Martha 10A

NEW YORK -- This is a mess even Martha Stewart may not be able to clean up.

Sorry. Martha jokes are all the rage these days, particularly lame ones that involve prison cell decor or recipes for cakes with files baked in.

"I am so hot," David Letterman said this past week, "I am sweating like Martha Stewart."

You can bet at least one person isn't smiling.

The empire of domestic perfection built by Stewart over two decades could crumble if the accusations that she was involved in insider trading stick. Her company's stock is already in a free-fall.

Stewart also has the misfortune of being a polarizing figure at just the time the world was looking to put a public face on an unseemly series of business scandals.

Her clenched-face appearance on CBS' "The Early Show" on Tuesday, where she furiously chopped cabbage while trying to deflect questions about the case, has already become tabloid legend.

"That was not a happy Martha moment," said Christopher Byron, whose book, "Martha Inc.," came out this spring. "You could see it in her behavior and appearance. She looked like she was in a daze."

Stewart is either loved or loathed -- there's rarely a middle ground. Being known as a prickly personality doesn't help her much.

Jon Stewart joked about that on Comedy Central's "The Daily Show" this week: "Experts say the company is suffering because its image is so directly tied to Stewart's persona, an assessment that has many investors surprised that the price hasn't just remained frozen."

Bitter public reaction

You know things are going badly when Stewart inspires pity. Author Leslie Savan wondered in The New York Times this week why so many people took pleasure in the domestic diva's public humiliation.

"The reaction is so bitter that you can't help thinking Martha Stewart is in trouble less for investments in ImClone than for our investments in her image -- and maybe her secret role in our own self-image," Savan wrote.

Investigators are asking whether Stewart had inside information when she decided to sell nearly 4,000 shares of ImClone stock in December, the day before the Food and Drug Administration announced it wouldn't consider the company's experimental drug for fighting colorectal cancer.

Stock in her own company, Martha Stewart Living Omnimedia, sold at around $19 a share when reports of the congressional probe surfaced June 6. The stock sold for $11.47 a share Friday.

Her company took in $295 million in revenue last year. It publishes magazines like Martha Stewart Living, operates a catalog and Web site, and makes a product line sold at Kmart. She has a syndicated television show, a radio show and a newspaper advice column, "Ask Martha."

The strength of Stewart's business lies in middle America, where her predicament may not resonate, Byron said.

"Do these people continue to stick with her or do they feel betrayed by someone who is portrayed one way in the image they've bought but turns out to be a different kind of person entirely when she steps out from behind the curtain?" he asked.

Kmart, with its own financial troubles, isn't likely to give up its most popular product line. "The merchandising will be among the last areas to be affected by this scandal," said Seth Siegel, a licensing consultant who once did some work for Stewart's company.

Instead, a bellwether of her company's health will be the response of skittish advertisers in her magazines or TV shows, he said.

She has some time; magazine advertising is locked up until the end of the year. But her competitors are sure to be planting seeds of doubt for the futureOne current advertiser, Restoration Hardware, said it would be watching Stewart's case closely.

"You're not going to want to align with somebody who's under criminal investigation," company spokesman David Glassman said. "Anyone who wouldn't at least take it under consideration I would find strange. Martha Stewart the person is essentially Martha Stewart the company."

Her position may be less strong in television, where her syndicated program has already lost half its audience over the past four years. So far there have been no reports of stations or advertisers backing out.

"I'm sure a lot of advertisers will want to take second looks at her," said Tom DeCabia of the advertising buying firm PHD.

CBS is still committed to her weekly appearances on "The Early Show," although it may think twice if there are more awkward conversations over salad.

For her part, Stewart seems to be wishing it would all go away.

"When I was a model -- and I was all during high school and college -- you always wanted to be on the cover of a magazine," she said on CBS. "That's how your success was judged, the more covers the better. Well, I am the CEO of a New York Stock Exchange-listed company and I don't want to be on the covers of any newspapers for a long, long time."