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Tobacco Firm Paid $950,000 to Place Cigarettes in Films : Movies: Company paid actors in cash, cars or jewelry in early ‘80s, memos say. Industry says it has halted practice.

TIMES STAFF WRITER

Internal memos say that Brown & Williamson Tobacco Corp. spent more than $950,000 in a span of four years to feature its cigarette brands in more than 20 movies--including payments of at least $300,000 to action film star Sylvester Stallone.

The payments took the form of checks, cash and merchandise--including jewelry and automobiles for such stars as Paul Newman, Sean Connery and Stallone--over the years 1979 to 1983, the documents say.

Product placement, which involves payments for display of brand-name merchandise in films, is a legal and potentially large source of revenue for filmmakers.

But use of the practice by tobacco companies drew harsh criticism in Congress and from health activists in the late 1980s. Critics charged that the tobacco companies were making an end-run around federal laws that require warning labels on cigarette ads and banish tobacco ads from television, where many feature films eventually appear.

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According to Brown & Williamson spokesman Tom Fitzgerald, the nation’s No. 3 cigarette manufacturer--which makes Kool, Barclay and other brands--halted the use of product placement agreements several years ago. Tobacco foes believe that the practice continues in the industry, citing what they consider an otherwise inexplicable rise in smoking scenes in films and television.

Among the papers, recently leaked to anti-smoking leaders in Congress and several news organizations, is an April 28, 1983, letter signed by Stallone in which he agrees for a fee of $500,000 to “use Brown & Williamson tobacco products in no less than five feature films.”

A spokeswoman said Stallone had no comment.

Jim Bergman, executive director of the anti-smoking group STAT--which has accused tobacco firms of using movies to hook young smokers--said Wednesday that the revelations are dramatic.

“It’s purposely putting advertising in the movies but pretending that it’s not advertising, knowing that the movies that Sylvester Stallone is in appeal to children and youth more than anyone else,” Bergman said.

In 1989, then-Rep. Thomas A. Luken (D-Ohio) conducted hearings on the use of product placement deals by tobacco firms. In the biggest expenditure disclosed during Luken’s inquiries, Philip Morris said its Tokyo-based advertising agency had paid $350,000 to showcase Lark cigarettes in a James Bond film that was to run in Japan.

But the placement effort described in the Brown & Williamson documents is the most extensive and costly ever to come to light.

The papers include a 1983 audit of the tobacco company’s agreement with Associated Film Promotions, a now-defunct Los Angeles product placement firm. According to the audit, Associated Film’s records showed that “they have attempted to make placements for B & W in over 150 movies or television shows and have succeeded in making placements in 22 movies and one television show.”

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The report said B & W was paying Associated Film a $30,000 quarterly retainer in 1983 and had paid a total of $278,000 in retainer fees since their relationship began in mid-1979.

According to the report, B & W spent an additional $687,000 for “special placements” arranged by Associated Film in a variety of movies--including $100,000 apiece for “Where the Boys Are” and “Harry & Son,” both 1984 releases, and $50,000 for the Clint Eastwood picture “Killing Ground,” released in 1983 as “Sudden Impact.”

About $300,000 of the special placement monies went to Stallone as part of the five-picture deal worth $500,000, the documents said. Among the Stallone films in the deal, according to the documents, were “Rhinestone Cowboy,” “Rocky IV” and “Rambo,” which was released as “Rambo: First Blood Part II.”

The documents suggest that B & W officials were not sure they were getting their money’s worth, after sitting down to view seven films in which their brands were to be featured.

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In “Body Heat,” the blurred image of a Kool poster appeared three times, but two lead characters were “observed . . . smoking Marlboro"--industry leader Philip Morris’ flagship brand--throughout the film, the report said.

It was the same story with “Only When I Laugh.” That film included “a blurred pack of Kool,” but “the lead character . . . smoked Marlboro throughout the movie.”

Tobacco executives also discovered that in some cases, Associated Film was not paying with “checks to individuals” because movie producers “prefer cash, jewelry, cars, etc.”

For example, the report said, Associated Film’s records showed that of $20,000 paid for placement in the James Bond film, “Never Say Never Again,” $12,715 was spent on “jewelry for Sean Connery.”

