Abstract
The article discussed the testimony of PM Chief Executive Officer Michael E. Szymanczyk in the ongoing U.S. Department of Justice's (DOJ) civil racketeering lawsuit. U.S. Attorney Sharon Eubanks asked Mr. Szymanczyk about Philip Morris' corporate makeover program, "PM-21," which has been made visible to the public through the company's youth smoking prevention television commercials, the publicizing of PM's support for domestic violence shelters and feeding the hungry, and the cutting of some cigarette advertising from youth-oriented publications. Szymanczyk told the court that PM started the PM-21 program to bring the company into alignment with society's expectations of a responsible company and thus boost the company's stock value.
U.S. attorney Sharon Eubanks questioned whether the PM-21 program wasn't actually publicity ploy instead, aimed at mitigating public anger at the company and minimizing the potential for large jury awards in court cases. To back this up, Ms. Eubanks presented a 1999 memo written by Steve Parrish, (Vice President and General Counsel for PM) and sent to all PM employees. In the memo, Mr. Parrish introduced 11 pages of comments from financial analysts about the newly launched PM-21 program. Many of the comments focused on the effect the PM-21 program was expected to have on potential jury awards:
"In the long term, we feel that a campaign such as this will help mitigate the need on the part of juries to further punish tobacco companies for past behavior..." [Page 2065572428]
"We believe that over time the [PM21] program should (1) moderate public anger against the company and the tobacco industry; (2) reduce the risk of large-scale punitive damage awards in individual smokers claims..." [Page 2065572429]
"We reiterate our initial assessment of the image campaign as a long-term positive for the company based on its ability to mitigate 'jury anger." [Page 2065572435]
"...we feel that the company's 'admission', particularly over time, will actually strengthen the company's legal defense and reduce the risk of large scale punitive damage awards in individual smoker cases..." [2065572437]
"Leaving the 'flat-earth' society should moderate juror anger, a key factor in the juries' willingness to punish Philip Morris...The company's revised position, in our opinion, will be viewed as far more reasonable and will likely help moderate potential juror anger." [2065572437]
The analysts also praised PM for avoiding offering an apology to the public for the company's decades of wrongdoing, for carefully wording its public statements to preserve its current liability defenses, and for continuing to sidestep any direct admission about the link between smoking and disease.
Fields
- Notes
The interoffice memo from Steve Parrish to all PM employees that served as the cover page for the analysts' comments can be seen here:
Title: ANALYSTS' COMMENTS ON PM21
Organization Authors: PHILIP MORRIS COMPANIES INC
Person Authors: PARRISH,S
Document Date: 19991015
Document Type: MEMO, MEMORANDUM
Bates Number: 2071041506
Page Count: 1
Collection: Philip Morris
URL: http://legacy.library.ucsf.edu/tid/znm32c00
- Quotes
Sanford C. Bernstein & Co.
Bill Pecoriello
Wednesday, October 13, 1999
PHILIP MORRIS IMAGE CAMPAIGN IS PART OF LONG TERM SOLUTION; NO QUICK FIXES; OUTPERFORM
1. In the long run, we believe the tobacco industry's track record in individual suits is the key to valuation...Anti-tobacco groups have demonized the industry and influenced juries (as witnessed in San Francisco and Oregon) while the industry hid behind closed doors. The public image campaign unveiled by Philip Morris yesterday addresses these concerns head-on...
...For years Philip Morris had allowed various anti-tobacco groups (e.g., ASH/Campaign for Tobacco Free Kids) to define its public image without opposition. These groups have been so effective that MO's [Philip Morris' stock symbol] favorability rating versus other companies...placed it squarely in the bottom quartile...The effectiveness of these anti-tobacco campaigns also became evident in San Francisco and Oregon where juries seemingly felt a need to punish or send a message to the tobacco companies. Based on research conducted by Philip Morris...this image campaign is expected to have a positive impact on Philip Morris' corporate image. In the long term we feel that a campaign such as this will help mitigate the need on the part of juries to further punish tobacco companies for past behavior.
