Martha Stewart's "Early" Exit

Under investigation for alleged insider trading, domestic diva ducks her CBS morning show segment

By Bridget Byrne Jul 03, 2002 9:35 PMTags
Icebox desserts.

That was going to be Martha Stewart's topic on The Early Show Wednesday morning.

But instead of breaking out the bonbons and fruit cups, the self-styled domestic goddess ducked out, giving the cold shoulder to CBS after the network told her she would be questioned on-air about her apparent involvement in the ImClone insider trading scandal.

It's not yet clear how long Stewart plans to stay away from her once-a-week "how-to" segment on the morning news show. "At this point it's just this week," said a spokesperson for Brunswick Group, the New York public relations firm just hired to help the publicly popular but often privately scorned entrepreneur through the biggest crisis of her career.

While the media lick their chops over whether Stewart will finally get what many believe are her just desserts, or prove to be as spotless as her kitchen counter, the house-making maven is laying low as Congressional investigators look for skeletons in her financial closet.

Last December, Stewart dumped nearly 4,000 shares of ImClone stock worth $227,824 the day before the biotech company's experimental cancer drug Erbitux was rejected by the Food and Drug Administration. Last month, fomer ImClone CEO Sam Waksal was arrested and charged with securities fraud and conspiracy for allegedly tipping family members to sell the stock before the announcement of the FDA rejection caused it to nose-dive.

Now, the feds are investigating whether Waskal tipped off his old pal Stewart, too.

For her part, Stewart has claimed her sale was merely the consequence of a verbal stop-loss order agreement with her broker, Peter Bacanovic. But it has yet to be ascertained whether Stewart really had such an order in place, and Bacanovic has since been put under suspension by brokerage house Merrill Lynch.

While the probe continues, Stewart has much more to worry about than whether her soufflé rises or whether the ruffles on her pillowslips are the correct width. Her fans have stayed very loyal in the past, despite all the gossip about what a tough cookie she really is, but this scandal could really cook her goose. As a former stockbroker, leader of a public company and a board member of the New York Stock Exchange, any sort of financial impropriety would be damaging to her image and the multimillion-dollar business it supports.

Since the scandal broke last month shares for her own Martha Stewart Living Omnimedia have fallen by as much as half, but are now recovering a bit.

Stewart informed CBS on Tuesday that she wouldn't be turning up for The Early Show after the network had confirmed she would again be subjected to questions about the allegations against her.

Last week, host Jane Clayson dared to question Stewart even though at the time Stewart was wielding one of her sharp knives, chopping a head of cabbage for a salad.

"I want to focus on my salad, because that's why we're here," responded Stewart, claiming she would be cleared of any "ridiculousness."

A spokesperson for The Early Show referred all queries to Stewart's publicists.

Allyn Magrino, an Omnimedia spokeswoman, told the Associated Press that Stewart recognized that CBS, as "a premier news network," was compelled to ask about her stock deal, which was the reason she couldn't appear because she "is unable to comment or offer an other information at this time out of respect for the investigatory process."

Meanwhile, Stewart's Emmy-winning syndicated show Martha Stewart Living, which is carried by CBS affiliates nationwide, won't be affected by her decision to avoid The Early Show.