updated 7/19/2004 9:53:23 AM ET 2004-07-19T13:53:23

Guest: Herb Hoelter, Susan McDougal, Julie Benveniste, Diane Brady, Chris Madden, Colin Cowie

ANNOUNCER:  DEBORAH NORVILLE TONIGHT.

WILLOW BAY, GUEST HOST:  Sentenced.  Martha Stewart gets five months.

(BEGIN VIDEO CLIP)

MARTHA STEWART, SENTENCED TO FIVE MONTHS IN PRISON:  I‘m not afraid. 

I‘m not afraid whatsoever.

(END VIDEO CLIP)

BAY:  She may be going from this to this.  But does the punishment fit the crime?

(END VIDEO CLIP)

STEWART:  ... that a small personal matter has been able to be blown out of all proportion.

(END VIDEO CLIP)

BAY:  Tonight, a look inside one of the most sensational white-collar criminal trials in history.  Where do Martha Stewart and her team of lawyers go from here?

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE:  There will be issues in the courts of appeal...

(END VIDEO CLIP)

BAY:  And what‘s in store for her billion-dollar corporate empire?

(BEGIN VIDEO CLIP)

STEWART:  We‘ve worked so hard on that company.

(END VIDEO CLIP)

BAY:  Plus: former federal prisoner Susan McDougal with the lowdown on life behind bars.  How will Martha Stewart adjust to this?

(BEGIN VIDEO CLIP)

STEWART:  I hope the months go by quickly.

(END VIDEO CLIP)

BAY:  Tonight: What now for Martha Stewart?

(BEGIN VIDEO CLIP)

STEWART:  And I‘ll be back.  I will be back.

(END VIDEO CLIP)

ANNOUNCER:  Substituting tonight for Deborah Norville from studio 3K in Rockefeller Center, Willow Bay.

BAY:  Good evening.

Martha Stewart asked the judge for leniency today, and she got it.  Inside the courtroom, she asked the judge to, quote, “remember all the good I have done,” and the judge sentenced her to five months in prison, the minimum allowed by law.  She could have received 16 months.  Stewart was also sentenced to five months of home confinement, two years probation, and fined $30,000 for lying to the government about her sale of Imclone Systems stock.  The judge also allowed Stewart to stay out of prison while she appeals her conviction.

After the sentencing, Stewart made a lengthy statement.

(BEGIN VIDEO CLIP)

STEWART:  Today is a shameful day.  It‘s shameful for me and for my family and for my beloved company and for all of its employees and partners.  What was a small personal matter became over the last two years an almost fatal circus event of unprecedented proportions.  I have been choked and almost suffocated to death during that time, all the whale more concerned about the wellbeing of others than for myself, more hurt for them and their losses than for my own, more worried for their futures than the future of Martha Stewart, the person.  More than 200 people have lost their jobs at my company as a result of this situation.  I want them to know how very sorry I am for them and their families.

I would like to thank everybody who stood by me, who wished me well, waved to me on the street—like these lovely people over here—smiled at me, called me, wrote to me.  We received thousands of support letters and more than 170,000 e-mails to marthatalks.com, and I appreciate each and every one of those pieces of correspondence.  I really feel good about it.

Perhaps all of you out there can continue to show your support by subscribing to our magazine, by buying our products, by encouraging our advertisers to come back in full force to our magazines.  Our magazines are great.  They deserve your support.  And whatever happens to me personally shouldn‘t have any effect whatsoever on the great company Martha Stewart Living Omnimedia.  And I don‘t want to use this as a sales pitch for my company, but we love that company.  We‘ve worked so hard on that company, and we really think it merits great attention from the American public.

And I‘ll be back.  I will be back.  Whatever I have to do in the next few months, I hope the months go by quickly.  I‘m used to all kinds of hard work, as you know, and I‘m not afraid.  I‘m not afraid whatsoever.  I‘m just very, very sorry that it‘s come to this, that a small personal matter has been able to be blown out of all proportion, and with such venom and such gore.  I mean, it‘s just terrible.

(END VIDEO CLIP)

BAY:  I‘m joined now by NBC News chief legal correspondent Dan Abrams, the host of MSNBC‘s “THE ABRAMS REPORT.”  Dan was inside the courtroom when Stewart was sentenced.  Also joining us, Herb Hoelter, Martha Stewart‘s sentencing consultant.  He helped Stewart‘s legal team develop their arguments for today‘s sentencing, and he too was in the courtroom this afternoon.

Gentlemen, welcome.  Dan, I‘d like to start with you.  I‘ll get your reaction that lengthy statement on the courthouse steps by Martha Stewart in just a moment, but I‘d like to get your reaction to her sentencing today.  It seemed on the light side, correct?

