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Stock makes Martha merry

Stewart's not stewing this holiday season

NEW YORK — Inside the prison nicknamed Camp Cupcake, media mogul Martha Stewart is exploring new dishes in microwave cooking — first it was flan, now it’s Vietnamese food, according to insiders.

It’s clear Stewart isn’t feeling merry spending Christmas in the slammer, but she does have newfound reason to celebrate as the year draws to a close — shares of Martha Stewart Living Omnimedia are up roughly 150% this year as the home decorating diva stands to become a prison folk hero in Johnny Cash-like style.

In a Christmas note to fans posted Wednesday on her Web site, Stewart spoke about the woes of cafeteria jail food but insisted she’s doing okay and that it’s hard to be selfish when incarcerated with 1,200 other inmates. Never shy about speaking her mind, she also urged that U.S. sentencing laws be reformed.

“I am fine, really. I look forward to being home, to getting back to my valuable work, to creating, cooking and making television,” wrote Stewart, whose official prison job is cleaning.

Seeks reforms

“I beseech you all to think about these women — to encourage the American people to ask for reforms, both in sentencing guidelines, in length of incarceration for nonviolent first-time offenders and for those involved in drug taking,” she said. “Many of them have been here for years — devoid of care, devoid of love, devoid of family.”

On Wall Street, analysts attribute the recovery of Martha Stewart Living’s stock to Susan Lyne’s recent appointment as CEO of the media conglom, along with word that NBC Universal has picked up Stewart’s new syndie strip, which will bow in the fall; Mark Burnett is the exec producer. Then there was the announcement that Kmart, which sells Stewart’s kitchen and bath line, will buy up Sears.

Martha Stewart Living does not comment on stock matters.

Stewart is halfway through her five-month term at the minimum-security women’s prison camp in Alderson, W. Va. When she’s released in March, she’ll be under house arrest for five months, monitored by an electronic anklet.

Though she’s prohibited from discussing business with such visitors as Lyne and Burnett, the ever-shrewd Stewart remains well aware of her financial options.

Sells stock

Last week, she sold some $8 million of stock just as Martha Stewart Living shares hit a new high for the year, closing at $33.50 — up 272% from the day before Stewart’s sentencing.

“This wasn’t a case where Martha knew something the rest of us didn’t know; this is a case of her selling when the price got high,” Standard & Poor’s analyst Gary McDaniel told reporters at the time.

Coincidentally or not, shares began falling after Stewart’s transaction. In Wednesday’s trading, shares were up slightly to close at $27.64.

Some analysts don’t attach much importance to the surge in stock price, saying it is merely the result of a campaign to resurrect Stewart’s image, not real proof that the company has turned things around.

Pub campaign cited

“I have never seen such a beautifully orchestrated publicity campaign in my life,” said independent analyst Dennis McAlpine, who tracks Martha Stewart Living. “There is no reason the stock should be up where it is. Most of what they’ve done, it’s not real.”

Even McAlpine, who runs McAlpine & Associates, spoke highly of Lyne, saying she is a strong hire for Martha Stewart Living.

Stewart and Lyne share more than just looks — both are aiming to resurrect their careers. Lyne, the former prexy of ABC Entertainment, was unceremoniously fired by parent company Disney this spring.

Lyne — the former editor of Premiere magazine and the Village Voice — became her own hero with the bow of ABC’s hit fall shows “Desperate Housewives” and “Lost,” which pulled the Alphabet out of its longtime ratings slump.

“I wasn’t happy about it when it occurred, but within a week or so, I understood they did what they felt they had to do,” Lynne recently said on CNBC’s “Kudlow & Cramer.”

Lyne said her immediate goals include building the TV division at Martha Stewart Living, both here and internationally.

In addition to the new syndie strip — which Martha Stewart Living owns and will book revenue from — Martha Stewart is slated to appear in a primetime show exec produced by Burnett.

And on Jan. 8, Martha Stewart Living will premiere a new weekly series on PBS, “Everyday Food.”

Morale is on the rise within Martha Stewart Living, with staffers finally shaking the glum mood that descended when Stewart was charged and then convicted of lying to the feds about a suspect stock sale. Advertisers still haven’t returned en masse to the pages of the flagship Martha Stewart Living mag, however.

Ad bump foreseen

Lyne said she expects to see a bump in advertising numbers by the second quarter of 2005.

It also remains to be seen whether the company will return Martha Stewart’s name to various pubs and products.

The looming question is what role Stewart will play in her company when she’s completed her prison ordeal and home confinement.

“I have had time to think, time to write, time to exercise, time to not eat the bad food and time to walk and contemplate the future. I’ve had my work here too,” Stewart wrote in her Christmas note to fans.

“Cleaning has been my job — washing, scrubbing, sweeping, vacuuming, raking leaves and much more,” she said. “But like everyone else here, I would rather be doing all of this in my own home and not here — away from family and friends.”

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