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i 1 MEDIA STATUS REPORT JANUARY 1988 COMPLETED - Placement of Virginia Slims Menthol spread and B&H spread in Life's April 4th special issue entitled "The Dream: Then and Now," a report on blacks in America. - Effective January 27, P.M. Blues has been withdrawn from the Cleveland test market due to its low market share. - Addition of Marlboro Menthol pages in three black publications; Ebony, Essence and Black Enterprise. - Re-examination of growth markets for Marlboro resulted in cancellation of Connecticut and Houston Home and Garden magazines and the addition of Chicago to magazine schedule. • - Meeting with PM International Military personnel regarding transfer of advertising budget (approximately $500,000) to USA media. Examination of cover positions in all magazines relative to each brand's page participation. Adjustments made where warranted. Decision for Marlboro to participate in the Tobacco Rate Discount plan rather than the Gannett plan for 53 of 74 Gannett newspapers, resulting in a 237 space increase. Cancellation of Virginia Slims Boardgame unit. Super Box contracts for field sales/customer entertainment use completed for the following: St. Louis Arena - inclusive of NHL All-Star, Blues games and all other events scheduled at Arena. Box capacity 8 guests. • Fenway Park - Two Boston Red Sox games - 6/3 and 6/24 - Box capacity 28 guests. Nassau Coliseum - Five N.Y. Islanders games - Luxury Box capacity 12 guests, 2/20, 2/23, 3/1, 3/10 and 3/12.

© 1) • • Examination of costs and efficiency of current military ROP representative, Military Media, versus a newcomer, Armed Forces Communications, in Region 5. The savings offered by AFC amounts to $2,348 for 11 insertions in 8 papers. Reschedule Merit Ultra Lights Box national supplement insertions due to market duplication. Parade, USA Weekend and Sunday Metro (unduplicated markets) will run April 10, 17 and 24. Sunday Metro duplicated papers will then run May 1, 8 and 15. Addition of two national Marlboro Menthol pages to existing Parade schedule to qualify for the,New Prospect Brand Plan Discount. Incremental out-of-pocket cost per page will be $44,180 after 40% discount and applicable rebates (versus open page rate of $345,900). Secured alternate location for Marlboro 20' x 60' ad panel and six additional 3' x 9' auxiliary ad panels in San Diego/Jack Murphy Stadium for Super Bowl XXII. Relocation of the 20' x 60' ad panel was necessary in order to allow for the installation of NFL required additional seating. N O ~ • O ~ W GJ CJ1 Ul th

3 • • ACTIVE - Final 1987 newspaper, outdoor, supplement and FSI schedules. - 1987 newspaper, magazine and test makegood/credit summaries. - Evaluation of alternative newspaper program for possible deletions/additions for 1988. - Revised brand plans for Parliament, Virginia Slims and Merit. - Allocation of $3 million advertising support behind Marlboro Red to include additional pages from March to June in newsweeklies. Conversion of pages to spreads in July/August for Red Roof Blitz. - Proposal from Backer Spielvogel Bates to include spreads in Parliament's media plan which would be funded by shift of outdoor to other brands and incremental funds. - Agency's report of 1987 spending by medium, by trading area. - Providing PM Market Research with circulation figures for all publications used in various test markets from 1982 to present. - Determination of media list for "Buy one, get one free" promotion for Merit Ultra Lights Box introduction. Proposal received from agency recommending use of FSI. - Awaiting approval of media recommendation for Cambridge $2.00 on-carton promotion. - Media plans for test brands: ° Alpine - Pittsburgh and Little Rock test markets, to start April 25, $30 million national budget. ° Elan - Sacramento and Atlanta test markets, to start May 31, $26 million national budget. ° Select Thins by B&H Sacramento and Tampa/St. Pete test markets, start date to be determined, $75 million national budget. ° Dunhill - San Francisco test market, start date to be determined, $8 million national budget. N O -P ` 0 . ~ GJ W CT1 ~ O