DAN ABRAMS, HOST, “THE ABRAMS REPORT”:  No question.  You know, the defense team was asking for no prison time at all.  They were asking for probation.  They knew that wasn‘t going to happen.  I think that they recognized that this was going to fall within the sentencing guidelines, 10 to 16 months.  I think that there were many people who thought that 12 months, maybe even 14 months was more likely than 10 months which she received.  She got exactly what she asked for in terms of home detection for half of the time.  She got to choose which home, her home in Bedford, New York.  She got the prison sentence stayed, meaning she doesn‘t have to go to prison until the appeals process is over.  And she may not even have to necessarily wear an electronic bracelet, as the judge initially had ordered, when she‘s on home detention.  Remember, home detention means she can work for most of the week.  So I think Martha Stewart has to be sighing a big sigh of relief here.

BAY:  What about Peter Bacanovic, who got a similar sentence?

ABRAMS:  Yes, I think the same thing.  I think that he probably expected something in this range, and I think that, again, it would have been unrealistic to expect that he wasn‘t going to get any time in prison.  And I think that he, too, has to recognize that—he‘s got to be sighing a little bit.  The question for him, though, is going to more interesting because the judge has recommended a specific prison with regard to Martha Stewart, the exact one she asked for.  But Peter Bacanovic, there‘s a little more ambiguity as to which prison he‘ll get.  And so that could make a big difference.

BAY:  But again, as you say, they‘re not packing their toothbrushes because they do have—what is this called, a stay of appeal?

ABRAMS:  That‘s right.  A stay pending appeal.  It means—a stay means a delay as the appeals process moves forward.  So both of them are going to be free until that appeals process is concluded.  And remember, what they‘re really asking for—sure, they‘re asking that they be declared innocent.  That‘s not going to happen.  What they are asking for is a new trial.  And so if they win, there would still be a new trial ahead.

BAY:  We heard from Walter Dellinger, who‘s handling Martha Stewart‘s appeal right after she spoke on the steps of the courthouse.  Let‘s hear what he had to say.

(BEGIN VIDEO CLIP)

WALTER DELLINGER, MARTHA STEWART‘S ATTORNEY:  We believe that there are very significant issues to be brought before the court of appeals.  There are at least five issues that we think—there are at least five issues that we believe are worthy of serious consideration, some of which are questions of first impression for the court of appeals.  The court of appeals has to, first of all, deal with a very unprecedented situation.  It has to deal with a case in which there were, after the trial was over, two extraordinary revelations of perjury, one by a very outspoken juror and one by a key government witness.

(END VIDEO CLIP)

BAY:  So Dan, what is, then, the basis for appeals here?  Please walk us through that.

ABRAMS:  Well, there are really—you know, he‘s saying there are five.  There are three really the strongest arguments are, No. 1, that you had this ink expert who testified for the prosecution, who‘s now being prosecuted himself for perjury in this trial.  And the defense is saying, Wait a sec.  We‘ve got one of their witnesses who‘s lying, and you‘re not going to give us a new trial, even though we didn‘t find out about it until after the trial?  Initially, the judge ruled that that testimony did not impact the verdict.  They‘re also saying that one of the jurors was essentially trying to get on the case and lied about it.  Again, that‘s going to be a real tough argument for them to win.

I think that their strongest argument may be that one of the charges that Martha Stewart faced initially—initially, she was charged with defending herself publicly, basically, like, proclaiming her innocence, in an effort to manipulate the markets.  The judge threw that out at the end of the case.  But there was still evidence presented.  There were still opening statements about that.  And the defense is going to say that infected the rest of the trial because there was an improper charge still part of that case, and that infected the jurors‘ minds.  We should get a new trial.  That may be the strongest, I think, of those arguments.

BAY:  Herb Hoelter‘s joining us, Dan, as you know.  And I‘d like to get your take, Herb.   You helped her arguments, or her lawyer shape her arguments for the appeals—for her sentencing.  Excuse me.  So do you consider this a win?

HERB HOELTER, MARTHA STEWART‘S SENTENCING CONSULTANT:  I think we would have preferred that the judge grant probation and that there be no prison sentence imposed.  But I agree with Dan...

BAY:  But realistically.

HOELTER:  Realistically, I agree with Dan.  We now know the worst, and worst was that judge took the very lowest end of the guidelines that she possibly could.  She stayed within the box, but she even split that and gave her five months in prison and five months in home confinement.  And I think, at the end of the day, we have to consider that at least partly a win.

BAY:  You‘ve worked very closely with Martha Stewart.  You were there in the courtroom today.  What was her mood like in that courtroom today?  What was her reaction?

HOELTER:  I think her mood has been consistent throughout.  She‘s resilient.  She‘s strong-willed.  She‘s determined to fight these charges.  And I thought that she did a good job in the courtroom today, in terms of explaining to the judge the shamefulness of what had happened in this case.

BAY:  She did some explaining to the public, which we just saw, on the courthouse steps.  Was that a statement vetted by her lawyers, or was that pure Martha?

HOELTER:  You know, in my opinion, that was pure Martha.  I know I didn‘t have anything to do with it and...

BAY:  All right, so putting your lawyer‘s hat on, your reaction?

HOELTER:  Probably would have said a few things differently, but I think...

BAY:  Like what?

HOELTER:  I think that she could have been more like she was in the courtroom with the judge.

BAY:  Which is more contrite?

