News & Events

MENDOZA IN THE NEWS

ND professor sees rocky road ahead

by Carol Elliott, South Bend Tribune
Publication: South Bend Tribune

July 17, 2004

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Note to Martha: Do your very short time and move on.

"I think the best thing is for her to admit what she's done that was wrong, apologize and move on," said local corporate communications expert James S. O'Rourke IV. "I think the market place will forgive her."

O'Rourke, professor of management and director of the Fanning Center for Business Communication at the University of Notre Dame's Mendoza College of Business, has followed Stewart's case since 2002, when he directed a case study of Stewart's troubles stemming from her December 2001 sale of ImClone Systems stock.

Stewart was sentenced in a New York court Friday to five months in prison and five months on home detention -- with no electronic monitoring device.

O'Rourke said even though the sentence was light, the company still has big problems, despite the initial stock bounce for Martha Stewart Living Omnimedia.

Shares closed up $3.17 -- a nearly 40 percent jump -- to $11.81 Friday on the New York Stock Exchange.

The struggling health of the Kmart retail chain, which reiterated its decision Friday to continue carrying the Martha Stewart Everyday brand, adds strain to Stewart's financial picture, as do the money woes of the magazine industry in general.

Stewart's television show is the linchpin of her empire because of the marketing opportunities it provides, said O'Rourke. "And it is not at all clear to me what the future of her television show is.""If she is able to rescue the television program, I think the rest of the line has great potential," said O'Rourke.

Of the many Martha fans who rallied during the court proceedings with "Save Martha" T-shirts and signs, O'Rourke said, "Sentiment is not enough to save a retail operation."

With Stewart's long-term reputation in doubt, the company's survival may very well depend on becoming Martha-free, said O'Rourke.