The worst has happened for Martha Stewart. With her Mar. 5 guilty verdict on charges of lying to the government, Stewart, 62, faces prison and the prospect of her empire unraveling in coming months. Already, Viacom (VIA) has pulled her syndicated TV show from its CBS and UPN stations, and advertisers are shunning her flagship magazine. Even the signature askMartha newspaper columns have been rebranded simply as "Living" and "Weddings."
But consumers are still buying her merchandise, and few think her deal with Kmart (KMRT) will collapse as long as they do. Another area of growth: the new Everyday Food magazine. A recipe digest with few references to Martha, its monthly circulation already tops 500,000. Still, with the former icon of domestic perfection facing ridicule, jail time, and further charges from the Securities & Exchange Commission, the future of her brand looks bleak. While Stewart is appealing her conviction, most legal experts believe she will eventually do time. There's some good news about quality for Detroit's Big Three carmakers in the new issue of Consumer Reports. The magazine's well-read April cars issue hit the stands on Mar. 8, and domestic cars surpassed European models in the reliability rankings. U.S. models average 18 problems per 100 vehicles, compared with 20 per 100 for European cars. Brands like Buick, Pontiac, Dodge, and Jeep beat the industry average of 17 problems per 100 cars and topped all European names, including BMW, Audi, and Mercedes (DCX). The news wasn't all good, though. Japanese and Korean cars came out on top, with an average of 12 problems per 100 vehicles. Some 26 domestic cars are on CR's recommended list, but that's just half the number of foreign cars. The fight between TV content owners and distribution companies ramped up as Charlie Ergen's EchoStar took Viacom-owned channels CBS, Nickelodeon, and MTV off its Dish network, which serves 9.5 million subscribers. EchoStar, the No. 2 satellite operator, claims Viacom is demanding a 40% rate hike. By pulling 10 Viacom (VIA) channels, EchoStar (DISH) could deprive an estimated 1.6 million viewers in cities such as New York and Los Angeles of the "March Madness" college basketball championships on CBS. The tiff comes weeks after cable operator Cox (COX) threatened to yank ESPN off its systems before signing a new contract. Both EchoStar and Viacom say they could reach agreement quickly. If not, EchoStar could lose subscribers to cable and Viacom will miss out on advertising revenues. The digital camera wars grew more heated as Eastman Kodak (EK) sued Sony, alleging the Japanese consumer-electronics giant violated 10 digital-camera patents that Kodak won from 1987 to 2003. Sony (SNE) denied the charge and vowed to defend itself. The two are battling to rule the U.S. digital camera market. Sony led the market with a 21.7% unit share in 2003, down from 24.4% the year before. Kodak picked up more than four points to nab the No. 2 slot with a 17.9% share, according to IDC. Drugmakers are facing a fresh legal attack. Attorneys general in Ohio and Pennsylvania filed lawsuits on Mar. 9 and 10 charging fraud or deceptive sales practices. Ohio claims five companies provided false wholesale pricing data that led the state's Medicaid program to pay inflated prices. Pennsylvania's suit against Pfizer (PFE) and 12 other drugmakers slams pricing, too. It also hits free samples and free trips for doctors. Pfizer says it has done nothing wrong and will defend itself "vigorously." Pharmacia, a company Pfizer bought, is named in the Ohio suit. Schering-Plough (SGP), named in both states, declined to comment. -- S&P raised Lucent Technologies' (LU) credit rating.
-- The SEC fined Banc of America Securities (BAC) $10 million for failing to hand over documents.
-- Halliburton (HAL) said its liquidity could suffer due to Pentagon probes into its Iraq billing practices. Wall Street punished shares of Sun Microsystems (SUNW) after Standard & Poor's on Mar. 5 downgraded the computer giant's debt to junk due to concerns over profitability. The company's stock tumbled 16% in the days following the S&P report to close at $4.35 on Mar. 10.