HOELTER:  I wouldn‘t say contrite, but accepting, certainly, of the judge‘s representation or position in the case.  It almost became a commercial.  But that‘s Martha Stewart, and I think that‘s what we‘re dealing with.

BAY:  Dan, what‘s your take on that statement?  You‘ve seen a lot of defendants on the courthouse steps before.  Ever seen a sales pitch like this one?

ABRAMS:  No.  I think it is fair to say that she was far more contrite inside the courtroom and far more defiant outside the courtroom.  But I hear people saying, you know, How is this going to affect the appeal?  Was this a bad idea?  You know what?  It doesn‘t matter, is the real truth.  Yes, she said some things that were aggressive.  She‘s pitching her magazine and pitching her company.  It‘s not going to matter.  The appeal question is, Did the judge make mistakes?  It‘s not, What did Martha say on the courthouse steps?  And people may say, Well, judges are human beings, and they may not like Martha.  She didn‘t say anything that was so inflammatory that‘s going to have any impact in the case, in the long run.

BAY:  One of the things Martha said on those steps was this was “a small personal matter that got blown out of proportion.”  To both of you, is she right, or is she in denial?  Dan, start with you.

ABRAMS:  I think she‘s in denial, to a certain degree.  I mean, she—

I have to give her credit.  She did use those same words inside the courtroom, as well.  She just repeated them a number of times on the courthouse steps.  She does have to recognize this is more than a small personal matter.  Her position is that she‘s being targeted, et cetera.  The evidence was overwhelming that she lied.  She lied repeatedly when she was asked questions by the federal authorities.  My position has long been she wouldn‘t have been prosecuted for it had she not been Martha Stewart, but nevertheless, she still lied to federal officials.  And that‘s not a “small personal matter.”  And I don‘t agree with her, and I think that it‘s foolish of her to continue to insist that it is.  But again, I don‘t think it‘s going to have any impact on the appeal.

BAY:  Herb, before we go, do you agree?

HOELTER:  Well, it‘s a criminal matter, and that was what she was in court for today.  And I would agree with Dan.  It‘s not a personal matter, it‘s criminal matter.

BAY:  Serious business.  Herb Hoelter, Dan Abrams, thank you very much to both of you for joining us.

ABRAMS:  All right, Willow.

HOELTER:  Thank you very much.

ANNOUNCER:  Coming up: Corporate billionaire Martha Stewart may soon be trading her lush lifestyle for menial chores behind bars.  How will she cope?

(BEGIN VIDEO CLIP)

STEWART:  I‘m used to all kinds of hard work, as you know, and I‘m not afraid.

(END VIDEO CLIP)

ANNOUNCER:  A look inside federal prison with former inmate Susan McDougal when DEBORAH NORVILLE TONIGHT returns.

(COMMERCIAL BREAK)

BAY:  Well, the judge may have gone easy on Martha Stewart today, sentencing her to just five months in prison.  My next guests say that when and if Stewart serves her time, it won‘t be easy.  Susan McDougal served 18 months in prison after refusing to answer questions about President Clinton in the Whitewater investigation.  Julie Benveniste‘s husband, Mark (ph), is serving a 63-month sentence for bank fraud at the Maxwell Federal Prison Camp in Montgomery, Alabama.  Welcome to both of you.

SUSAN MCDOUGAL, SERVED 18 MONTHS IN FEDERAL PRISON:  Thank you.

BAY:  Susan, I‘d like to start with you.  Let‘s listen to a little bit of what Martha Stewart had to say after she received her sentence.

(BEGIN VIDEO CLIP)

STEWART:  And I‘ll be back.  I will be back.  Whatever I have to do in the next few months, I hope the months go by quickly.  I‘m used to all kinds of hard work, as you know, and I‘m not afraid.  I‘m not afraid whatsoever.

(END VIDEO CLIP)

BAY:  “I‘m not afraid whatsoever.”  Susan, is that an appropriate response, do you think?

MCDOUGAL:  You know, that is a woman who was not remanded immediately to prison are, who didn‘t walk out the door in leg irons, like I did, with the handcuffs and the belly chains.  And I have to tell you, I probably would have been Dancing down the steps myself with this sentence and with being able to go home pending appeal because she has a good chance.  And she is jubilant.  I would say this is a massive win.

I go to sentencing hearings all the time.  I hear women with children, even sick children, begging to be remanded to home sentencing, and it‘s so rare.  And I would say this is a big win for her, and she really demonstrated it.  I would have like to have seen a little bit more contrition myself, like was in the courtroom.  But you know, like Dan Abrams said, I don‘t think it really matters.  I think, in the long run, what will really matter is how they handle this appeal and if she really has to go, which I don‘t think she will.

BAY:  Susan...

MCDOUGAL:  I really don‘t.  I don‘t think they‘ll send her to jail, no.

BAY:  We talked with one of her lawyers today whose job it is to prepare her for a prison sentence.  Were you prepared?  Can you ever be prepared to go to jail?

