What happens to Paula Deen’s empire?

Paula Deen

When Paula Deen admitted in a deposition that she used racial slurs, the Queen of Butter had a lot to lose. The first blow happened when The Food Network dropped her show on Friday.

But Tuesday, ABC News had a story about how much the admission was costing her business:

Paula Deen is doing all she can to shore up her image and her estimated $17 million business empire in the wake of a media firestorm ignited by her confession that she has used a racial epithet.

Forbes last year ranked Deen the fourth highest-earning celebrity chef. The so-called butter queen made $4.5 million in 2008 and has been on an upward climb every year since, banking $17 million in 2012, according to the magazine.

That is until the recent media firestorm hit and the Food Network said it would not renew her contract.

“To see somebody who has been so closely aligned to her — they both grew famous and wealthy together — drop her, has created a domino effect,” Forbes wealth reporter Caleb Melby told ABCNews.com. “It’s made a lot of companies that thought they could wait for this to blow over second-guess themselves.”

Melby estimated that $2.5 million of Deen’s earnings come from the Food Network, which was paying her about $50,000 per episode. The Smithfield deal, in which Deen served as a spokeswoman for the brand, including her own line of hams, since 2006, will likely cost her another $1 million to $2 million.

The New York Times reported Monday about her losing major sponsors:

Smithfield Foods, whose hams and other products Ms. Deen has endorsed since 2006, severed its relationship with her Monday. Smithfield, the world’s largest pork producer, has been the flagship in Ms. Deen’s collection of at least 17 licensing and endorsement partnerships.

Ms. Deen’s empire began to crumble last week after her deposition in a discrimination lawsuit was leaked to the news media. By Friday, the Food Network announced it was terminating her contract and immediately pulled her two shows from the network.

At the center of the lawsuit is Lisa T. Jackson, who for several years considered herself Mrs. Deen’s right hand, helping manage her restaurants and becoming close to the Deen inner circle.

Ms. Jackson filed the suit in March 2012, after she spent six months trying to turn around Uncle Bubba’s Oyster House in Savannah, Ga., which is largely run by Ms. Deen’s brother, Earl W. Hiers, who is known as Bubba. Ms. Deen also operates The Lady and Sons restaurant in Savannah with her sons, Jamie and Bobby.

At Uncle Bubba’s, the federal lawsuit contends, racial slurs and jokes about women, Jews and blacks were common. Workers were intimidated and pornography was left on computers in the kitchen.

Ms. Deen and her brother have long contended that Ms. Jackson was bent on revenge. Before she filed the suit, she asked for $1.2 million, Ms. Deen’s lawyers have said, and threatened to take the matter public if she was not paid.

But according to CNN Money, orders for her cookbook are pouring in:

Advance orders for Paula Deen’s new cookbook have surged since the Food Network and Smithfield Foods axed her for using a racial slur.

Orders for “Paula Deen’s New Testament: 250 Favorite Recipes, All Lightened Up” surged on Amazon by nearly 1,300% in the last 24 hours.

The cookbook was ranked 115th on Tuesday, compared to a ranking of 1,592nd on Monday

“Paula Deen’s New Testament” is not available until October.

Another cookbook, “Paula Deen’s Southern Cooking Bible,” jumped 114% to Amazon sales rank 350, from 750 in the prior 24 hours.

The Huffington Post reported several other corporations were reviewing their ties to Deen:

Here are the highlights:

    • QVC and Kmart, which both sell Deen-branded homewares, are allegedly “reviewing their options.” QVC issued a statement on Paula Deen that said the company has “no immediate plans to have her appear on QVC.”
    • Kraft said it hadn’t worked with Deen in over a year, and that it has no current business relationship with her.
    • Novo Nordisk, which manufactures the diabetes drug (Victoza) that Deen endorses, says that it has no plans to drop Deen.
    • Smithfield Hams, which has a longstanding partnership with Deen, did not respond to requests for comment from CBS This Morning.

The Bloomberg Businessweek story points out that one network isn’t dropping her just yet:

You’ve no doubt heard that Paula Deen, of Bacon Cheeseburger Meatloaf and doughnut sandwich notoriety, was fired from the Food Network after she admitted in a deposition that she used racial slurs. But one of Deen’s shows, Paula’s Home Cooking, also airs on the Great American Country cable channel. (Both the Food Network and GAC are owned by Scripps Networks Interactive.) Unlike the Food Network, though, GAC is being curiously circumspect about Deen’s future. When asked about the status of Deen’s show and contract with GAC, Lee Hall, a spokesperson for Scripps, wrote in an e-mail: ”I really can’t add any detail beyond the statement issued on Friday.”

It looks like the verdict is out on what will happen to Deen. Many of her supporters are rallying in her defense, while others would like to see her fade away.

I find this story interesting since not only will it affect a celebrity chef, but could also hurt ratings for a channel that she helped bring to prominence. But even more interesting is the Scripps Networks’ ability to cut ties on one hand and retain them on the other. No matter the outcome, this particular TV owner will be able to keep the advertising income from exposure to this star.