Reality Check Halts Momentum at Martha Stewart

Meanwhile, Stewart herself gets to lay claim to much of the financial benefits from the relationship with Burnett. Much of the hype surrounding the stock in recent days seemed to involve the idea of Burnett following his successes Survivor and The Apprentice with the development of a hit prime-time TV series involving Stewart.

Under a new contract inked with the company earlier in September, Martha Stewart Living agreed to pay its founder two-thirds of any talent fees the company received from Burnett's production company -- amounting to at least $500,000 -- for each season of the prime-time show. The company also paid Stewart $200,000 essentially as a retainer fee to appear in its television and radio programs.

Further, it agreed to pay her at "fair market value" to appear in any new programs -- other than the prime-time show -- which Burnett agreed to help develop. In addition, the company will give Stewart a 10% cut of the gross revenue of those shows once they go into reruns.

Under Stewart's previous contract, the company did not pay her extra for TV and radio appearances.

In addition, Burnett's production company will own the prime-time show and other new programming developed with Martha Stewart Living, according to Drewry. That means the company might see little revenue from the deal besides Stewart's talent fees -- the bulk of which it already has agreed to give to Stewart.

Drewry also noted that the success of The Apprentice hasn't improved the financial status of Donald Trump's Trump Hotels & Casino Resorts (DJTC.OB Quote).

"There will be no impact [of the deal] on MSO's TV division," Drewry wrote.

A Martha Stewart Living representative declined to comment on the specifics of the company's deal with Burnett. A representative for Burnett's production company did not return a call seeking comment.