Advertising is not focused directly at tobacco issue.
The campaign does not offer either apologies or explanations for any conduct in the past as company-conducted studies have found communication of that type to be ineffective. Rather, the campaign focuses on the present and the future of Philip Morris...
# # #
Morgan Stanley Dean Witter
David J. Adelman
Wednesday, October 13, 1999
PHILIP MORRIS: A KINDER, GENTLER PHILIP MORRIS; STRONG BUY
...The overall goal of the campaign...is to alter the public perception of the company and the people who work for it....We believe that over time the program should (1) moderate public anger against the company and the tobacco industry; (2) reduce the risk of large-scale punitive damage awards in individual smoker claims...
DETAILS:
No "mea culpa." The company's initial campaign...does not address or acknowledge alleged past wrongdoing. In part, we believe that this reflects the company's...belief that it has acted appropriately in the past with respect to smoking and health issues. More importantly...we believe that MO's testing indicated that apologizing, without a preconceived need among the public to do so, was not an effective form of communication...
...More importanly, in test, the campaign effectively shifted individuals from a neutral to favorable opinion of the company...
Sanford C. Bernstein & Co.
Bill Pecoriello
Thursday, October 14, 1999
PHILIP MORRIS IMAGE CAMPAIGN - NO LIKELY EFFECT ON LITIGATION, MAINTAIN STANCE.
...We reiterate our initial assessment of the image campaing as a long-term positive for the company based on its ability to mitigate "jury anger."
Legal defenses remain intact. In our opinion, the statements made by Philip Morris in conjunction with the launch of their image campaign still do not constitute an admission of general causation (whether smoking can cause cancer and other diseases). While Philip Morris has conceded that "ther eis an overwhelming medical and scientific concensus that cigarette smoking causes lung cancer and other serious diseases", there is no statement that the company agress with these findings. Even if Philip Morris had conceded the general causation issue, it is still incumbent upon the plaintiff attorneys to refute the affirmative defenses of the industry relating to specific causation. Typically, the specific causation issue include: (1) the plaintiff did not die from cancer; (2) although the plaintiff did have cancer it was not of a type caused by smoking; (3) although the plaintiff's cancer could have been caused by smoking, there are other risk factors that contributed to this plaintiff's cancer. All the traditional defenses utilized by Philip Morris and the tobacco industry regarding specific causation are still available with the same prospects for future success...In 1994, tobacco company executives testified that smoking was not addictive, but that position had changed by 1997 when sworn testimony was given that smoking was addictive in the commonly used sense fo the word--like coffee or gummy bears.
Leaving the "flat earth" society should moderate juror anger. In our opinion, a key factor in the juries' willingness to punish Philip Morris in the henley and Williams-Branch cases was the company's denial of general causation...The company's revised position, in our opinion, will be viewed as far more reasonable, and will likely help moderate potential juror anger. Note that the company's admission should be particularly effective in countering the allegation that the company has "manufactured controversy" as to the health effects of smoking, and that it was not forthcoming and honest in revealing what it knew regarding the risks associated with smoking.
- Company
- Philip Morris
- Author
- Adelman, David J. (Financial Analyst, Morgan Stanley Dean Witter)
- Cohen, Marc (Financial Analyst, Sanford C. Bernstein & Co.)
Comments on tobacco companies
- Gurkin, Ann H. (Financial Analyst, Davenport & Co.)
Watches tobacco stocks.
- Herzog, Bonnie (Financial Analyst, Credit Suisse First Boston)
Analyzes tobacco stocks.
- Pecoriello, Bill (Financial Analyst, Sanford C. Bernstain & Co.)
Watches, analyzes tobacco company stocks.
