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I Want To Focus On My Salad
Transcript of I Want To Focus On My Salad
Martha Stewart Living Omnimedia
All About ImClone
The Makings of a Scandal
Founded in 1984
CEO Sam Waksal
Independent biomedical pharmaceuticals company
Corporate headquarters in Bridgewater, NJ
Research headquarters in NYC
December 26, 2001: Waksal was tipped off that the FDA would not approve Erbitux
Waksal immediately sold his shares in the company as well as family members'
The next day, Stewart sold 3928 shares of ImClone stock
December 28: the FDA officially rejected Erbitux, and ImClone's value dropped by 18%
By selling her shares the previous day, Stewart made close to $43,000 more than if she would have sold it a few days later
The SEC became involved on January 7, 2002
October 23, 2014
Martha Stewart and the ImClone Scandal
Case Study 6
Martha: The Early Days
Before The Storm
: Released her first cookbook
: Signed with Time Publishing Ventures to develop Martha Stewart Living magazine
: Started a weekly TV program based on her magazine
: New York Magazine declared her "the most definitive American woman of our time".
: Began Martha Stewart Living Omnimedia, Inc., which incorporated all of her business ventures. Stewart served as president, chairman, and CEO.
: MSLO goes public on the New York Stock Exchange
: Stewart becomes first female, self-made billionaire in the U.S.
I Want To Focus On My Salad
Invented drug called Erbitux, an experimental monoclonal antibody, designed for use on patients with cancer
Failed to get FDA approval in 2001, which caused ImClone's stock prices to drop
What Went Right
Hiring The Brunswick Group
Martha Talks - 2 million hits on the first day, and 60,000 people posted messages of support within the first six weeks
MSLO took images of her out of the media and tried to focus on other ventures
Re-entry into the public eye
Warming up her public image while she was in prison and upon her release
I will be exonerated of any ridiculousness.
Pre-Indictment PR Efforts
The Susan Magrino Agency silent for months
Stewart hired The Brunswick Group much later
June 6, 2002: The public was made aware of the scandal by way of the media
Martha released a statement saying she had pre-arranged a sale with her broker
The Early Show - salad isn't always good for you
"Martha Talks" personal website launched one day after her indictment
What Went Wrong
Where Are They Now?
Back at MSLO
Still the face of the company
"Martha Stewart's Cooking School" on PBS
Radio show on Sirius XM
Products still in retail stores
Is there anything you would've done differently or added to the PR efforts to help maintain Stewart's image?
The scandal happened in December 2001, and it became headline news in June of 2002. If you were Stewart's PR agency, would you have released any information before it got into the news?
Do you see any ethical issues in supporting clients who have broken a law? Would you have represented her? What about other white-collar crimes?
Stewart collaborated with business partner Sharon Patrick to create a company that incorporated all of her various business ventures
MSLO officially launched in 1997
IPO in 1999 - shares at $18 per stock
Three main divisions
Martha Stewart Living
Martha Stewart Weddings
, along with various books, accounted for 60% of MSLO's annual revenues
Waksal: CEO of ImClone and former suitor of Stewart's daughter
Her agency originally handled the scandal
Stewart added this agency to her crisis management team when things started going south
The Indictments - June 4, 2003
Obstruction of Justice
Sentenced to 7 years and 3 months in prison, fined more than $4 million
Making false statements to a federal investigator
Obstruction of Justice
6 other criminal counts in conjunction with her broker
Sentenced to 5 months in prison, 5 months of home confinement,
2 years probation, and $30,000 in fines
Bacanovic: Martha's Stock Broker
What Could've Been Done Differently
No media prep or key messages
Statement saying she had prearranged conditions with her broker
Lack of transparency
She hid from reporters for months
Martha Talks was created too late in the game
Arrogance that the charges would be dropped
Conviction happened at the same time as Enron, Arthur Anderson, and WorldCom scandals
Post-Indictment PR Efforts
In a court of law, you are innocent until proven guity; in the court of public opinion, people assume "no comment" means "guilty as charged".
–Michael Sitrick, chairman of a crisis PR firm
Stewart resigned as CEO
Full page ads in USA Today
MSLO kept visible images of Martha out of the media
MSLO moved away from the Martha Stewart label
MSLO stayed competitive by keeping up with industry changes
Goals and objectives for MSLO centered around maintaining the business without Martha
Prison and Post-Release PR Efforts
Stewart returned to MSLO
New business ventures
Articles began to refer to her as "Martha" rather than just "Stewart"
Public loved the come-back story
Goals and objectives for MSLO and Stewart's personal ventures involved changing public opinion of her personality
Immediate response internally and externally
Crisis response team
Consistent and truthful key messages
hide from the media
MSLO consistent messages and tactics
Proactive rather than reactive strategies
Hannah Bause, Carrie Clemens, Leo Veiga, Brooke Harp, & Alayna Muncy
Founder and CEO of Kadmon
Banned by SEC from being CEO of any public company, so he will bring in his brother as lead when Kadmon goes public
Unemployed for 2 years after prison
Couldn't stay out of Martha's shadow
May be running a fashion and culture blog?
Maintained the empire
New CEO, stock prices fell, but are rising again