I 4 • • Five-year agreement for Marlboro signage/entertainment package forwarded for review at Boston Garden. Signage to include four 3' x 8' center scoreboard ad panels. Entertainment package includes the use of a luxury suite for 10 Boston Celtic games and 10 Boston Bruins games each year. Annual rate of $150,000 inclusive of entertainment package valued at $20,000. Drafting settlement agreement with the Pittsburgh Civic Arena renewing PM'S existing advertising agreement for an additional ten-year term at the annual rate of $90,500. Agreement will also provide Miller with four concourse dioramas valued at $12,500. Upon execution, PM will withdraw tomplaint filed in U.S. District Court (Pittsburgh) to prevent the Civic Arena from breaching the renewal terms of the existing agreement. - Reviewing proposal to renew existing signage agreement for Anaheim Stadium for an additional eight-year period. - Forwarded draft of a twelve-year agreement for Miller signage inside the Palm Beach Jai-Alai Fronton to facility for review. Signage includes two 3' x 14' 4" scoreboard ad panels at an annual rate of $11,000. - Draft of agreement for Marlboro signage at Mile High Stadium (Denver) forwarded to Diamond Vision, Inc. for review and execution. Signage includes one 16' x 40' main ad panel and one 4' x 10' end zone clock panel. $235,000 annually over a 10-year term. Draft of agreement for Marlboro signage at the Silverdome (Detroit) forwarded to American Sign and Indicator Corp. for review and execution. Signage to include two 20' x 60' ad panels, two 3'6" x 28' auxiliary scoreboard panels and two 4' x 20' end zone clock ad panels. $200,000 annually over 15 years commencing in February, 1988. Agreement terminated with PDI-Sports Section for clock advertising rights in 32 horse racing facilities. Visiting each track to review and execute new agreements for exclusive advertising rights and upgrade positioning of clocks as needed. Revising draft of agreement for Marlboro/Miller signage package at the Jacob Javits Convention Center of New York. - Awaiting state alcoholic beverage control board approval for execution of agreement to install a Miller scoreboard at minor league baseball park in Fayetteville, NC.

5 . Revising draft of agreements for Marlboro/Miller signage package at Thistledown Racetrack (Cleveland, OH) and Marlboro signage package at Louisiana Downs (Bossier City, LA). State ABC regulations prohibit Miller's participation in Louisiana Downs signage package. Evaluation of all Philip Morris contracted pure paint boards for possible conversion to Flexface, a one-piece vinyl-coated reinforced fabric that offers quality reproduction with either hand painting, computer painting or screen painting. Draft of agreement for Miller signage package outside the Kingdome (Seattle) forwarded to facility for review and execution. Signage consists of two 10' x 30' rear illuminated ad panels on each side of a free standing marquee. Annual payment of $60,000 for a ten-year term. Examining feasibility of new fineline computer printing technique as economical alternative to conventional methods in short runs of outdoor bulletins, backlight dioramas, clock signs, transit posters, etc. Developing Marlboro/Miller signage program for presentation to NBA expansion franchise facilities (Charlotte, Miami, Orlando, Minneapolis). Discussions being held with Miller and General Foods for the possibility of sharing luxury box at Auburn Hills Arena (Detroit) for all events. Negotiations underway with new Charlotte Coliseum for Super Box. Developing sales/customer entertainment package for MLB's All-Star activities and game, Cincinnati on July 11 and 12. Negotiating suite for sales/customer entertainment at Wrigley Field for 15 Chicago Cubs game during 1988 baseball season. Plans underway for sales/customer entertainment functions at NBA games in Atlanta, Washington, DC, Boston and New York. Functions to be conducted similar to '87 test with basketball personalities. - Contacting all Major League Baseball Clubs for approval to produce each club's 1988 Baseball games schedule for Marlboro N . SportsMonday calendar newspaper publication in each MLB City. O O v W W 01 CTt 00

r 6 • MEDIA DEVELOPMENTS - Effective January 1988, Family Media has acquired the U.S. publishing rights to Taxi, a women's fashion magazine. The magazine ceased publication in October and will resume with the May issue. Soap Opera Update, a new magazine from the same founders of Soap Opera Digest, premiered at the end of January. This new publication is standard magazine size and has a circulation of 300,000. Charter advertisers are being offered a 50% discount off the regular rates of $4,500 foY a 4-color page. Effective January 1988, Advance Publications has bought Details, a style, fashion and club scene monthly, from Alan Patricof Associates. - Effective March 6, The New York Daily News will start distributing 100,000 copies of "Vista" a Florida based hispanic supplement. - Effective March 1988, The New York Times Company Magazine Group will launch Snow Country, the first year-round winter sports magazine to cover skiing and off-season activities in each monthly issue. Circulation rate base is 200,000. Murdoch Magazines is introducing a multi-magazine advertiser incentive plan based on space credits. The plan offers special incentives to lure current advertisers to expand their buys to include other Murdoch publications and increase their spending in general. Among the magazines involved are New York, The Star, Automobile, Elle, European Travel & Life, New Woman and Premiere. On January 11, Fairchild Publications launched its new weekly consumer publication Travel Today on the East Coast. It is distributing 374,000 copies and is targeted toward people who want to take advantage of low travel costs. .