- Recipient
- Philip Morris employees
- Region
- United States
- Type
- REPT, REPORT, OTHER
- Litigation
- Feda/Produced
- Named Person
- Henley, Patricia Ann (Plaintiff in Henley v. PM)
- Surgeon General
- Operation/Project
- PM21
- Named Organization
- 20/ 20 - Television news magazine show
- 60 Minutes - Television news magazine show
- ABC, American Broadcasting Co.
- ASH, Action on Smoking & Health
- Campaign for Tobacco Free Kids
- CBS - TV station
- David Letterman, host, late-night talk show
- Days of Our Lives - daytime soap opera
- ER - TV show ("Emergency Room")
- Jag
- Kraft Foods - Altria subsidiary
- Miller - Beer Co. owned by PM/Altria
- MO - Ticker tape symbol for Philip Morris
- Monday Night Football
- Morgan Stanley Dean Witter Global Bevera
- NBC - TV stations
- Oscar Mayer
- Practice
- S+P
- Seagrams
- Today
- Subject
- litigation
- public relations
Document Images
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mandated warning label (e.g., smokers cannot claim failure to warn), and
the significant and growing public awareness of the risks associated
with smoking, we believe that the strength of the industry's legal defense
in individual smoker cases will increase over time (e.g., in the not to
distant future, almost all jurors would have seen cigarette warning labels
during their entire adult lives). Over time, we believe that the public
indication of the company's position on smoking and health issues, whether
through its impact on the statute of limitations or other factors, will also
strengthen the company's legal defense. Stated differently, particularly given
the surprising press the company's "admission" received, we believe it will
prove increasingly difficult for any smoker to claim that he/she was misled by
the industry.
Public image. Further, we believe that the company's "admission"
will increase its credibility with the general public, and should help -- over time
-- in enhancing its public image. While addressed in its web page, we continue
to believe that the company's key message should be that it absolutely does not
want minors to smoke cigarettes, period.
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Humanitarian Aid
The advertisements will be seen on a wide variety of shows like NBC's ER,
Today and Days of Our Lives; ABC's 20/20, The Practice and Monday Night
Football; CBS's 60 Minutes, JAG and David Letterman.
Research/Methodo loev
Philip Morris spent a significant amount of time on this campaign by
researching and conducting numerous focus groups. As a result of its extensive
research, Philip Morris is highlighting the positives about the company and
how it is going to solve the existing tobacco issues instead of apologizing for
the past. Philip Morris found that going straight at tobacco issues in this
environment made people angry. Therefore, the company has decided to use
more of a human touch to address these issues.
On its new corporate website, the company discusses very openly the dangers
and risks of smoking as well as how smokers can quit if they choose to do so.
The website also addresses addiction.
Through its focus group research, Philip Morris found that the vast majority
of the public had a very unfavorable rating of the company. A lot of
people weren't even sure what businesses Philip Morris owns. The ratings and
awareness went up dramatically after Philip Morris showed the focus groups
the new campaign.
The media campaign is an on-going effort and will cost $100 million
annually. Through its advertisements, Philip Morris believes 95% of the
population will be reached by the end of 2000.
Overall we believe Philip Morris is on the right track with this campaign and
it should help to change the public's perception of both the company and
possibly tobacco in the long term. We were impressed with the extensive
research that Philip Morris completed before launching this campaign and
believe it will contribute to its overall success.
# # #
Davenport & Company
Ann H. Gurkin
Wednesday, October 13, 1999
New ad campaign and web site.
It's about time....Philip Morris is scheduled to begin airing a new ad
campaign on Wednesday and should have its web site in operation.
Key points:
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responsible, caring company that produces many valued consumer
products, some of which carry well-known health risks.
We maintain our Strong Buy rating and a $56 12-month target price. As
a reminder, MO will present at the Morgan Stanley Dean Witter Global
Beverage, Tobacco and Food conference in New York on November 4,
1999 (conference is November 3-4).
