Andrew Allentuck

Saturday, April 5, 2003

Martha Inc.: The Incredible Story of Martha Stewart Living Omnimedia Inc
by Christopher Byron
442 pages
ISBN 0-471-42958-9

Martha Inc. reads like a fatwa in which Ms. Stewart plays the intended victim and author Chris Byron is the ayatollah of her doom. A stretch? Martha ought to know. Mr. Byron takes pains to be scrupulously fair to his subject, but she emerges as a vicious hag who has issued more than a few fatwas of her own against her real and imagined adversaries.

Born in 1941 in Nutley, New Jersey, a working class bedroom community for Manhattan, Martha Stewart, nee Kostyra, lived a life of relative privation, worked as a maid in an apartment on Fifth Avenue, then modeled and got on covers of some fashion mags in the early 60s. She worked as a stock broker for five years beginning in 1968 as a woman who could attract clients by her good looks. She married lawyer Andy Stewart. His name allowed her to shed her Polish moniker, and, with a new handle, she harassed and divorced him, puttered around the fancy bedroom community of Westport, Connecticut, ran a catering service, started a magazine, made a lucrative deal with K-Mart to peddle her name-brand kitchen ware, took her company public and became a billionairess. Then, in what was either insider trading or a poorly documented stop loss order to sell ImClone stock just after that company's CEO, Sam Waksal, dumped his shares, she saw her empire begin to crumble in a sea of scandal. Add in the bankruptcy of K-Mart and the truth emerges: Martha Stewart Living Omnimedia's magazines cost too much to produce and to sell. Without the K-Mart or a similar deal, the empire could be no more. This middle aged, capitalist version of the intrepid Nancy Drew would then slouch off to the necropolis of the failed where she would join others ruined by hubris and incompetence.

The U.S. Securities and Exchange Commission and the courts have not rendered judgment on Martha as of the time of publication of the revised edition. Indeed, Martha has not been charged with anything. Yet Mr. Byron paints Martha as a very close friend of Mr. Waksal, a social climbing immunologist and corporate crook who had his company to loan him money, then had the company write off the loans. He has already been convicted of insider trading and fraud. Martha, his buddy and in some ways his protégé, had it in her character to sell ImClone shares before news that the company's cancer-fighting drug had failed its tests was made public. Still, one has to give Martha the benefit of the doubt and, balanced journalist that he is, Mr. Byron does so, coming to no conclusion on Martha's guilt.

Mr. Byron, who schmoozes for CNBC, MSNBC, CBS Evening News and hosts a syndicated daily radio show, did fine research for the book, going through birth records and school records and battling Martha who, he reveals, was trenchantly uncooperative. He explains the process of digging up facts on his subject in his extensive footnotes, a fascinating read apart from the book's main text.

Martha emerges as an energetic wonder woman who bolts from her bed each morning ready to begin a day that would steamroller most people. Yet Mr. Byron shows that she is also a mean-spirited witch. She raised a daughter, Lexi, playing the role of drill sergeant, Mr. Byron says. Martha's neighbour at one of her houses, P.J. O'Rourke, the American right wing bad boy essayist for Rolling Stone, backs up Mr. Byron. This is a lady you don't want to live next to.

According to Mr. Byron, Martha is a martinet. She taunts her staff mercilessly, promises various benefits for sticking with her, then reneges on those promises. And what a temper she has! Martha nearly took the head off a CBS interviewer in a famous performance when it was clear she would be asked about the insider trading case. With knife in hand, Martha insisted that she was on T.V. only to make a salad. That was a video version of the Fifth Amendment against self-incrimination written all over it. Martha has had the smarts of a three year old when it comes to presenting her side of the insider trading case, Mr. Byron says. She could have done much better and, indeed, Jeffery Toobin, the New Yorker's staff legalist and a former U.S. federal prosecutor, suggests that the case against her is weak.

The financial case is the core of the book, at least from the point of view of this reviewer. Mr. Byron's evidence is that, barring a resurrection of her reputation, better profits from her magazines, and a rebirth of K-Mart, Martha Stewart Living Omnimedia is a has been.

Martha Stewart remains the heart of the company and if, one day, she retires or if fate takes its course and she goes on to that great kitchen in the sky, then the company would be headless, he says.

"Martha Stewart Living Omnimedia, Inc. is not really an institution so much as a kind of colossal one woman band that is destined to fall silent when the musician stops playing," he says in the epilogue to the book.

As a piece of financial analysis, Martha Inc. is compelling advice to put money someplace other than her ailing company. Martha's winning streak is probably past. If this lady of 62 has a financial future, it's likely to be brief. Sic transit gloria mommy.