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TIME INC. HUDDLE ON CIG ADS SHAREHOLDING RELIGIOUS GROUP PRESSES FOR CURB

By Published on .

At a closed door meeting in New York last week, Time Warner executives huddled with representatives of a dissident stockholder group bent on pushing the media giant to re-evaluate its policy regarding cigarette advertising.

It remains to be seen whether the meeting was a negotiating ploy by Time Warner to avoid a potentially noisy fight at the upcoming May 19 stockholders meeting or a first step that could have far-ranging consequences on millions of dollars of cigarette advertising.

Time Inc. publishers were surprised the meeting took place and were apparently scrambling late last week to find out what was discussed.

Though no substantive agreements emerged from the March 30 meeting, the Interfaith Center on Corporate Responsibility, a coalition of investors belonging to religious-affiliated groups that have been battling corporate boards for several years on the issue, called the session a "major breakthrough."

Collectively, three stockholding groups within the coalition control 15,000 shares of Time Warner stock valued at about $500,000. Yet they have apparently been able to force a powwow with the media giant against a backdrop of an increasingly politically charged atmosphere surrounding cigarettes in the U.S.

This move by shareholder groups into the board room may be only the tip of the iceberg, said Donald Roberts, chairman of the Stanford University Communication Department. "The advertisers and the media have been hiding behind the First Amendment on the smoking issue," he said, adding that a frustrated public will soon move to boycotts over smoking as well as against alcohol and the high violence content of programming.

At Time Warner's stockholders meeting a year ago, the New York-based coalition introduced a resolution urging the company's board to consider seriously curbing or eliminating the cigarette/tobacco ads. But the resolution was soundly defeated when most of the institutional investors sided with the board. In the ensuing year, however, cigarette advertising has become an even more politically explosive issue.

At stake for Time Inc. magazines is $60 million-plus in revenue. Tobacco has seriously shrunk as an important ad category for magazines, with little chance of rebounding. Once the No. 1 ad revenue generator for magazines, the category dropped out of the top 10 last year.

In return for Time Warner's agreement to reconsider its policy on accepting tobacco advertising, the coalition withdrew a shareholder resolution requesting a study to develop ethical criteria for accepting cigarette ads.

The interfaith coalition now claims it has a commitment from Time Warner not only to meet with top executives but to present them with evidence against tobacco advertising at a series of meetings, the first held last week.

"We are going to engage in a serious dialogue about the ethics of tobacco advertising," said Timothy H. Smith, executive director of the coalition. The group is composed of pension plan investors for Protestant, Catholic and Jewish religious organizations.

"We will be encouraging a hard look at the types of ads they put in," Mr. Smith said. "We think the ads for Joe Camel, for example, manipulate youths, and we think the companies that publish those ads bear at least partial responsibility."

In addition to Mr. Smith, those present at the March 30 meeting at Time Warner headquarters included Capuchin Franciscan Brother Michael Crosby, Time Inc. Exec VP Donald Barr and several other Time Warner officials.

Mr. Smith acknowledged his group had some reluctance about withdrawing the resolution, fearing the company might just want to get the proposal off its annual meeting's agenda, where similar resolutions have twice before been debated and defeated.

According to Publishers Information Bureau, $61.5 million, or 31% of the total $200 million in 1993 magazine ad revenues from cigarettes and tobacco marketers, was spent in Time Warner's major magazines. The company's People, with $25.1 million in tobacco ad revenues, and Sports Illustrated, with $22.4 million, topped the list.

Time Warner acknowledged meeting with Mr. Smith and Brother Crosby, whose order is sponsoring the proposal, to discuss tobacco advertising, but declined to say whether a review of ad policy is under way.

"We met with them and gave them an opportunity to express their concerns," said a spokesman for Time Inc., the company's magazine division. "We've established a dialogue with them. We left open the door for future discussions."

Time Warner's meeting comes as the religious coalition's members, shareholders in many major corporations through pension funds, are extending their challenge beyond tobacco to alcohol marketing issues. In the coming six weeks, eight companies, including media companies Knight-Ridder and Gannett Co., face stockholder votes on resolutions relating to tobacco and alcohol advertising.

Also facing a vote for the first time is Anheuser-Busch.

The proposals range from traditional requests for tobacco companies to study whether cigarette campaigns target minorities and the poor, to newer ones requesting that all tobacco promotional items-even hats and T-shirts-carry labels warning about the health risks of smoking.

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