Tobacco Documents Online

cmb Rechholtz 11 1 2 3 4 5 6 7 8 8 10 11 12 13 14 Q Now when I used the word "ban" that is what I am talking about. MR. CURNIN: Is this a voluntary suggestion? MR. JOHNSTON: Voluntary ban and statement on behalf of the industry that they would discontinue TV and radio adver tising under certain conditions. Q Incidentally, do you recall reading about this ban ori the front page of the New York Times on or around July 23, 1969? A No, I do not. Q Was this proposed ban, or voluntary discontinuance -- MR. JOHNSTON: Strike that. ; Q Was this proposed voluntary discontinuance ~ 15 of TV cigarette advertising discussed by you at ~ 16 s i this meeting? f. 17 A Yes. - 18' Q r Can you recall what you said in that ~ 19 ~ ,. regard? ;.... . ~ ~ 20 A To the best of my knowledge I recall our 21 discussing,that if the voluntary withdrawal agree- ~ 22 ment were to become a reality, or if we were in- 23 voluntarily banned from radio and television advertis- ing, that non-broadcast media would become proportion-`===~ ~ ZS - ~

1 cmb Rechholtz 12 2 3 4 5 6 7 8 9 10 11 12 13 14 iS - 16 17 18 19 20 ~, 21 0 0 24 ately more important to our company, and that REA truck advertising would fall into this category. Q Did any member of the committee express agreement with this thought? A Yes. Q Did each member express agreement with this thought? A I don't recall that it was a unanimous agreement with the thought, but there was general agreement.' Q Did this meeting of the advertising com- mittee conclude with the decision to accept the pro- posed increase of REA? A Yes, the committee decided to accept the media group's recommendation to purchase, to renew REA for 1970, on the basis of purchasing one- half of the previous commitment, but at the new asked for rate, which I believe was $11.50 for a four sheet panel. 0 Am I correct that you stated Mr. Berger reported to you? A That's correct. Q Can you recall that you decided to present REA's proposal with respect to increased rates because I

0 0 cmb _Rechholtz 13 2 of the TV ban? 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 MR. CURNINs Objection as to form. MR. JOHNSTON: In what way? MR. CURNIN: I think the question now . . is unintelligible. MR. JOHNSTON: Would you read it? (Question read.) MR. CURNIN: And it is argumentative. Why not ask him why he wanted to do such and such? MR. JOHNSTON: All right. Q Did you decide to present this proposal for nearly double increase in rates to the advertising committee because of the -- you personally, decide to pass this on to the -- this proposal on to the advertising committee because of the proposed ban? MR. CURNIN: Objection as to form. MR.JOHNSTON: You mean on the ground it is leading? 20 MR. CURNIN: The most simple way to 21 elicit the information_is to ask him why. 22 0 •MR. JOHNSTON: But there are a lot of ways to ask questions and more than one that is proper. ; MR. CURNIN: It could be presumed that that o 24 -+ is the only factor he considered. _ ~ 25 0 ap 0 0

0 2 3 4 5 6 7 8 10 11 12 13 14 1S 16 17 18 19 20 22 23 24 25 cmb _Rechholtz 14 MR. JOHNSTON: No, I am not saying that. I am saying -- 1KR. CURNIN: The question assumes it, that is why I object to it. THE WITNESS: It was a significant factor, but it was one of several factors. MR. JOHNSTON: Well, in view of that testimony I:will go on to something else. You have got an objection as to form here, and the witness has made an answer. Are you going to ask that that answer not be read into evidence? MR. CURNIN: May I have the witness's answer, please? (Record read.) MR. CURNIN: It is my understanding that it is the witness's testimony that the statements that have been made by the president of Philip Morris on behalf of the industry in July was considered by him and that that was one of the principal -- well, I think the best way to go about it, so we can have the witness's testimony on it, is to rephrase the question and permit the witness to answer. MR. JOHNSTON: All right. Q Will you tell me why you decided to pass

_ ......~..._....~._. .. 1 cmb - Rechholtz 15 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 CV, 0 0 24 on REA's proposal to the advertising committee? A Yes. Number 1, by form and company procedure I was required to submit for committee review any significant proposal, whether -that-.consti-P.:'• tuted an approval or a rejection. Point Number 1. In terms of the marketing rationale, there were three or four main reasons why it was submitfied, one being that we had been associated for a long period of time with the medium.. This constituted a significant investment in terms of exposure to the consumer. We had a desire to maintain this contin- uity. Another point was speculation which had to be speculation at that time, that at some point in the future our non-broadcast media would become proportionately more important. The REA trucks constituting one of several availabilities in this category, and another reason is that compared to other out of home media on a cost per unit basis, the REA panels, even at the new rate, were not totally out of line. Those were the main reasons. Q How long did this execu tive committee meeting that we referred to last?