DETAILS:
No "mea culpa." The company's initial campaign -- largely television based -
- does not address or acknowledge alleged past wrongdoing. In part,
we believe that this reflects the company's understandable pride, and its
belief that it has acted appropriately in the past with respect to smoking
and health issues. More importantly, largely in response to general
public tobacco apathy, we believe that MO's testing indicated that
apologizing, without a preconceived need among the public to do so, was not
an effective form of communication. We believe that over time, the initial
campaign may make subsequent communication on smoking and health issues
-- a discussion of the provisions of the MSA, for example -- more effective.
Hiyhlighting the good that the company does. The four television
spots highlight (1) what the company is doing to address certain smoking
issues, and (2) various non-tobacco initiatives (e.g., hunger relief, funding of
the arts, employee volunteerism, and so forth). Specifically, the emotional
ads discuss (1) KraB's 20-year program to help feed the poor; (2) PM
USA's commitment to the "We Card" program that helps retailers enforce the
law (e.g., it is illegal to sell cigarettes to minors); (3) the
company's commitment to feed, shelter, and counsel victims of domestic
violence; and (4) Miller's history of responding to emergencies. For example,
the company has utilized its breweries and distribution infrastructure to bottle
and deliver water to disaster victims.
Will not appease the company's harshest critics. MO's adversaries
prefer the status quo -- where they can define the company -- and will
obviously protest, and be unmoved by, the new campaign. However, we
believe that their likely protests highlight their concern that the program will be
effective. More importantly, in test, the campaign effectively shifted
individuals from a neutral to favorable opinion of the company, and those with
a favorable opinion to a more favorable opinion of the company.
Among other things, MO's web site will outline the company's position on
a number of controversial smoking and health issues, such as causation
and addiction. In general, Philip Morris is taking reasonable positions on
these issues with which the general public would largely agree. Importantly,
we do not believe that the opinions expressed will adversely impact the
company's smoking and health legal defense.
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Importantly, testing indicates that measured opinion ratings with respect to
the company and its brands move upwards significantly after exposure to
this program.
This long-awaited move is a distinctively positive step. While results are
unlikely to be immediate, this campaign should eventually have a positive
impact on public opinion, help investor perceptions and may even stimulate
sales of some of the company's products.
ADDITIONAL DETAILS:
1. INTEGRATED PROGRAM PROMISES BROAD SCOPE - The
program involves a multi- media approach that includes grass roots speeches
by executives, frank discussion of tobacco issues on a website and corporate
image campaign that educates the public about positive community affairs
actions on the company's part. Its core elements are to put a human face on the
company, to communicate broadly and to openly address tobacco issues.
After investing $100 million over the course of a year, the company expects
to have its message reach 95% of the targeted population with the
average person seeing an ad about every week. Importantly, testing not only
shows that favorable perceptions about the company and its products move
sharply higher after exposure to the advertising, but that it stands up well
to countermessages that the company's critics are certain to launch. Predictably,
these countermessages have already been apparent in several media reports this
morning.
2. A SOFTER SIDE OF PM - We should emphasize that we don't expect
PM21 to generate positive feelings about tobacco in the general
population. Cigarettes won't be perceived as less dangerous. However, those
who manufacture it should come to be seen as more legitimate and
responsible. The company should benefit from a positive rub-off of perceptions
about Kraft and, importantly, research shows that Kraft's image and that of
its brands is not damaged by the campaign. We were initially surprised by
the soft approach that is being taken in advertising, having expected
the company to be more direct about addressing its challengers. Upon
thought, however, it has chosen a much less confrontational approach that
stands a higher likelihood of triggering a positive response with people.
Of course, there is no chance that it will ever change the opinions of the fringe
majority who are devoted critics of tobacco. However, it may be able to bring
the majority of others to a point where the extreme views of some of these
critics are seen for what they are.
# # # N
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Wednesday, October 13, 1999 W
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MO: Philip Morris Launches a New Marketing Campaign
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5. Brand equity boost. One of the interesting points to come out of
the meeting was how little most people knew about Philip Morris. Consumers
were as likely to give MO credit for owning Seagram's or Camel cigarettes as
Oscar Mayer. Company research found that consumers who has seen the
campaign and were informed that certain brands belonged to MO were slightly
more likely to purchase those brands. We believe that defining and improving
MO's corporate image will have a positive, long-term impact on the already
formidable Philip Morris brand family.
