Big Tobacco’s Magazine Ads Draw States’ Ire

The tobacco industry is again drawing the wrath of state attorneys general, who are investigating allegations that cigarette makers are violating their historic 1998 settlement by seducing teens with magazine ads.

At issue is the $246-billion settlement reached between the states and the industry in late 1998 to resolve suits aimed at recouping Medicaid costs spent on sick smokers. As part of the agreement, the tobacco industry agreed to stop certain types of outdoor advertising, including on billboards and in stadiums and shopping malls. While there was no specific language about magazines, the industry vowed that it would not take any action to target youths in the sale of cigarettes.

While tobacco firms promptly pulled billboard ads after the agreement was signed, cigarette ads have continued to run in a gamut of magazines read by teens, including Glamour, Rolling Stone, TV Guide and Sports Illustrated.

“We have an active, very focused investigation,” said Washington State Atty. Gen. Christine Gregoire. Gregoire, president of the National Assn. of Attorneys General and a key negotiator of the landmark settlement, said the probe started about four months ago with complaints about the nature of the ads.

If the attorneys general believe after their probe that the industry has violated the terms of the agreement, they can take manufacturers back to court and seek a contempt order and penalties.

The timing of the probe, which could land tobacco companies back into courts across the country, is particularly bad for the industry as it faces what could be a massive punitive damage verdict from the Florida jury in a huge smokers’ class-action case. The punishment phase of the landmark Engle lawsuit begins next week.

In a development in that case Wednesday, the judge said Philip Morris Cos. and other tobacco companies can’t cite their $246-billion settlements with the states to argue they’ve been punished enough.

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Bloomberg News was used in compiling this report.