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The $100,000 purportedly paid for placement in “Harry & Son” included $42,307 for a “car for Paul Newman,” the documents said. And of $50,000 listed for the film that became “Sudden Impact,” $22,047 was said to have been spent on a “car for Clint Eastwood,” according to the audit.

Spokesmen for Connery and Newman did not return phone calls seeking comment. A spokesman for Eastwood said the audit entry had to be a mistake.

“He didn’t receive a car,” the spokesman said.

Robert Kovoloff, a public relations man and former president of Associated Film, declined to discuss the documents.

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“I have nothing to do with this right now. My answer is I have nothing to say.”

Several tobacco companies told Luken in 1989 they no longer paid filmmakers to feature their brands, but had done so in the past.

A year later, cigarette firms wrote a prohibition on placements into the industry’s voluntary advertising code, according to an official with the Tobacco Institute. The code states that tobacco companies will “not . . . engage in paid movie product or cigarette advertising placements.”

The practice remains common among other makers of consumer goods. One current release, “Major League II,” includes prominent displays of at least eight recognizable brand names.

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--- START OF APPENDED STORY ---

Tobacco Pitchman Agrees Stars Did Not Receive Gifts

Cigarettes: Brown & Williamson documents outlined payments. Middleman says information is bogus.

By MYRON LEVIN, TIMES STAFF WRITER

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Originally published: Los Angeles Times - Tuesday June 14, 1994, Home Edition, Part A, Page 1, Column 5, Metro Desk; 30 inches, 1046 words

Paul Newman did not get a Mercedes. Bob Kovoloff did.

Kovoloff, of Encino, ran a nearly $1-million campaign in the early 1980s to place Brown & Williamson Tobacco Co. brands in feature films.

His Associated Film Promotions, then among Hollywood’s most prominent product-placement firms, often eschewed written deals with studios, claiming to rely instead on lavish gifts to members of movie casts and crews.

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Drawing on internal documents leaked from B & W to members of Congress and news organizations, The Times reported last month that Newman, Clint Eastwood, Sean Connery and Sylvester Stallone, among others, supposedly got expensive jewelry, cars and other items, purchased by Associated with B & W’s money.

But those reports prompted indignant denials by some of the celebrities. And now, challenged on the details, Kovoloff--a pioneer product pitchman who has faced dozens of lawsuits over his business dealings--says that many of the goods never reached the stars.

Sean Connery “never got any jewelry,” he said in a telephone interview last week. “Paul Newman never got a car. Sylvester Stallone never got a car. Clint Eastwood never got a car. They never got a thing from me.”

Although a B & W audit in 1983 listing the gifts said it relied exclusively on records provided by Kovoloff’s firm, Kovoloff last week called the listing bogus, denied furnishing the information and said he did not know where it came from.

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Confusion over how the money was spent was not his doing, Kovoloff insisted. “A lot of (stuff) could have been made up,” he said. Kovoloff declined further comment, and did not return additional phone calls from The Times.

There is no doubt that Brown & Williamson set out--years after Congress barred tobacco firms from advertising on television and radio--to buy display for its products in motion pictures. But in selecting Kovoloff as its Hollywood pitchman, B & W got fewer results than it hoped for.

The product-placement effort “in our view was a failure,” acknowledged B & W spokesman Tom Fitzgerald. “It was not an effective use of our marketing dollars.” Fitzgerald declined to comment on the audit--conducted by B & W to ascertain how its money was being spent by Kovoloff’s firm--or on Associated’s use of the tobacco firm’s money.

*

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Kovoloff, 57, is no stranger to disputes over property and money. During the 1980s and early ‘90s, he and his companies faced a torrent of lawsuits from angry clients, landlords and employees--a legal onslaught checked only by his bankruptcy filing in 1992.

For example:

* Former clients Nikon and Panasonic won court judgments of $70,000 and $349,000, respectively, over expensive photographic and electronic equipment loaned to Associated as movie props but never returned. In its defense, Associated claimed it was understood “that many of the products would not in fact be returned as that is the custom and practice in the motion picture industry.”

