The nation's four largest tobacco companies will
approve an agreement that would limit their marketing and
advertising if a majority of the 46 states which have not
yet reached deals with the companies agree to the terms
formally announced yesterday. The states' attorneys general
must approve or reject the deal by Friday (Mult., 11/17).
WHAT IT MEANS: The WALL STREET JOURNAL's Hwang &
Geyelin report that the agreement is "emerging as a far
better deal for cigarette makers than widely expected" as
the settlement does not contain "many" of the restrictions
that were part of an earlier proposal signed in '97, such as
total bans on all outdoor ads and sponsorship of sports
events (WALL STREET JOURNAL, 11/17). Tobacco companies can
now sponsor one event per year and they also "retain the
ability to promote their products within such events." For
example, companies can now put their brand names on race
cars and advertise outside at the event site (Sally Beatty,
WALL STREET JOURNAL, 11/17). In Charlotte, David Poole
writes that RJR's sponsorship of NASCAR's Winston Cup series
looks safe under the proposed deal. But its support of the
NHRA and Senior PGA Tour's Vantage Championship may be
affected. RJR would have to "drop" these sponsorships or
"transfer" them to non-tobacco products. Another "potential
casualty" is RJR's support of the Winston Racing Series at
small tracks throughout the U.S. As part of the deal, the
sponsorship deals will be allowed to continue "for up to
three years or until any contract signed before Aug. 1
expires, whichever comes first." Poole reports that auto
racing is "covered by specific language" in the deal, which
allows sponsorship of "a single national or multi-state
series or tour" (CHARLOTTE OBSERVER, 11/17). Tobacco is the
largest corporate partner of auto racing with a reported
$220M in racing sponsorships in '98, and in Indianapolis,
Bill Koenig reports that under the proposed plan, tobacco
companies "would have to focus" on one brand, rather than
promoting a range of brands. Brown & Williamson Manager of
Sponsorships Bert Kremer said that although the company has
to analyze the pact before making decisions, he said, "It
would certainly be our intention" to continue motorsports
sponsorships (INDIANAPOLIS STAR-NEWS, 11/17).
THE DOMINO EFFECT OF A DEAL? In Milwaukee, Tom Daykin
reports that to help pay for its share of the settlement,
Philip Morris "might" be forced to sell Miller Brewing or
Kraft Foods (MILWAUKEE JOURNAL SENTINEL, 11/17).
