"The marketing issue will be dealt with in . . . North Carolina court," said Joseph Helewicz, VP-public affairs for Brown & Williamson Tobacco Corp. "What you see in this Liggett settlement is nothing more than a business deal for [investor and Liggett CEO Bennett] Lebow."
Still, the Liggett deal-a wide-ranging settlement of health-related lawsuits and public acknowledgement that tobacco causes cancer, is addictive and is marketed to teens-poses problems for tobacco companies.
FTC WANTS PAPERS
A Federal Trade Commission executive told Advertising Age last week the agency wants to see the papers Liggett is giving the attorneys general, including company lawyers' notes of conversations with other tobacco companies that could offer documentary evidence about tobacco marketing to kids or other illegal activities.
Last week, a judge in North Carolina issued a temporary restraining order against the release of those documents.
Liggett, with a 1.6% brand share for its combined L&M, Eve, Chesterfield and Lark cigarettes, is losing money, with January sales off 18%.
The deal provides for the company to pay 25% of pre-tax profits to the states and to include the warning "smoking is addictive" on its cigarette packs.
The company does not spend heavily in media for the brands. Its 1996 total was about $1 million.
"There is not a lot here," said Manny Goldman, an analyst at PaineWebber, noting that a number of states are not even in the agreement.
"There is a mushy quality to it. When it gets down to an individual jury trial, not very much has changed," he said.
Mr. Goldman also questioned whether the pact with the attorneys general could really limit suits against Liggett and suggested Congress would have to act.
Diana Temple, an analyst at Salomon Bros., said that, while she downgraded some tobacco stocks because of concerns about the impacts of adverse publicity, she doesn't think the agreement actually affects the cases much.
"I don't see any dramatic incremental effect," she said. "It was presented in a fashion to sensationalize, but there are already millions of documents out there and the key is how the documents are used in court."
The impact of publicity could be significant, however.
Texas, several other states and the U.S. Congress are currently considering proposals for tobacco tax increases. Last week, Walgreen Co. pulled R.J. Reynolds Tobacco Co.'s Camel Menthol cigarettes out of its stores, citing slow sales and protests by groups charging the brand targeted African-Americans.
Despite statements by the attorneys general saying Liggett admitted knowledge of industry efforts to reach 14-to-18-year-olds, a spokesman for Liggett said the marketer did not itself admit to marketing to those under 18.