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CLINTON'S REGULATIONS SEEK TO SMOKE TOBACCO ADVERTISING

     President Clinton yesterday approved Food and Drug
Administration proposals in an "ground-breaking regulatory"
effort to curb teen smoking.  Part of the FDA's plan would
"sharply limit" cigarette advertising and sponsorship, according
to Richter and Shogren of the L.A. TIMES.  After the
announcement, five U.S. cigarette manufacturers filed suit in
U.S. District Court in North Carolina, and with ad agency Coyne
Beahm joining the suit, contending the new rules "impinge on
advertisers' rights" (Richeter & Shogren, L.A. TIMES, 8/11).
NBC's Brian Williams:  "The President's plan hits the tobacco
companies in many ways -- in sales, advertising, and even image,
by taking brand names out of sporting events.  Winston Cup auto
racing would become RJ Reynolds racing." (NBC, 8/10). "Nightly
Business Report's" Dennis Moore: "Should the Marlboro Man be
associated with the glamour of big time sports? ... President
Clinton says that isn't even a close call" ("NBR," PBS, 8/10).
     TROUBLE FOR AUTO RACING?  The FDA would have the power to
ban the "use of cigarette and chewing tobacco brand names in
event sponsorship," writes Paul Farhi in today's WASHINGTON POST.
Corporate names like Philip Morris and RJ Reynolds could still be
used "in connection with events."  Farhi writes "by far the
biggest beneficiary of tobacco money has been auto racing."  RJ
Reynolds has sponsored the NASCAR Winston Cup auto racing series
since 1970, "doling out an estimated $10 million a year in
organizing funds, prize money and contributions to local tracks."
Philip Morris, maker of Marlboros, sponsors Indy Car and Formula
One cars and races.  NASCAR spokesperson Kevin Triplett: "Where
our relationship with (Winston) goes from here is hard to say"
(WASHINGTON POST, 8/11).  "Taking a major -- but not lethal --
hit would be NASCAR," writes Dave Fay of the WASHINGTON TIMES.
NASCAR and their sponsors could get around Clinton's proposal by
renaming everything connected to tobacco after its manufacturer -
- Winston Cup to Reynolds Cup, but "that is not thought to be a
long-term solution." One NASCAR observer: "The customer can
identify between Winston and Marlboro, but probably not between
owners" (WASHINGTON TIMES, 8/11).  Some executives say if tobacco
sponsorships were banned, "it could create additional financial
hardships" for fans.  Ticket prices may have to increase and
races might switch to pay TV from free TV  (USA TODAY, 8/11).
ESPN'S Keith Olbermann: "The tobacco industry will admit,
however, it did not back NASCAR just out of a love of the sport.
But it will not admit that it's sponsorships and the ads painted
directly on the cars are designed to advertise cigarettes on TV."
Senior VP of Philip Morris Marc Firestone:  "It defies my
understanding of logic how one can associate the issue of youth
access with the issue of sports sponsorship or advertising or
other techniques that we use to market our products to adult
smokers who choose to smoke" ("SportsCenter," ESPN, 8/11).
Racing officials in Texas "blasted" the President's plan. Billy
Meyer, who owns Texas Motorplex, a stop on the Winston Drag
Racing series: "All he (Clinton) is doing is a modernized
prohibition.  If it's a legal product, how can you ban
advertising of it?"  Jim Hunter, President of Darlington South
Carolina Raceway, said smoking and tobacco was a "part of the
sport's heritage.  We believe in loyalty, and that may not be
politically correct this days" (FORT WORTH STAR TELEGRAM, 8/11).
In his news conference, Clinton responded "angrily" at arguments
by advertisers regarding their right to free speech.  Clinton:
"It is illegal for children to smoke cigarettes.  How then can it
be legal for people to advertise to children to get them to smoke
cigarettes?" (Todd Purdham, N.Y. TIMES, 8/11).
     ARE OTHER SPORTS HURT? Some in the sports industry predicted
the Clinton plan would have little effect on other sports.
Sports Marketer Allen Furst: "Most sports are already moving away
from cigarette advertising" (N.Y. POST, 8/11).  But ESPN's Keith
Olbermann noted that sponsorship is "only one item on the
President's hit list.  Almost every ballpark in almost every
sport has a cigarette billboard of some kind," and the plan could
effect "sports magazines."  Clinton's plan says publications with
more than 15% readership among people under the age of 18 would
could not run cigarette ads that include color printing or
photographs ("SportsCenter," 8/10).  Last year the tobacco
industry spent $284.8M in magazine ads, accounting for 3% of
total revenue (Kevin Goldman, WALL STREET JOURNAL, 8/11).
     WHAT'S NEXT:  The FDA move "was a non-story on Wall Street,
possibly reflecting a view that the regulation may never come to
pass.  Most tobacco stocks didn't move much," according to the
WALL STREET JOURNAL.  Analyst for Sanford C. Bernstein & Co. Gary
Black said ad budgets will "drop right away," but that cigarette
makers "will eventually find new ways to market" (WALL STREET
JOURNAL, 8/11).  While the new rules "do not require
congressional approval, Congress theoretically could stop the
President's plan by weakening the FDA."  The reforms would not
take affect until after a public comment and "months of fine-
tuning -- a process that could take a year or two" (L.A. TIMES,
8/11).

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