MCDOUGAL:  You know, I did everything I could to think of the very worst things that could happen to me, so that I wouldn‘t break down when I got there.  And there is no way to prepare yourself for what you see when you walk in there.  I was so stunned at the number of elderly women there who were sick and who were, you know, going to live their lives out and die in that place, even inmates who had terminal illnesses, who told me, you know, I know that I‘ll die here because I‘m so sick.  And just the overall pervasive sadness, and you know, on an instant, in a moment, the danger, the—you know, just an outbreak of a fight.

I saw, you know, a 70-year-old woman beaten into the ground with a telephone once just from standing in line, waiting for the phone.  Just in an instant, how Dangerous it can be.  You can‘t prepare yourself for that when you come from a background, you know, like did I, middle-class, small town-girl.  You know, I‘d never been in the city, even.  So I don‘t think you can prepare yourself when you‘ve lived the life Martha Stewart has for just what can happen in the wink of an eye, and you‘re standing there and you‘re in the middle of it.

BAY:  Susan, just give us a sense, if you will, of what that first day was like for you.

MCDOUGAL:  They closed the door behind me, and I had a bedroll in my arms.  And I remember that the shoes had steel toes in them.  They were so heavy.  And I thought, Why do I have steel-toed boots, you know, these black boots?  And then the inmates were sort of laughing.  They said, You got your Calvin Klein clothes because, you know, they‘re all khaki.  You wear these khaki pants and shirts, and they were kind of laughing about that.

And I went over, the sheets were sort of strange.  You didn‘t have a fitted sheet and all that.  And so someone had to come help me make the bed.  And in that instant, where I was fumbling around, even on that small task, and people were watching me, and there were so many women in that room, screaming, yelling, profanities, I remember thinking, How would I ever sleep here?  How would I ever feel safe or even comfortable enough to close my eyes and go to sleep?  Almost everyone there felt the same way who had just come in.

The next day, that following—oh, I didn‘t have visiting that day.  The next day, I had visiting.  It was my first time to get strip-searched, and it was, I have to tell you, almost more traumatic than going to jail for the first time because you‘re told to absolutely strip, bend over.  You are touched by a stranger.  Even your mouth is invaded with a gloved hand.  Your tongue is felt.  I mean, it is the most invasive thing you can imagine, and I was sick at my soul.  You know, I thought, My God, I never realized.

BAY:  Julie, your husband is serving time at a federal prison camp, a different type of prison than the one Susan was sentenced to.  These are commonly referred to as the country clubs of the prison system.  Is that the case?

JULIE BENVENISTE, HUSBAND SERVING TIME IN FEDERAL PRISON:  Absolutely not.  And I agree with Susan.  I think the judge showed great compassion today on Martha Stewart.  And it would be wonderful to have my husband on home confinement.  We have two very, very small children.  I am working full-time.  I‘m barely making ends meet.  You know, I—it is no country club there.  And not only do I feel they treat them poorly, but they don‘t treat us very wonderfully, visiting, either.  Martha‘s going to have a different experience.

BAY:  That‘s interesting.  Tell me a bit what that‘s like.  What will be the case when Martha Stewart‘s daughter goes to visit her or her celebrity friends, Barbara Walters, Rosie O‘Donnell?  We saw them all at the trial by her side.

BENVENISTE:  Oh, I think Rosie and Barbara might be treated

differently, but the average person on the street—you‘re going to go

there, and you know, at first, it‘s traumatic.  You go in there, and it‘s -

·         still, to this day, when I see my husband, it‘s surreal.  I remember the first time he came out, he was, like, God, if this is supposed to be the best place, I‘d hate to see the worst.

BAY:  So what happens when you go in?

BENVENISTE:  Well, we...

BAY:  And visit him.

MCDOUGAL:  We go into an Air Force base, and so I typically have my two small children with me.  We drive up to the Air Force base.  We check in at the base, so we have to have a driver‘s license.  They give you a pass to put in your car.  Then we drive up to the camp, and we wait at gate until 8:00 o‘clock, until the gate opens.  Sometimes it opens at 8:00, sometimes it opens at 8:05.  Just depends on who‘s working.  We then drive in, and people rush out of the car, and we go wait in line and we fill out a—just a standard form, same thing every time, saying that we have no weapons or food or drugs or anything of that nature.  And they check our license.  Then we go into this huge waiting room, which is fairly nice.  It‘s always clean.  And we wait for him to come out.  When he comes out, I give him a big hug, the children run to him and hold his—you know, and sit on his lap, and they can‘t get enough of him.

But there are different circumstances.  Sometimes they‘ll tell you that your skirt‘s too short or your flip-flops are not permissible.  Or one day I went in, and I had baby bottles.  My son was just a year old.  And they said, You can‘t take that stroller in.  You can‘t take your bottle bag in.  And I said, Fine, I‘ll put it in a locker.  And if I need a baby bottle, can I get it for him?  And they said, No.  If you leave the visiting area, you can‘t come back in.  I was, like, Haven‘t we gone a little bit too far on this one?

