For Martha, Crime Will Pay Nicely

Now that Stewart has paid her debt to society, she can look forward to a queen-size salary, a lucrative TV deal, and probably a book

By Diane Brady

As Martha Stewart left Alderson Federal Prison Camp in the early morning hours of Mar. 4, she entered a much more lucrative environment than the one she left behind five months ago. Her outfit's stock price is up, TV deals are in the works, and a potentially lucrative book is on the horizon. What's more, she has built up a lot of psychic goodwill with her decision to go to jail while appealing her conviction on charges of lying to the government.

So what's in store for America's celebrated homemaker? Here's a look at where Stewart stands to gain:

Stock price. Stewart's stake in Martha Stewart Living Omnimedia (MSO ) is her chief source of wealth. Although she sold more than $8 million of the stock late in 2004, she still owns approximately 29.4 million shares. A recent drop has reduced that holdings' worth to about $950 million, but it was enough throughout much of last year to keep her among the ranks of U.S. billionaires.

The big question: Where does that stake go from here. Most analysts feel the stock is overvalued, despite dropping about $4 since late February. MSO's prospects remain uncertain, with advertising revenues and subscriptions below their peaks, and MSO recently reported its second straight year of losses.

Even if the company sees a revenue surge as a result of its famous founder's return, the reliance on one personality makes some investors nervous. The general sentiment on the Street is that MSO has more downside than upside at this point.

Salary. Other than the monthly $5.25 she has been paid for cleaning the administration building at the West Virginia prison compound, Stewart hasn't been drawing a paycheck. As of Mar. 7, when she returns to work, she'll collect an annual $900,000, with bonuses of at least $500,000 on top of that. In 2003, despite MSO's sinking fortunes, Stewart took home $1.4 million.

Stewart is no longer an executive with the company, going for now by the title of founder, but that doesn't preclude her from making major decisions or taking on the chief creative role. While under house arrest at her estate in Bedford, N.Y., for the next five months, she can work up to 48 hours a week outside her home.

TV appearances. Stewart will reportedly get $100,000 per episode for her starring role on The Apprentice: Martha Stewart -- a prime-time spin-off of Donald Trump's successful reality series. While there's no guarantee she'll prove as big a draw as Trump, it's safe to assume that the initial run will be at least 15 episodes.

Between the covers. Stewart's representatives reportedly have been shopping a book deal that could fetch as much as $10 million, more than Hillary Clinton received for her best-selling memoirs. No deal can be inked until Stewart is free because of restrictions on conducting business from her cell, but a ready market likely exists for anything she chooses to write.

One question is whether she might run afoul of the so-called Son of Sam law, which is named after the serial killer who tried to hawk his memoirs and is designed to prevent criminals from profiting off their crimes. Such laws vary from state to state, and Stewart's prior standing, combined with some careful writing, should get around that.

Some publishers also question the depth of public interest. After all, this is a woman whose life, business, and trial have been chronicled in detail in other books and media. As one book editor puts it: "If she's going to write something, she had better do it fast."

Indeed, with Stewart's celebrity at an all-time high, there's a strong consensus that, if she handles it well, this could end up being a banner year, at least financially. The challenges of building a sustainable long-term brand remain. But for now, the indications are that marketing Martha is once again going to be good for her personal bottom line.

Brady is a senior writer for BusinessWeek in New York

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