NEWSWEEK COVER: 'Martha's Last Laugh'

NEWSWEEK COVER: 'Martha's Last Laugh'

Donald Trump On Stewart: 'That She Should Be in Jail and O.J. Simpson Is Playing Golf in Florida Is Ridiculous'

Stewart Sowed Seeds of Her Comeback By Restocking Her Board With Allies Like Former ABC Entertainment President Susan Lyne

Stewart's Lawyers in Talks With SEC About Potentially Returning Stewart to CEO Role in Five Years; Deal Could Set Legal Precedent Expanding Definition of Insider Trading

NEW YORK, Feb. 27 /PRNewswire/ -- When Martha Stewart, 63, walks out of jail, most likely this Friday-two days before her official release date -- America will be ready to embrace a reformed woman. (Sources tell Newsweek that prison officials can't process Stewart's release on a weekend, so they're setting her free two days early.) The rollout of Martha's Third Act is being carefully stage-managed by a new team of New York and Hollywood A-listers like reality TV guru Mark Burnett, Donald Trump and Stewart's new CEO Susan Lyne, the ex-ABC exec who greenlighted "Desperate Housewives," reports Detroit Bureau Chief Keith Naughton in the March 7 issue of Newsweek (on newsstands Monday, February 28). "The American public loves a great comeback," says NBC TV chief Jeff Zucker, who is airing Stewart's new daytime and prime-time shows. "And her story is even more compelling now."

(Photo: http://www.newscom.com/cgi-bin/prnh/20050227/NYSU002 )

During her trial, Stewart discovered she had an unlikely ally in Mark Burnett, the creator of "Survivor" and Trump's "Apprentice" show. Stunned by Stewart's slow disappearing act in her own magazine-"It was the equivalent of McDonald's taking down the Golden Arches," he says-Burnett felt Martha's fall from grace would follow America's favorite story line all the way to redemption. So he asked Stewart for a meeting, at which he pitched her on two shows: an hourlong daytime show in front of a live audience and a prime-time reality show. Each would be loosely scripted to play off all the spontaneity and sense of fun Burnett saw in Stewart, reports Naughton.

Newsweek reports that Donald Trump was initially cool to Burnett's idea of giving Stewart an "Apprentice" spinoff. Burnett finally convinced Trump by showing him how spinoffs from "CSI" and "Law & Order" actually boosted the ratings of the original shows. Now Trump, who considers Stewart an old pal, has become her most vociferous public defender. "That she should be in jail and O.J. Simpson is playing golf in Florida is ridiculous," he tells Newsweek. "But she took it standing up. There were no tears. No dropping to the ground. I've seen very strong men who can't handle that."

Around the time she was first meeting Burnett, Naughton reports, Stewart was also reaching out to another power broker who would become instrumental in her revival: Charles A. Koppelman, the wealthy, well-connected music impresario who is a crisis manager to the stars. Koppelman got word to Stewart during her trial that he was willing to help her. She phoned him as soon as her trial was over and asked if he'd be interested in joining her board. Now as vice chairman of Martha Stewart Living Omnimedia, Koppelman is cooking up a plan for a line of how-to DVDs culled from the 1,500 hours of Stewart's old morning TV show.

Stewart also moved fast to snap Susan Lyne, the final member of her comeback machine, into place. Naughton reports that the day after Lyne was fired as ABC Entertainment president last May, a headhunter contacted her about joining Martha Stewart's board. Soon Stewart herself was wooing Lyne and had her on the board by June. Five months later, after Stewart reported to prison, the board replaced CEO Sharon Patrick with Lyne, who by then was getting the last laugh on ABC as "Desperate Housewives" had become a phenomenon.

Newsweek also reports that Stewart has embraced prison life. She's foraging the grounds for dandelion greens and crab apples to whip into salads and tarts. She's teaching the other inmates yoga and how to start a business, in between reading Bob Dylan's autobiography and working her 12-cents-an-hour job cleaning the administration office (toilets included). And around the prison yard, there's nary a whiff of Hamptons snobbery when someone sits at her lunch table. "When my friend, an older lady, sat down with her, they talked about microwave cooking," says one former Alderson inmate who keeps in contact with women there.

Stewart helped one inmate who had been disowned by her family by writing a letter to the woman's sister. Stewart wrote movingly of the isolation of prison life and implored the woman to reach out to her incarcerated sister. The letter worked and the family reunited, Stewart's friends say. In return for her loyalty, the inmates try to help Stewart protect her privacy, crowding around her to block the cameras of the paparazzi.

Newsweek's Martha Stewart cover package also includes an exclusive report by Senior Writer Charles Gasparino on the implications of a potential deal between federal regulators and Stewart's lawyers-still in the early stages of discussion-that could return Stewart to her role as CEO of her company in five years or possibly less. In the talks, first reported by Newsweek on its Web site last week, Stewart's lawyers and the Securities and Exchange Commission are considering waiving a rule that says convicted felons cannot run publicly-traded companies. But there's something in it for the SEC, Gasparino reports. The deal could set an important legal precedent, making it easier for the SEC to crack down on future cases of insider trading.

The SEC's goal is to significantly expand its ability to charge people with insider trading abuses in the future, expanding the definition of "insider" to include third parties such as brokers and others who pass along secrets and other tips to their favorite clients. (Stewart was never convicted of criminal insider trading, just lying about the circumstances surrounding the stock she sold after receiving a tip from her broker at Merrill Lynch that Sam Waksal, a friend of Stewart's and former CEO of ImClone, was trying to unload his stock.) One SEC official told Newsweek that the fact that Stewart's lawyers are willing to negotiate "shows that the case has sufficient merit and creates a precedent as to what cases have merit."

http://www.msnbc.msn.com/id/7038081/site/newsweek /

(Read Newsweek's news releases at http://www.newsweek.com/.
Click "Pressroom.")

Photo: NewsCom: http://www.newscom.com/cgi-bin/prnh/20050227/NYSU002
AP Archive: http://photoarchive.ap.org/
AP PhotoExpress Network: PRN1
PRN Photo Desk, photodesk@prnewswire.com
Source: Newsweek

CONTACT: Abigail Lorge of Newsweek, +1-212-445-4078

Web site: http://www.newsweek.msnbc.com/

-------
Profile: intent