You know, last week, they told me my dress was technically—or they told him my dress was technically within parameters, legal parameters, but if the wind blew, it wouldn‘t be.  Well, I don‘t think the wind‘s blowing in Montgomery since the Civil War cannon went off, you know?  It‘s just—they just—they nitpick.  They find any reason they can to get you.

BAY:  We‘ve heard...

BENVENISTE:  And they make it hard to visit.

BAY:  Yes.  We heard news reports this week that Martha Stewart was getting some of her financial house in order, selling real estate and selling stock, for example.  What did your husband—how did he prepare, how did he get his life in order, financially and also emotionally, to serve time?

BENVENISTE:  Well, we did the best we could as quick as we could.  We had a lot  of time between trial and sentencing, but you just never knew when that note was going to come to say, You are hereby, you know, required to report on this given day.

And we pretty much had lost everything, you know, going through this trauma for the last several years.  And we lost our home, our business, our car.  I recently moved back into my parents‘ home with my two children, and you know, I have a car that, you know, is all pretty much I own.  And I go see him every weekend and—but we haven‘t lost each other, and our love and our strength.  And in many ways, it‘s made us stronger.  And a lot of good came from this, as far as the community supporting us and the people around us.  But he‘s—you know, we‘re pursuing an appeal, as we speak.  But I don‘t believe the punishment fits the crime, and I don‘t believe that he really deserves to be there.  But that‘s another story.

BAY:  Susan, I‘d like to end with a quick question to you about your best advice to Martha Stewart.  How should she prepare for this possibility?

MCDOUGAL:  I made myself two promises when I went.  One was that I would try very hard to get my body in shape.  I was going to lose a lot of weight, do walking.  The food was going to be terrible, so I was going to be in the best shape when I came out.  And that I was going to work on myself, you know, while I was there and try to be a better person.  And I would say to her, Be quiet.  Stay—you know, keep a low profile until you find out.  She won‘t be there long enough to really get into that jail mentality, so to speak, as some of the girls call it.  But it will be so shocking and such a trauma for her, and there‘s no way for her to prepare.

BAY:  Susan McDougal, thank you very much.  Julie Benveniste, thank you, as well.  We appreciate your time tonight.

ANNOUNCER:  Up next: She‘s the name and face behind a billion-dollar corporate empire, but how will the Martha Stewart brand survive with its founder behind bars?

(BEGIN VIDEO CLIP)

STEWART:  More than 200 people have lost their jobs at my company as a result of this situation.

(END VIDEO CLIP)

ANNOUNCER:  Can Martha‘s shoes be filled?  We‘ll ask lifestyle gurus Colin Cowie and Chris Madden when DEBORAH NORVILLE TONIGHT returns.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

MARTHA STEWART:  Perhaps all of you out there can continue to show your support by subscribing to our magazine, by buying our products, by encouraging our advertisers to come back in full force to our magazine.  I don‘t want to use this as a sales pitch for my company, but we love that company, we worked so hard on that company, and we really think it merits great attention from the American public. 

(END VIDEO CLIP)

BAY:  Martha Stewart after her sentencing today continuing to pitch her company and products to the public. 

So what might the future hold for Martha, Inc., and can anyone take her place?  Joining us now is the associate editor for “BusinessWeek” magazine, Diane Brady.  Diane, welcome.

DIANE BRADY, BUSINESSWEEK:  Hi.

BAY:  So we were—all watched that statement on the steps. 

BRADY:  Yes.  The quintessential Martha, I think. 

BAY:  Sales pitcher that appropriate or inappropriate? 

BRADY:  Well, I think some might consider it bad taste, but I think it is Martha.  She never forgoes an opportunity to basically hock herself and hock her company.  The question is, will people be subscribing to her magazine out of sympathy?  If anything, they have been losing subscribers, and advertisers are not going to go with her simply because Martha tells them to.  She‘s a convicted felon at this point.

BAY:  The stock, however, rallied on the news of her sentencing today, whether they heard her plea or not.  Investors bought.  What was going on?

BRADY:  Sure.  Well, it‘s a very emotional stock.  I don‘t know if you remember before the guilty verdict came down, the stock soared as well, and then all of a sudden she was found guilty, and boom, it plummeted.  So it is thinly traded.  This is not a GE that, you know, millions of shares are trading hands and things go out, so I think there‘s a bit of an emotional issue there.  She did get on the lighter side, and also I think people are excited.

BAY:  Excited? 

BRADY:  They‘re excited that she is not going to jail for a year, but I think when you look at the long-term issues for her company, they are still there and they are still really problematic.

BAY:  And that cloud of uncertainty very much still there.  We know Wall Street really dislikes uncertainty, almost more than bad news. 

BRADY:  I think that is a big factor, and I just think people are going on a day-to-day basis with this stock.  Let‘s not forget, it is coming off a very low base.  The IPO price was $18.  It is nowhere near that at this point.  It‘s gone up from about $8, so it‘s a shade of what it once was. 

BAY:  Martha Stewart wrote a letter to Judge Cedarbaum just a few days ago.  In it, one of the things that she writes is—“I have also been accused of being arrogant, and I apologize for that.”  There (ph) it is, the first that she‘s apologizing.

