disaster, what might she anticipate for herself, for her role at MSO, and for the survival of the company she created? How should Stewart deal with unwanted media attention and negative attacks? And what audience was Stewart speaking to when she finally did appear publicly?
Excerpt
UVA-OB-0793
MARTHA STEWART: WHIPPING UP A STORM (A)
Sixty-year-old Martha Stewart, founder and former CEO of Martha Stewart Living Omnimedia, Inc., (MSO), spent 15 years earning her title as media baroness. By January, 2004, Stewart faced the possibility of spending the same number of years in a federal prison or on probation. The government was investigating Stewart's actions over the sale of her ImClone stocks one day before the Food and Drug Administration rejected the biotechnology company's cancer treatment drug. Stewart was met with four legal actions alleging she breached her fiduciary duties to MSO when she made “materially false and misleading statements” about her involvement in trading ImClone stock.
A comparison of Stewart's statement to shareholders in the firm's annual reports in 2002 and 2001 revealed a sharp contrast:
Martha Stewart Living Omnimedia (MSO) had another outstanding year in 2001. Despite the difficult economy we achieved; record revenues, record earnings before interest, taxes, depreciation, and amortization (EBITDA); and record earnings per share. We made great progress in further establishing a strong foundation for our future growth.
2002 was an extremely difficult and challenging year for Martha Stewart Living Omnimedia. Our year-end financial results reflected both the substantial negative impact of the ongoing government investigations relating to my personal sale of non-Company stock and the generally unfavorable economic environment of the past year.
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Keywords: Crisis management, career management, communication process, communication strategy, community relations, government regulation, law, legal environment, media planning, public relations/publicity, women in business, ethics
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