. 7 • • - Triangle Publications, which owns Good Food, TV Guide, and Seventeen magazines is reportedly for sale. Companies expected to enter bids include Time Inc., Gannett and Hearst. Effective March 6, the San Francisco Examiner's Image Magazine will be joining the Sunday Metro Magazine Network. The Wall Street Journal reports that the newspapers' plan to increase national advertising by closing the gap between local and national rates is failing. National advertisers pay as much as 60% more than local advertisers,for newspaper space. In an effort to curb costs, Philip Morris has requested that newspapers running Marlboro SportsMonday insertions, allow placement at the package goods rate. Those papers complying receive 26 insertions, while those charging the national rate receive only 20. Knight-Ridder is expecting to win a joint operating agreement for its Detroit Free Press and Gannett's Detroit News both operating in the red. The joint operating agreement, a waiver from antitrust laws intended to save failing newspapers, would allow a business monopoly as long as each paper maintains separate news and editorial operations. N O O ~ ~ ~ W W CT1 ~ O I

a 8 • BUDGET - 1988 original budgets: Marlboro $125.8* Benson & Hedges 64.4 Merit 52.2 Va. Slims 37.9 Cambridge 6.3 Parliament 10.6 Players .9 Corp/Trade 2.0 Tests/Other 45.6 $345.7 * Does Not Include 7.8 in Stadia Programs • COMPETITIVE - Monitored competitive expenditures show the following comparison for full year 1987: January - December 1987 ($ Millions) Mags ROP FSI's Supps Outdoor Total ~ Industry PM $182.8 $35.4 $ 1.8 $13.2 $ 75.3 $308.5 46.8 RJR 87.9 2.4 6.6 14.2 88.8 199.9 30.3 B&W 22.1 3.5 0.5 3.4 15.1 44.6 6.8 LOR 21.4 0.9 0.8 4.6 33.5 61.2 9.3 AM 19.0 4.9 1.4 1.2 14.4 40.9 6.2 L&M 3.8 0.1 - - 0.04 3.9 0.6 TOTAL $337.0 $47.2 $11.1 $36.6 $227.1 $659.0 100.0 Monitored Media Source • Magazines Daily Newspapers ("A" papers) Suburban Press Newspapers Lynch Transcription Lynch Transcription U.S. Suburban Press N O Free Standing Inserts FSI Reports O ~ Sunday Metro Syndicated Supplements Outdoor (Posting & Paint) Leo Burnett Lynch Transcription Leo Burnett W W ~ ~ --L

I . • 9 RJR is running a four-page pop-up ad celebrating Camel's 75th anniversary. The insert which carries a "buy one pack, get one free" coupon, features a smoking camel popping up among pyramids and palm trees. The insert is only running in five magazines including Playboy's March issue and an issue of Sports Illustrated. Other select men's books like Penthouse and 4-Wheel & Off Road, are carrying the anniversary promotion as a spread and pop-up coupon. Penthouse has indicated RJR has pop-up ads planned for Salem and Winston this summer. RJR has signed a contract with USA Today to run an ad daily for a year across the bottom of the "For the Record" page in the Sports section. The black and white, 3" deep ads will showcase RJR's tobacco brands, Nabisco products and company sponsored sports events. The ads have been running since January 4. Full year 1987 magazine positioning report shows PM is receiving superior ad positioning over RJR. % PAGES - 1ST QUARTER OF BOOK PM RJR Weeklies 69 52 Women's-Service 46 41 -Fashion Image 50 46 -Home Food 62 40 Men's -Special Interest 74 63 -Sports 84 70 -Automotive 78 59 -Outdoor 78 59 -Mechanics/How To 86 69 General Interest 71 56 Military 74 0 Black 86 50 • N O -P O ~ W W CTt O N

I 10 . - Full year 1987 reveals a substantial reduction in magazine pages for R.J. Reynolds. Compared with 1986, select magazines, by category, show the following: TOTAL PAGES 1987 1986 % Change • Weeklies 291.5 342.0 ( 15) Women's-Service 149.6 179.0 ( 16) -Fashion/Image 292.0 412.0 ( 29) -Home Food 107.0 140.0 ( 24) Men's-Special Interest 168.0 213.0 ( 21) -Sports 158.0 121.0 + 31 -Automotive 266.0 268.0 ( 1) -Outdoor 111.0 97.0 + 14 -Mechanics/How To 71.0 79.0 ( 10) General Interest 62.0 93.0 ( 33) Military 0 37.0 (100) Black 122.0 137.0 ( 11) 1,798.1 2,118.0 ( 15)% • N O P O ~ W W C)'1 O W