BRADY:  I think that has been a real issue for her in this trial, that she has had a bit of the world done me wrong veneer to the whole thing.  And I think getting 170,000 e-mails from her fans has only helped reinforce that image.  She hasn‘t shown a lot of contrition until recently, and she certainly, you know, until today most people didn‘t know that 200 people have lost their jobs at her company. 

BAY:  Well, the arrogance comes at a price, certainly, as you point out, in terms of her company.

BRADY:  Yes.

BAY:  Walk us through, give us an overview of how the company has eroded in all its different components over time.  I mean, starting certainly with the stock, which at one point was trading at nearly $50...

(CROSSTALK)

BRADY:  That was the heady days—that was also the dot-com boom, so it never really approached that after 2000.  I think what the real thing that has been hit is the TV segment, because you have the CEO who has been the host of a daily TV show, and boom, Martha is out of the picture.  All of a sudden, the TV show is on hiatus.  It‘s been pulled back to a cable network that doesn‘t have wide distribution, and so that part I think is really suffering and you are hard-pressed to see how they are going to resurrect it. 

The magazine, the challenge there is that have been de-Marthafying it.  They‘ve taken away the calendar that all of us loved about her repairing fencing and things like that, and I think that‘s going to be a real challenge.  The other issues is the merchandising.  That‘s one segment that has held up...

BAY:  That seems to be doing fine, right?

BRADY:  That has held up well, because her face is not on those products, and you either like them or you don‘t. 

BAY:  She created not just an empire but really a marketplace for all this stuff.  Who is out there, who are the players that may take advantage of this void and really grow their business? 

BRADY:  Well, I think you have two of them coming on this show.  Certain Colin Cowie is one who comes to mind.  Now, he has everyday elegance.  He does have this deal come with J.C. Penney.  I think the issue with him is I see him as somebody who has more of a champaign flute in his hand and is sort of party organizer to the stars.  You can‘t really see him putting on galoshes and going into the garden.

The second, Chris Madden, who I think has a very different approach.  She—her career has been as long as Martha Stewart‘s, but she is almost more like a feminist Martha Stewart.  She talks a lot more about solace and sanctuary, whereas Martha is much more about entertaining. 

BAY:  Who else? 

BRADY:  B. Smith, I think has certainly been a contender, although she hasn‘t done quite as well.  Her magazine flopped, but she does have the restaurant, she has Bed, Bath & Beyond.  She has other popular venues.  And then I think even Oprah.  You know, Oprah is trying to get into that space.  “O” magazine is hugely popular.  Now, whether or not she has got the credibility to suddenly tell people how to paint their rooms and cook is another issue.  She‘s—we all know she has a personal chef, so yeah.

(CROSSTALK)

BAY:  Diane Brady, thank you for being here tonight. 

BRADY:  Thank you.

BAY:  When we come back, Chris Madden will be along to talk about the lifestyle industry and why from TV to books, products, all that stuff is still a good thing. 

(COMMERCIAL BREAK)

BAY:  After her sentencing today, Martha Stewart vowed she‘d be back. 

In the meantime, the lifestyle industry is growing by leaps and bounds.  And there are new players emerging all the time.  Chris Madden is the CEO of Chris Madden, Inc.  She has been in this business for 30 years, and she now has her own line of bedding, bath, furniture and home accessories for J.C. Penney.  She is also a best-selling author, and her latest book is called “Haven.”  Chris Madden joins us now. 

Chris, welcome.

CHRIS MADDEN, CEO, CHRIS MADDEN, INC.:  Thanks.

BAY:  You are an established player.  You are a big name in this business.  And I know it may be uncomfortable to address, but does Martha Stewart‘s absence present a growth opportunity for your business? 

MADDEN:  I think that first of all, I want to say she paved the way for me and for so many of us.  But I feel like I‘m already there right now, and I think one of the reasons I‘m compared to her a lot is because I do have a similar deal with J.C. Penney now, and we have hundreds, hundreds of products out there now that was launched in May. 

BAY:  I will talk about a little bit more about your product line in a bit.  But let‘s talk about that comparison to Martha Stewart.  You are not compared because your design philosophies or lifestyle philosophies are similar.  You are compared because your business is large and diverse.  So, walk us through that business that you are building right now. 

MADDEN:  The business that I have right now is really multimedia.  I have...

BAY:  A couple of books.  Sixteen, you‘re 16...

MADDEN:  Yes, 16, 16.  We have been doing a weekly newspaper column to over 400 papers for 10 years, a decade.  I was design correspondent for Oprah Winfrey.  I was on HDTV for eight years.  And now, I really have to say I‘m concentrating on home products, and that‘s really because I realize you can change the world, you can help people turn their homes into havens with good products. 

BAY:  For people who may not know you well, what is Chris Madden‘s brand?  What is it that you are selling to people? 

MADDEN:  I‘m trying to de-stress people, I think.  I want to empower women across America.  I want to...

