PM MOVES TO DODGE REGULATION;TOBACCO MARKETER'S AD-LIMIT PLAN CALLED NOT ENOUGH BY WHITE HOUSE

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Twenty-six years after volunteering to remove cigarette ads from TV, Philip Morris Cos.' surprise offer to remove them from other media-if it can avoid Food & Drug Administration regulation of tobacco-is sending reverberations throughout the marketing world.

The question is: Will the offer prevent greater regulation of tobacco or open more advertising to greater regulation?

Philip Morris' offer could be a precedent that increases pressure on marketers of other products.

The stunning proposal capped a week that saw the U.S. Supreme Court rule unanimously in favor of free commercial speech in a Rhode Island case involving liquor advertising, just days before Rep. Joe Kennedy (D., Mass.), as expected, called for broad restrictions on alcoholic beverage marketing (AA, May 13).

Philip Morris proposed legislation be enacted to ban outdoor boards within 1,000 feet of a school or playground and limit the magazines in which cigarettes can advertise-restrictions PM is fighting in court as "unconstitutional."

Both R.J. Reynolds Tobacco Co. and Brown & Williamson Tobacco Co. said they are studying the Philip Morris proposal.

PM extended its proposal as an olive branch to President Clinton and his concerns about youth smoking, since the president had said he preferred a legislative solution and had called for the industry to make an offer.

TIME TO ACT

"We need to act on this issue now, not just continue the debate," said Steve Parrish, Philip Morris senior VP-corporate affairs, noting the government's plan to give the FDA power over tobacco marketing would be tied up in court for years.

U.S. Tobacco Co., the largest seller of smokeless tobacco, joined with Philip Morris in stating it would support the seemingly sweeping restrictions.

Besides the ad restrictions, the two companies suggested other steps on youth smoking, including bans on cigarette vending machines and on sales of packages with less than 20 cigarettes.

THE CRITICS RESPOND

However, even as Philip Morris was taking out page newspaper ads in major markets May 17 to explain the plan, critics complained some of the provisions would have little effect and noted they were far less dramatic than FDA's proposal, which had called for banning ad characters and imagery as well.

"We would be the first to welcome a serious proposal," said Matthew Myers, counsel to the Campaign for Tobacco-Free Kids. "This falls far short. It promises a change in advertising without actually producing one."

He contended the event sponsorship limits proposed by Philip Morris exempt most of the sponsorship activities engaged in by tobacco companies.

President Clinton last week praised Philip Morris for coming forward but also said the proposal didn't go far enough.

"Under the proposal, kids of this country would still be confronted with Joe Camel and the Marlboro Man on billboards, in stores and all the magazines," said the president. "So I don't think it's enough, but I do believe that it's an indication that there may be some way we can agree on legislation to do this."

Gary Black, a tobacco industry analyst with Sanford C. Bernstein & Co., suggested the tobacco company was putting its ducks in order following the Supreme Court decision that will probably make it harder for FDA to regulate tobacco broadly (see Page 3).

`NOTHING TO LOSE'

"They've got nothing to lose. They get a paper trail that they can use to say in court is a viable alternative that FDA hasn't tried yet," he said. He added that Philip Morris, with its No. 1 Marlboro brand with a pack color and design embedded deep in consumers' psyches, may have the least to lose from restrictions anyway.

Advertising, marketing and media groups, however, are worried Philip Morris went too far, and could prompt more challenges to marketing tactics for unpopular product categories. There was also some concern about industry solidarity vs. potential government restriction.

"A lot of individual cowboy stuff is going on out there," said one outdoor ad executive, who noted not only Philip Morris' announcement but earlier ones from Liggett Group of a settlement of tobacco litigation and 3M Media's decision not to accept tobacco ads.

"We think the FDA's original proposal was unconstitutional and we don't think the legislation proposed by Philip Morris will make it any less unconstitutional," said George Gross, exec VP-Washington, Magazine Publishers of America.

Philip Morris's suggestions "go beyond what is allowed constitutionally. There is only one Constitution and no distinction between products," said Dan Jaffe, exec VP of the Association of National Advertisers.

WRONG MESSAGE

Hal Shoup, exec VP of the American Association of Advertising Agencies, said he is worried about the precedent.

"There is a message that is implied within this action. It certainly is a message that they have every right to send, but it does not change our position. Whether it's FDA regulation or laws from Congress, we view them as unconstitutional," Mr. Shoup said.

Philip Morris' Mr. Parrish, pressed on his company's willingness to accept legislation it repeatedly has said would not stand up in court, stated that the proposals more narrowly tailor restrictions to locations rather than content. He also said the company would not challenge the law.

Contributing: Michael Wilke, Keith J. Kelly.

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