# # #
Morgan Stanley Dean Witter
David J. Adelman
Wednesday, October 13, 1999
PHILIP MORRIS: A KINDER, GENTLER PHILIP MORRIS; STRONG
BUY
KEY POINTS:
Philip Morris unveiled its initial corporate communications and
public relations program yesterday afternoon to sell-side analysts and the
media. The program includes four TV advertisements and a new corporate
web site, www.philipmorris.com.
The overall goal of the campaign, with the tag line "Working to make
a difference. The people of Philip Morris," is to alter the public
perception of the company and the people who work for it. The initial four
TV ads attempt to define and humanize the company, and will highlight
that Philip Morris is a responsible corporate citizen that has a long history
of making significant charitable contributions to a number of worthwhile
organizations, and that the company is far more than a tobacco
manufacturer. The program indicates that MO will be a more open and
accessible company, that it is committed to reducing youth smoking, and
that it will support reasonable solutions to smoking issues that take into
account the interests of adult smokers.
We believe that over time the program should (1) moderate public
anger against the company and the tobacco industry; (2) reduce the risk of
large- scale punitive damage awards in individual smoker claims; (3) move
the company towards the mainstream of corporate America; (4) increase
the company's ability to recruit top tier employees; and (5) enhance
the effectiveness of its government lobbying effort.
We believe that an effective public relations effort is critical for Philip
Morris, and its initial campaign is consistent with our expectations that the
company would launch a significant ($100 million in annual spending),
thoughtful, and effective program. As a result of its ongoing initiative, we
believe that over time the public will increasingly view Philip Morris as a
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Sanford C. Bernstein & Co.
Bill Pecoriello
Wednesday, October 13, 1999
PHILIP MORRIS IMAGE CAMPAIGN IS PART OF LONG TERM
SOLUTION, NO QUICK FIXES; OUTPERFORM
1. In the long run, we believe the tobacco industry's track record in individual
suits is the key to valuation (as class actions and the Federal Suit are resolved
favorably). Anti-tobacco groups have demonized the industry and influenced
juries (as witnessed in San Francisco and Oregon) while the industry hid
behind closed doors. The public image campaign unveiled by Philip
Morris yesterday addresses these concerns head-on, but should be viewed as
part of a lone term solution, not a short term magic "bullet" fix.
2. Philip Morris yesterday afternoon presented the key components of its PM
21 (Philip Morris in the 21 st Century) image campaign. The ongoing
campaign is expected to cost $100 million annually and is designed to reach
95% of the U.S. population by December 2000, with the average person seeing
the TV ads 4 -5 times every month. The goal of the campaign is to "put a
human face on the company" by delivering positive messages on both tobacco
and non-tobacco issues. The key components of the campaign are speaking
engagements, community outreach, TV commercials, and a corporate website.
3. Redefining Philip Morris. For years Philip Morris had allowed
various anti-tobacco groups (e.g. ASH/Campaign for Tobacco Free Kids) to
define its public image without opposition. These groups have been so
effective that MO's favorability rating versus other companies'in the S&P 500
placed it squarely in the bottom quartile (despite the fact that Kraft name was
received very favorably). The effectiveness of these anti-tobacco campaigns
also became evident in San Francisco and Oregon where juries seemingly felt a
need to punish or to send a message to the tobacco companies. Based on
research conducted by Philip Morris and presented during the meeting, this
image campaign is expected to have a positive impact on Philip Morris'
overall corporate image. In the long-term, we feel that a campaign such as this
will help mitigate the need on the part of juries to further punish
tobacco companies for past behavior.
