Describe the accusations against Martha Stewart and her response—or lack of response—based upon established PR plans, practices, and duties by PR professionals, and recognized media outreach efforts.
Consider the following questions as you construct your initial post:
- From a public relations perspective, how would you characterize Martha Stewart’s initial response to charges against her for insider trading?
- What key public relations principle did Stewart violate and ignore?
- If you were Stewart’s public relations advisor, what strategies and tactics would you have recommended she implement in response to the charges brought against her?
- Did Stewart’s decision to go to jail early make an impact on public opinion?
- What public relations strategies should Stewart adopt to help re-establish her reputation and her brand?
Martha Stewart was the undisputed “Queen of the Kitchen” with her numerous CD’s, TV appearances, books, advertising contracts, and her Martha Stewart Living show. That all changed in December of 2001 when Martha sold close to 4,000 shares of ImClone Systems’ stocks at $60 a share the day before the stock price plummeted due to the FDA rejecting ImClone’s application for their new cancer fighting drug (Seitel, 2013, p.78). ImClone Systems was owned by Martha’s longtime friend, Samuel Waksal; the sudden sale of almost 4,000 stocks saved Martha a $51,000 loss (Seitel, 2013, p.78). According to the U.S. attorney for the Southern District of New York there was no possibility of Martha being smart enough to know about the FDA’s timing in rejecting the cancer fighting drug; instead the government argued that Martha had become aware of the coming rejection from her stockbroker who called her after receiving an urgent call from Waksal (Seitel, 2013, p.79). In June of 2003 the US attorney formally indicted Martha and her stockbroker for illegally acting on insider information (Seitel, 2013, p.79).
The two following years turned the “Queen of the Kitchen” into the “silent diva”; Martha suddenly went from being everywhere in the media to allowing her attorneys to speak in her place (Seitel, 2013, p.79). The public was disappointed when Martha remained quiet in court and in public when they expected the normally spirited “Queen of the Kitchen” to come out fighting. The only fight the public got from Martha was her personal website which proclaimed her innocence and her desire to clear her name, but these promised actions never happened. On March 5, 2004, Martha was found guilty of obstructing justice and lying to federal investigators; her only response to this was a brief note on her website saying “Dear Friends, I am obviously distressed by the jury’s verdict but I take comfort in knowing that I have done nothing wrong and that I have the enduring support of my family and friends” (Seitel, 2013, p.79). Four months after posting the message on her website, Martha lost her job, her company, close to half a million dollars in stocks, her reputation, and she lost her freedom when she was sentenced to five months in prison with two years of probation (Seitel, 2013, p.79). Martha and her attorneys fought the prison sentence until October when Martha voluntarily began her five month sentence early in order to put everything behind her personally and professionally. During her five month sentence, Martha was the ideal prisoner; she participated in prison events, was kind to the guards and wardens, and she wrote about the unfairness of federal sentencing guidelines (Seitel, 2013, p.80). Martha was released from prison on March 3, 2005.
From a public relations perspective I would characterize Martha Stewart’s initial response to charges against her for insider trading as two fold. From a court standpoint she did the right thing in not speaking and allowing her attorneys to fight for her, but in the realm of public opinion her response was poorly done. Martha refused to talk about the charges and many took her silence as an indication of guilt, while others felt betrayed by Martha’s lack of fight. The only positive aspect of Martha’s lack of response was that she did not lash out at the public.
Martha’s lack of response to the public violated the key public relations principles of openness and honesty (Seitel, 2013). The advice given to John D. Rockefeller Jr. in 1914 to “tell the truth, because sooner or later the public will find it out anyway and if the public doesn’t like what you are doing, change your policies and bring them into line with what the people want” still applies today (Seitel, 2013, p.32). Martha should have told the truth to the public from the beginning regardless if she was innocent or guilty. When she discovered that the public was displeased by her lack of appearance, she should have changed that to keep the public happy and her image strong.
If I was Martha’s public relations advisor, I would have advised her to remain open and honest with the public. I would have had Martha appear on a talk show with a host not known for harming the image of their guests. On the show I would have advised Martha to talk to the public about her innocence in the face of the charges in order to invoke public sympathy. I would have also advised Martha to sit down with a single journalist to act as a liaison between herself and the public. The journalist could take questions from the public, screen out the most relevant ones, and then talk to Martha about them in order to come up with a plan on what to release. By working with just one journalist Martha would be able to better control what the public learned about her while still being open and honest. My final advisement to Martha would have been to allow two way communications with the public on her website. She could have picked one question submitted to her website each week and answered it; this action would have made the public feel less like Martha had abandoned them. As her public relations advisor, I would have agreed with Martha’s decision to go to prison early because it would have, and did, positively influence her image. The act of going to prison early sent a message to the public that Martha was ready to leave the mess behind and get back to being the “Queen of the Kitchen” faster. By going to prison early the public saw Martha as dignified, respectable, and in control. This was not a woman that was going to have a tantrum, but a woman who could handle what life threw at her and come out better for it.
After handling prison in a respectable manner, Martha should capitalize on the positive feeling of the public to re-establish her reputation and her brand. After her prison stint the public gained a respect for Martha with how she decided to write about the “unfairness of federal sentencing guidelines, which shackled many of those whom she met behind the walls” (Seitel, 2013, p.80). Her new demeanor also won her some public support with how she was much more open to questions and more available to the public. Martha took the first positive steps towards reestablishing herself when she signed a deal for a radio program, a memoir deal for her time in prison, and for two new television shows. Martha should use these opportunities as a stepping stone to gaining her popularity and reputation back. Martha should appear publically, assist charities, continue to write and speak out for better sentencing guidelines, be active on social media, create or update her website to be more interactive, and encourage the public to contact her with question. These actions would portray Martha in an open and honest light which would appeal to the public and bring back some respectability to her name and reputation.
Seitel, F. (2013). The Practice of Public Relations(12th ed.). Harlow: Prentice Hall.