BAY:  Diane Brady called it sort of a feminist take. 

MADDEN:  Well, yeah, OK.

BAY:  Are you comfortable with that?

MADDEN:  I‘m very comfortable with that.  Because I started out, I mean, 10 years ago my book “A Room of Her Own” really addressed this issue of we women are overloaded with so many things.  The last thing I want to do is push more things on people.  So, everything I have done, the books, my column, and now the product I have broken it down into the simplest form.  So it is about haven, I have to say, turning home into haven.  But even with the product, from furniture to whatever, it is three different design personalities.  It‘s not brain surgery.  We are trying to make this easy and fun. 

BAY:  And accessible.  I mean...

MADDEN:  Yes. 

BAY:  ... a home into haven for everyone? 

MADDEN:  Yes.  I‘ve always said that I don‘t care if you have a one-room studio or a mansion, it should be about your personal vision.  At the end of the day, when you come home, or you have your friends in, you want to feel it is not an escape—it‘s a place of celebration, of sanctuary, of traditions, of spontaneity, all that good stuff.  Let‘s do it.

BAY:  OK, so, tell the truth, do you sleep on your own sheets, do you have your own furniture in your house? 

MADDEN:  Well...

BAY:  If I came over tomorrow, what would I discover? 

MADDEN:  Yes.  Well, you‘d see it, because actually we were just in “House Beautiful” this month, and I sleep in my Adventurous bed, I sleep on my wonderful linens.  They are great, they‘re soft, they come out of the drier easily.

BAY:  When you say Adventurous bed, we should point out that you are referring to one of your three style categories. 

MADDEN:  Yes, we have three design styles, because I think almost every American fits into one of these—Adventurous, Romantic or Serene.  So my bedroom is a little adventurous, and my blankets are all J.C. Penney.  I live the life.  My dining room is completely filled with all my gorgeous Adventurous dining room furniture.  Yeah.  Because I have to—I‘ve got to -- first of all, I design furniture that I love and I want around me.  That‘s what women have said to me.

BAY:  And what did J.C. Penney ask you to do for them? 

MADDEN:  They asked me to bring my vision to them.  Of course, my partners, I always look for durability and affordability.  They‘re a great company.  They‘ve been around for over 100 years.  I bring style to them. 

BAY:  You also bring some business to them, though.  As I understand it, the growth target was—you are about halfway there with it? 

MADDEN:  Well, the J.C. Penney home collection right now is $1.4 billion, and they would like me to bring it up to two billion.

BAY:  And so?

MADDEN:  I can do that. 

BAY:  No sweat.

MADDEN:  As my commercial says, how easy is that? 

BAY:  How important is your name and your face to the brand?  We have talked about this so much to Martha—with Martha. 

MADDEN:  Yeah, I really do think that it is—I mean J.C. Penney has this huge campaign now with me as the centerpiece, so I think it is important, but you know, people always ask that question.  Well, what is going to happen if something happens to you?  But you look at Ralph, you look at Laura Ashley.  And Laura Ashley hasn‘t been with us for almost a decade.  You look at the success of the Kate Spades of the world.  There are a lot of one brands out there. 

BAY:  Chris Madden, one brand we enjoy talking to. 

MADDEN:  Thank you so much.

BAY:  Thank you. 

Our next guest, Colin Cowie is known as the wedding planner to the stars.  He has also written several books, and is Oprah Winfrey‘s lifestyle correspondent.  Colin Cowie when we return. 

(COMMERCIAL BREAK)

BAY:  Fiftieth birthday parties for Oprah and John Travolta.  Million-dollar movie star weddings.  Colin Cowie likes to call it everyday elegance.  And he says anyone can have it, with a little help.  Now he is J.C. Penney‘s wedding registry planner and he has a new bridal collection coming out in September.  And Colin Cowie joins us now.  Colin, welcome. 

COLIN COWIE, LIFESTYLE AUTHORITY:  Thank you.  Thank you.  Happy to be here. 

BAY:  What is your reaction to this news today of Martha Stewart‘s sentencing? 

COWIE:  I think it is sad.  I don‘t think that Martha should go to jail and I think that our community would be much more benefit from the fact that she could do some community service instead. 

BAY:  How do you feel about being considered as a real player, as someone who is poised to grow in the void left by her absence? 

COWIE:  I get this question all the time.  I think the one thing Martha did do is demonstrate that there‘s a fabulous market.  She really brought the whole idea of living well to the foreground.  But we have a different sense of style.  I think she‘s clearly paved the way and each one of us now is creating our own brands and there‘s many many people and it is big industry and it‘s a big country and there‘s room for everyone. 

BAY:  Room for everyone and a real appetite for all of this stuff.  What is it that consumers, people are looking for?  Is it for somebody to tell them how to live more beautifully, live better? 

COWIE:  I think we want to live a younger, sexier lifestyle.  It needs to be easy, it needs to be fun.  So it‘s about putting—at the end of the day it‘s about empowering our people and our viewers to live a good life without spending a fortune, without spending too much time doing it.  It‘s kind of like the quick stylish fix.