4. Advertising is not focused directly at tobacco issue. The campaign does
not offer either apologies or explanations for any conduct in the past
as company-conducted studies have found communication of that type to
be ineffective. Rather, the campaign focuses on the present and the future
of Philip Morris - presenting the company as being more open and accessible,
as working to reduce youth smoking both domestically and internationally, and
as being supportive of reasonable solutions to the public policy issues
facing cigarette manufacturers. The company's website
(www.philipmorris.com) does specifically address various tobacco-related
issues including the link between between smoking and disease, second-hand
smoke and smoking cessation.
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the general causation issue, it is still incumbent upon plaintiff attorneys
to refute the affirmative defenses of the industry relating to specific
causation. Typically, the specific causation issues include: (1) the plaintiff did
not die from cancer; (2) although the plaintiff did have cancer it was not of
a type caused by smoking; (3) although the plaintiffs cancer could have
been caused by smoking, there are other risk factors that contributed to
this plaintiffs cancer. All the traditional defenses utilized by Philip Morris
and the tobacco industry regarding specific causation are still available with
the same prospects for future success. As with the causation issue,
tobacco companies will still be able to argue that a particular plaintiff was
not addicted or, if addicted could have quit. The companies typically
cite evidence that the plaintiff did not make serious attempts to quit or that
the plaintiff simply chose to resume smoking based upon his/her own
cost/benefit assessment.
4. No inconsistencies in campaign statements. From a legal perspective,
Philip Morris and the tobacco industry have been coming around to the
viewpoint that there exists significant scientific evidence linking cigarette
smoking to various illnesses, so there is nothing inconsistent with this
public admission on the Philip Morris website. The statements made are in
line with statements made by tobacco company witnesses in their trial
testimony over the past 1-2 years regarding smoking as a risk factor for certain
illnesses. Philip Morris' statements yesterday regarding addiction are also
consistent with the statements the company has given in testimony over the
past several years. In 1994, tobacco company executives testified that smoking
was not addictive, but that position had changed by 1997 when sworn
testimony was given that smoking was addictive in the commonly used sense
of the word - like coffee or gummy bears.
# # #
Morgan Stanley Dean Witter
David J. Adelman
Thursday, October 14, 1999
PHILIP MORRIS: LEAVING THE FLAT EARTH SOCIETY IS A
GOOD, NOT A BAD THING
KEY POINTS:
The market reacted negatively to Philip Morris's public statement yesterday
via its new web site that "there is an overwhelming medical and scientific
consensus that cigarette smoking causes lung cancer," and that "cigarette o
smoking is addictive, as that term is most commonly used today." In N
response to this disclosure, MO's stock declined 3.2% versus the S&P 0
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We believe that the market's concern over the legal implications of
the company's disclosure is completely unwarranted, and in fact, we feel
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Summary Philip Morris launched a new marketing campaign yesterday in an
effort to change the public's perception of the company.
The campaign includes four television advertisements and a new company
website, www.philipmorris.com.
The core elements of the new campaign, "Working to make a difference.
The people of Philip Morris," are; (1) to put a human face on the company,
(2) communicate broadly, and (3) openly address key tobacco issues.
Although the benefits of this effort will take a long time achieve, we believe
the company is on the right track to try and change the public's perception
about Phillip Morris. The company has been ignoring the public for years and
through this campaign Philip Morris can now finally embrace them.
Mission Philip Morris launched a new marketing campaign yesterday in an
effort to change the public's perception of the company and to communicate
more openly about its people, products and values.
Key Messages
Under the theme - "Working to make a difference. The people of Philip
Morris."- some of the key messages the company will try to convey are;
To be more open and accessible
To decrease youth smoking in the U.S. and abroad
To address tobacco issues
To show the public that Philip Morris is more than just a tobacco company
Philip Morris will convey these messages through four
television advertisements, public speaking engagements, and its new corporate
website.
