Stewart Board Stands Behind Maligned Martha

The ruling stems from a March 24 subpoena served by Comey's office on a public relations firm, in which prosecutors sought to compel one of the firm's employees to testify before the grand jury. Comey had sought to force the employee to testify about some of her communications with the target of the investigation. But the employee refused, saying her communications were protected by the attorney-client privilege.

One of Stewart's main publicists is Susan Magrino, who does public relations work for many high-profile people and celebrities. Magrino wasn't immediately available for comment.

Judge Kaplan said the public relations firm had been hired because the attorneys for the target of the investigation were concerned that "unbalanced and often inaccurate press reports about the target created a clear risk that the prosecutors and regulators conducting the various investigations would feel public pressure to bring some kind of charges against her."

The judge said that the work of defense lawyers would be undermined if they "were not able to engage in frank discussions of facts and strategies with the lawyers' public relations consultants."

Last summer, when the probe began heating up, Stewart hired Morvillo as her lawyer and also retained the services of the Brunswick Group to provide public relations services, in addition to Magrino, her longtime publicist. Brunswick said it no longer represents Stewart.

Brand Management

Analysts were focusing on potential damage in the firm's relationship with the slimmed-down Kmart, which recently emerged from bankruptcy, and with advertisers in the Martha Stewart magazines. The company's publishing business accounts for the lion's share of its revenue.

Terrance MacKay, an analyst at Morningstar, says consumers aren't likely to stop buying Martha's wares as a result of the charges. But he believes the business will suffer over the long term unless Stewart is completely exonerated.

"It's not a question of whether consumers want to do business with her -- it's a question of whether Kmart and other retailers want to do business with her," MacKay said. "The firm's competitive advantage is built upon her reputation. As long as that reputation is harmed, it hurts the company's business."