facing indictment on criminal charges by a federal grand jury (Steinberg & Vranica B4). Ms. Stewart maintains her innocence, but has stepped down from her chief-executive post. Ms. Stewart and others involved with the scandal were not the only one who sold ImClone stock on December 27, 2001. On that day more than 7.7 million shares of ImClone were sold and the price fell considerably. The insider trading trial is set to begin in January.
The results of these occurrences have had spin-off effects for Martha Stewart Living Omnimedia. As mentioned earlier, Ms. Stewart has stepped down from the chief-executive post and will be involved in more of the creative side of the business. The company reported a sharp decline in second-quarter profit, as the revenue decreased 16.3 percent. One year ago her reported profit was $6.7 million, and for the full year of 2003, the company expects a loss (Szalai, 9). Martha Stewart Living's television revenue for the second quarter fell 8 percent to $6.6 million because of lower ratings and fewer advertising sales. Revenue for the company's merchandising arm went down 26 percent to $11.8 million, and the company blames this decline on the closure of several Kmart stores. Finally, publishing revenue fell 16 percent to $39.6 million, primarily because of lower advertising. Circulation income also decreased (Szalai 9).
The threat of legal action concerns big name advertisers that appear in Martha Stewart's properties. Some of the companies have stuck with Ms. Stewart, and others have become wary. Pfizer, whose products include Listerine, Visine and the cholesterol drug Lipitor, decided not to advertise in Martha Stewart Living magazine for 2003 after being one of the company's major advertisers. Ryndee Carney, a spokeswoman for General Motors says, "We continue to monitor the situation closely, but right now her magazines continue to deliver the audience we are after" (Szalai 10). In the yea...