-- __ _..............,__.._........., _ 1 cmb _Rechholtz 16 ~ A The advertising committee meeting? ~ ~ 2 ~ Q Yes, the advertising committee meeting 3 about a week after September 5 that discussed this 4 proposed rate? How long did that last? 5 . 10 A Gee, I honestly don't remember. We dis- 6 cussed several topics in these meetings. 7 Q Oh, you did. 8 A And the length would not be indicative 8 of this particular topic. 10 Q You couldn't recall how much time was 11 allocated to the discussion of the proposal? 12 A No, sir, it would be impossible. 13 MR. JOHNSTON: May I have the last 14 answer read -- well, rather than waste the time in 1S view of the hour and the plane schedule -- 16 Q You mentioned something about cost of com- 17 petitive media, did you? 18 A I mentioned the cost of other out of home 19 media. 20 Q Was this considered comparable to any 21 other type, by you, of any other out of home media? 22 A No, not directly comparable. 23 Q We had a discussion prior to the commence- ~, 24 =. ° ment of this deposition which I believe you used the ~ 25 o

_.,. _. .. . __..._ ~...... ~... 0 2 3 4 5 6 7 8 9 10 11 12 13 14 1S 16 17 18 19 20 0 0 24 cmb - Rechholtz 17 word "fringe' media, is that correct? A Yes. MR. CURNIN: Objection as to form. And objection as to the answer. Q What do you mean by the words "fringe media"? A Fringe in terms of our marketing program would mean supplementary, or minor, in relation to the total media program. Q Do I understand from that that these posters were considered fringe media? A Yes, Q During the course of the time that Railway Express advertised Reynolds' products, did you at any time consider discontinuing the use of that media? A Yes.. } MR. CURNIN: Excuse me, may I have the question and answer, please? (Record read.) Q • Why did you consider discontinuing the use of it? A We questioned its value in relation to other media availabilities in which we could have

1 cmb -Rechholtz 18 2 invested this money. 3 1 0 How much money are we talking about approx- 4 imately? S 6 7 8 8 10 11 12 13 14 15 16 17 18 19 20 Ar-, 21 WIWI 22 0 24 A $770,000. MR. CURNINs May we have a relation as to point of time here, Mr. Johnston? MR. JOHNSTON: I am coming to that. Q During your time, during the time that you were employed with Reynolds,. that is between 1961 and the date of this advertising committee meeting in September, approximately how many times did you consider discontinuing Railway Express as a media to advertise Reynolds' products? A I don't recall the number of times. Our media program was reviewed periodically, most renewals occurring on an annual basis. So I think it is reasonable to say that each major aspect of our media program was considered for renewal, or rejection, at least on an annual basis. Q Did I ask,-I can't remember in view of the interruptions, did I ask you -- and if I did, we will forget the question - why the Railway Express was subject to discontinuance? MR. CURNIN:- It was asked and answered. 25

1 cmb _Rechholtz 19 Q Prior to this meeting of the advertisin 2 g 3 committee in September of 1969, did any member of 4 the advertising committee, to your recollection, S urge that this money be placed elsewhere? . MR. CURNIN: What money? 8 7 Q This money being that money earmarked for 8 the Railway Express program? 8 A Not to my recollection. 10 Q You have listed certain reasons, Mr. 11 Rechholtz, why the members of the committee decided 12 to accept the proposed increase to $11.50 from 0._ . $6 13 14 MR. CURNIN: Objection as to form. I 15 don't think that is the witness's testimony. 18 Q Do you recall listing certain factors 17 which the advertising committee took into account 18 in deciding to go along with $11.50 increase? E t A Yes. ~ 19 20 Q From your observation, what was the most 21 important factor? ~ . MR. CURNIN: Objection as to form. 0 23 Q You may ans.wer. E A Probable broadcast ban. . ~ ~ 24 ~ ~ 25 MR. CURNIN: So the record will be clear,

0 2 3 4 S 6 7 8 9 10 form? 11 12 13 14 15 16 17 18 19 20 21 22 0 24 25 cmb _Rechholtz 20 it is as to that question and that answer that I raise an objection as to form. Q Did you personally, in words or substance, indicate that this was the most important factor why you were in favor of going along with the proposed increase? MR. CURNIN: Objection as to form. MR. JOHNSTON: What is'wrong with that MR. CURNIN: Why don't you ask him what he said or what he did? This "words or substance can you indicate," I mean I am not sure what that means. I am not sure that the witness knows what it means. Q Do you know the exact words you used at the meeting? A No, sir. Q Now, in words or substance did you state that you thought the probable ban on TV advertising was the most important reason why the advertising committee should accept the proposed increase? A . I don't recall my personally taking that position, that it was the most important reason. Q You indicated, I believe, over objection of counsel when you were permitted to testify, that