* After Pizza Inn Inc., paid a promotional fee of $100,000, the firm “instantly began to be unable to ever locate” Kovoloff, said Jeff Rogers, president of the Dallas-based chain, which was listed as a creditor in Kovoloff’s bankruptcy filing.

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* Florida Smoked Fish Co. filed suit against an ad agency over what it termed an unfulfilled promise of a movie scene in which famished patrons held hostage in a supermarket were to eat bagels and the company’s fish products. The ad agency contracted for the placement with a Kovoloff firm.

* The Trumbull County Convention and Visitors Bureau in northeastern Ohio won a lawsuit over $35,000 it paid Associated to promote the area as a film location. “Nothing ever came of it. . . . We would write letters to him, place telephone calls, and there was no response,” said Darlene Russo, administrative assistant for the visitors bureau.

* Kovoloff and his companies also were sued repeatedly by landlords for unpaid rent on office space and luxury homes. “He’s a deadbeat extraordinaire,” said Ryan Martin, a leasing agent for a Van Nuys commercial landlord who repeatedly sued a Kovoloff firm for unpaid rent.

But it is the odd tale of Brown & Williamson’s campaign to promote its brands in films that has brought Kovoloff’s bumpy career into focus.

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In its 1983 audit, B & W said canceled checks and other records showed that Associated had used the tobacco company’s funds to buy, among other things, a $42,307 automobile for Newman, a $22,047 car for Clint Eastwood and $12,715 in jewelry for Sean Connery.

To support the claimed gift to Newman, Associated apparently showed B & W’s auditors a canceled check for $42,307 written to Auto Stiegler Inc., an Encino car dealership. But John Stiegler Jr., a spokesman for the dealership, said last week that a Mercedes convertible at that price was delivered to Kovoloff, not Newman. Kovoloff subsequently acknowledged he got the car.

As Kovoloff also acknowledged, Associated did not buy Clint Eastwood a car from Auto Stiegler, either, despite the audit record. Selling “a car to a celebrity . . . is a big thing to us,” Stiegler said. “I would have known if there was any car going to Clint Eastwood.”

As for Connery, his attorney stated that the actor did not receive any kind of payment for the placement of tobacco products in movies in which he performed.

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Another audit entry listed a payment of $13,000 to David Levy, described as “assistant producer” of the movie “Tank.” But according to the filmmakers and credits, “Tank” did not have an assistant producer--nor any involvement by a David Levy.

At the time of the purported payment, however, Associated did pay $13,000 to a David L. Levy--a real estate man who had nothing to do with the film. The money was for a security deposit and two months rent of a West Los Angeles office and warehouse building owned by Levy. The payment was cited in court papers in a lawsuit against Associated--one of several Levy wound up filing for unpaid rent.

*

The lW documents also included an April 28, 1983, letter to Kovoloff from Sylvester Stallone, in which Stallone agreed for a fee of $500,000 to “use Brown & Williamson tobacco products in no less than five feature films.”

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The B & W audit, prepared several months later, said Associated had received $300,000 of the funds for disbursement to Stallone. Stallone’s representatives have declined to discuss the matter, and it is unclear where the money wound up.

B & W canceled its contract with Associated Film in 1984. Internal memos show the firm was disturbed by Associated’s record-keeping practices and didn’t think it was getting its money’s worth. Moreover, the cigarette maker had just been hammered by bad publicity over the showing of a Kool cigarette commercial in a Massachusetts theater featuring the G-rated movie “Snow White.”

A memo said Kovoloff and Associated Film Senior Vice President James F. Ripslinger were told the deal “was being terminated because of a corporate policy decision.”

B & W’s parting was more amicable than that of some Kovoloff clients, who sued but were unable to collect their judgments. Collection was stymied by Kovoloff’s 1992 bankruptcy, which wiped out debts of more than than $1.5 million to nearly 100 creditors.

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Despite his seemingly dire financial straits, though, Kovoloff maintained some trappings of the high life.

At a court hearing in November, 1990, involving an unpaid legal judgment, Kovoloff said he and his wife “have nothing. . . . We are as broke as two people can be.”

He acknowledged, however, that his wife was driving a Range Rover. His car? A Jaguar.

--- END OF APPENDED STORY ---

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