BAY:  But as far as you‘re concerned, if you have a fortune you should spend it on a really great party, right?

COWIE:  Without a doubt. 

BAY:  In all seriousness, how would you describe the Colin Cowie way, the Colin Cowie brand? 

COWIE:  It is all about elegance, it‘s all about living well.  It‘s all about not spending too much time and at the end of the day having a good time when you do it. 

BAY:  It is one thing to say it is all about not spending too much money and not spending too much time...

COWIE:  Everyone wants formulas.  Everybody today wants formulas.  How can I do it? 

BAY:  You do formulas that are capital “F.”  Weddings that don‘t cost less than a million dollars, Oprah‘s party...

COWIE:  But there‘s two different sides to this.  There are two different sides to it.  Because the one side of me is the clients that I deal with.  Yes, we do $10 million weddings and million-dollar parties around the world but at the end of the day what I do in terms of the books that I write and the television shows that I do, it really is about living well without spending too much money and too much time. 

BAY:  Give me some of your secrets for translating that $10 million wedding style into something that most of us can afford, can use. 

COWIE:  Go to the corner store, buy store-bought, pre-roasted chicken, some salad, a bottle of salad dressing, come home, lay yourself a beautiful table, light some candles, put the music on, open a glass of wine and you have a party. 

BAY:  OK. 

COWIE:  It doesn‘t have to cost a fortune.  I think also there‘s this whole idea where we have been led to believe and I get this—a lot of this comes from the way we have to chop, slice, dice and peel and do it all from scratch.  I think that used to work but today we want a quick fix.  What can I buy off the shelf that‘s pre-prepared.  How can I warm this up quickly?

BAY:  We want that roasted chicken. 

COWIE:  You get no medals for chopping, slicing, dicing and peeling.  I think today‘s savvy host is a resourceful host.  Who cannot pick up a phone to get it delivered, where can I pick it up from, what is the quick fix?

BAY:  What is JCPenney mean for you in your business and your brand? 

COWIE:  This is great because beforehand I only did one and $10 million weddings for very very wealthy clients.  What I‘m now doing is taking the same amount of design ability and style and now bringing it to a much bigger audience through JCPenney.  And they have given me the opportunity to design fabulous products for them and create all the collateral and the material that will allow people to be able to go home and design these fabulous weddings.

We do all of the thinking for them.  We‘re doing, like, online invitations for them.  We‘re designing the tabletop in the box where we design your centerpiece.  If you‘re shipping fresh flowers, too.  The full nine yards. 

BAY:  How did you end up doing this?   How did you wind up in essence becoming a brand?  You have a rather unusual story and an unusual background. 

COWIE:  Well, actually, I started to study pharmacy back in Tel Aviv and I arrived here in 1995 and very quickly started a catering company.  Within 18 months I did Hugh Hefner‘s wedding which took me into the whole wedding world and then my first design project was on the cover of “House and Garden” and I started doing interior design, and then came the books and then the TV shows and we are building a wonderful brand today.  I‘m very excited.

BAY:  And what do you hope people say about that brand in 10 years from now?

COWIE:  That it served them well, it taught them to live a good life and they enjoyed the journey. 

BAY:  And remember to get that roasted chick.  I‘m going to have to try that.  Bottle of salad dressing. 

COWIE:  Remember, it is all about being resourceful. 

BAY:  Thanks, Cowie.  Thank you very much for joining us. 

When we come back a soldier‘s surprise visit with his mother in this week‘s “American Moment.”  Stay with us.

(COMMERCIAL BREAK)

BAY:  This week‘s “American Moment” takes place in Aurora, Illinois.  A soldier home on leave after 15 months in Iraq pays a surprise visit to his mother.  But before 27-year-old Army Specialist Jason Ocarra (ph) surprised her, his stepdad who knew he was coming home met him at Chicago‘s O‘Hare airport.  After the two had an emotional reunion there, it was on to the shopping mall where Jason‘s mom works for the surprise visit. 

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE:  Oh my god! oh my god. 

UNIDENTIFIED MALE:  Surprise!

UNIDENTIFIED FEMALE:  Oh, my baby! Oh, my baby!

It‘s the worst thing you could possibly go through as a mother.  To know that your baby is off there and you can‘t do anything about it. 

(END VIDEO CLIP)

BAY:  Jason is back home for 30 days and then it‘s back to Iraq.  He says he might even reenlist when his time is up.  His parents disapprove, but for now they are savoring their time together.  That‘s this week‘s “American Moment.”

Thanks for watching.  Deborah Norville is back on Monday.  She will be joined by Jack Ryan.  He was a dream-come-true candidate for the Republican party, but it was apparently too good to be true.  The one-time investment banker-turned-teacher dropped out of the Illinois Senate race after records from his divorce from actress Jeri Ryan became public.  They claim that he took her to sex clubs and asked her to have sex with him in front of other couples.  Now he says the media‘s focus on candidate‘s personal sex lives serves no public purpose and is harmful to democracy.

That‘s Monday.  Have a good weekend.

END   

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