Martha Is No Stern

When Howard Stern announced that he was jumping ship for Sirius Satellite Radio (Nasdaq: SIRI  ) , the firm's increase in value was measured in billions of dollars. It's ironic, then, that the arrival of an even bigger celebrity, Martha Stewart, has been greeted with such relative quiet. Shares of Sirius have climbed a couple of percentage points, about the half the somewhat warmer reception given to stubs of Martha Stewart Living Omnimedia (NYSE: MSO  ) .

I'd like to think -- despite clear evidence to the contrary -- that the reserve is being caused by sober reflection on what the deal will earn, if anything, for Sirius shareholders. According to reports, the channel will carry commercials, and the dismal ad-revenue picture at Martha's publications suggests that advertisers don't find the rehabbed domestic diva nearly so interesting as does the slack-jawed, scandal-mongering, quick-to-forgive-as-long-as-there's-ratings-in-it-for-them press.

By every metric, Martha's empire is in trouble, but you wouldn't know it by some of the harebrained financial reporting out there. In just one oft-repeated example, a Forbes article characterizes Martha's product sales at Kmart, now Sears Holdings (NYSE: SHLD  ) , as "healthy." Don't be fooled by this kind of shoddy journalism, folks. (The briefest glance at quarterly results reveals that higher Kmart revenue is due to higher guaranteed minimums, not the popularity of Martha's products.)

Martha, of course, will make out just fine. She always does. Last year, despite the firm's dismal performance and her stint in prison, she raked in $1.2 million in cash in salary, bonuses, and other compensation.

And she'll do even better next year. Her current contract and position as "founder" gives her $900,000 a year plus a guaranteed bonus of $495,000, and a "non-accountable" expense allowance of $100,000 per year. There's also the matter of $500,000 minimum for each "edition" of The Apprentice. (Let's assume and hope, for shareholders' sake, that an edition is a season, not an episode.) If that $2 million a year doesn't sound like much, keep in mind that she's only one of the execs, and the high water mark for MSO's net income was less than $24 million.

I've said it before, and I'll say it again: If I could get shares in Martha Stewart's net worth, I'd take all I could buy. But the person and the company are separate entities -- with the person getting richly rewarded no matter what happens to the firm. Unless this Martha deal is unlike any other, Sirius shareholders will soon be putting up the cash for a similar transfer of wealth -- from their pockets to Martha's. I'd call that a bad thing.

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Seth Jayson is continually amazed by Martha. At the time of publication, he had no positions in any firm mentioned, though he wishes he'd followed his own advice and shorted the heck out of MSO. View his stock holdings and Fool profile here. Fool rules are here.


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