Television Advertisements
Philip Morris' new television advertisements will help the public see how
Philip Morris' employees regularly make a difference in the communities in
which they live and work. The first four advertisements will raise awareness
about four main issues:
Hunger
Youth Smoking Prevention
Domestic Violence
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Not an off the shelf solution. It is very evident that as with all of
the company's brand building campaigns, significant thought, assessment,
and analysis when into the development of the communications program, and
we believe that with time it will prove effective in changing public
perception of the company and the people who work for it. Importantly, while
baseline studies indicate a generally low favorable public opinion of Philip
Morris, in test the television advertisements have been very effective in
improving the perception of the company.
The bottom line is that Philip Morris has been a good corporate citizen
for decades, but has received little credit (except from those who
directly benefited). At its essence, the new campaign should prove
effective precisely because the company will be discussing what it has always
been doing, rather than highlighting new actions taken to remake the
company's image.
Hopefully more to come. It should be relatively easy within the
current campaign to highlight that Philip Morris is the nation's largest
corporate taxpayer, and one of the largest purchasers of goods and services
from women and minority owned firms.
Goldman Sachs
Marc Cohen
Wednesday, October 13, 1999
Philip Morris Companies, Inc. : Come See The Softer Side of Philip
Morris
*********.**********:****:************************************
* We had the opportunity Tuesday to preview a major corporate image
* campaign that MO is officially launching today. We don't expect this
* initiative to make an immediate difference. However, the integrated
* grass roots and media program is impressive, and our optimism is
* strengthened that it will significantly improve public perceptions about
* the company and defuse demonization that has hurt it in the legal and
* regulatory arenas. There is no change to our EPS estimates of $3.30 for
* 1999 or $3.65 for 2000. We reiterate a Recommended for Purchase rating.
**.********************************************************s**
The program organized by PM is surprising for the soR approach it has
taken. While tobacco issues are confronted directly on a website, ads do
not address these issues and instead focus on positive things that PM
Companies does in the community.
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1) We are very pleased that Philip Morris will begin an advertising campaign
to get across the message that they are an open and socially responsible
company. The company is becoming more accessible and open to the public
and its investors. The core elements of their campaign include putting a human
face on the company, communicating broadly with the public, and openly
addressing key tobacco issues. Philip Morris' strategy will include focusing on
the present and the future, using constructive commentary on the tobacco
business, and focusing on non-tobacco issues (such as hunger relief,
humanitarian assistance, the arts, etc.)
2) Philip Morris has tested these commercials and found that post viewing,
the audience was more favorably disposed towards the company and was even
likely to purchase more Kraft and Miller products.
3) The company plans on spending $100 million on this advertising campaign
that will last until the end of 2000. The campaign is expected to reach 95% of
the population.
4) The internet address is www.philipmorris.com. Check it out!
# # #
Sanford C. Bernstein & Co.
Bill Pecoriello
Thursday, October 14, 1999
PHILIP MORRIS IMAGE CAMPAIGN- NO LIKELY EFFECT ON
LITIGATION, MAINTAIN STANCE.
1. Philip Morris was down (1.7%) relative to the market yesterday as
investors appeared concerned regarding the legal implications of certain
aspects of the company's new image campaign as described by the media.
2. Nothing has changed about Philip Morris' position regarding the link
between cigarette smoking and illness and the addictive nature of cigarettes.
The statements made were, as usual, very carefully worded and in line with
trial testimony given by tobacco company witnesses within the past 1-2 years.
In our opinion, no part of the image campaign should negatively impact the
company's ability to mount an effective legal defense in any of the actions it is
facing or is likely to face in the future. We reiterate our initial assessment of
the image campaign as a long-term positive for the company based on its
ability to mitigate "jury anger".
3. Legal defenses remain intact. In our opinion, the statements made by
Philip Morris in conjunction with the launch of their image campaign still do
not constitute an admission of general causation (whether smoking can cause
cancer and other diseases). While Philip Morris has conceded that "there is
an overwhelming medical and scientific consensus that cigarette smoking
causes lung cancer and other serious diseases", there is no statement that
the company agrees with these findings. Even if Philip Morris had conceded
