NYC Tobacco Ad Mandate Takes a Hit

A federal judge has struck a blow to New York City’s campaign to require retailers to post graphic pictures wherever tobacco is sold. The win for the nation’s big tobacco manufacturers has at least one applauding.

In his decision Dec. 29, U.S. District Judge Jed S. Rakoff said that only the federal government can dictate warnings that must accompany the promotion of cigarettes, according to the Associated Press. The ruling came in a suit challenging the legality of a 2009 New York City Board of Health code change that required the display of smoking cessation signs where tobacco products are sold. Individual retailers, the New York State Association of Convenience Stores, New York State Association of Service Stations and Repair Shops, and tobacco manufacturers are party to the suit.

"We are pleased that the Court recognized that only the federal government has the power to control the content of cigarette warnings," said Murray Garnick, Altria Client Services senior vice president and associate general counsel, speaking on behalf of Philip Morris USA. "This lawsuit is not about communicating the health effects of cigarettes, which Philip Morris USA does in a number of ways, including on its Web site. Rather we brought this litigation because the city’s resolution violates Congress’ mandate giving the power to regulate content of cigarette advertising and promotion to the federal government, subject to constitutional limitations."

In his written decision, Rakoff said that the part of the federal Labeling Act (1965) dictated that no state law could impose a requirement or prohibition with respect to advertising or promotion of cigarettes. An agreement among the parties to delay enforcement of the rule was set to expire on Saturday, Jan. 1. 2011.

Floyd Abrams, a lawyer representing some store owners, said the ruling will come as a relief to retailers who had agreed to post advertisements even though they were not yet required to do so, according to the Associated Press. He argued that the city could legally post anti-smoking advertisements across the city, but could not force others to do so.

The New York City Department of Health and Mental Hygiene said in a statement that it was "disappointed in and strongly disagrees with [Wednesday’s] ruling." Nicholas Ciappetta, a city attorney who handled the case, said the city is reviewing the decision and considering its legal options.

Tobacco, Defense Stocks Trail Year-Opening Rally

In trading Monday, cigarettes & tobacco shares were relative laggards in the broadly positive session, up just 0.4% on the day. Dragging down the group were shares of British American Tobacco, down about 0.8% and shares of Altria Group down about 0.7% on the day.

Also lagging the market Monday are defense shares, up on the day by just 0.5% as a group, led down by Applied Energetics, trading lower by about 2.5% and Alliant Techsystems ( ATK - news - people ), trading lower by about 0.4%.

China's Target for Tobacco Control Not Met

Nearly five years after China's accession to the WTO Framework Convention on Tobacco Control, China is set to breach its commitment to ban smoking in all enclosed public places.

Five years ago, China promised to enforce a complete ban on smoking in all enclosed public places and workplaces by January 9, 2011.

A report by the Beijing Times says as of today, China has failed to make any state-level legislation on a smoke ban and the smoke rate of its citizens has not yet declined. Meantime, the number of victims by second-hand smoking has increased 200 million within three years.

The report says tobacco-related advertisements and delicate cigarette cases are among the factors to be blamed for the country's high smoking rate.

Big Tobacco's nightmare

He is one of the most famous whistleblowers in the world, but his face is relatively unknown.

Jeffrey Wigand, the scientist who revealed Big Tobacco's dirtiest secrets and found a bullet in his letterbox, says he's "an ugly old man with white hair". But the world knows him as the fattened-up but still handsome Russell Crowe in a celebrated film.

Wigand likes the movie. "I think Russell Crowe did an amazing job of capturing my essence," he says on the phone from his home in Michigan. "I was sorry he didn't get an Academy Award."

The Insider showed one person can bring about change, that the truth will out, and that tobacco companies will fight to bury it. And that life is horrible for a whistleblower with kids.

"The death threats were never directed towards me, they were directed towards my two little girls," he says. "The bullet in the mailbox wasn't for me, it was for my kids. For a father, that really goes at the core. Here I'm doing something I believe is ethical and moral and as a result I could create harm for my children. It was difficult."

Wigand's revelations about Big Tobacco's lies and deceptions helped sink its reputation forever, and nowadays he spends his life spreading the word and advising governments.

He is in New Zealand this week to talk to the Maori Affairs select committee, which is investigating the effect of smoking on Maori, and to give lectures. His message: throw everything at the problem.

The anti-smoking lobby – Ash (Action on Smoking and Health) is sponsoring Wigand's trip – has pulled off a coup by bringing a world-renowned hero of the movement to New Zealand. It hopes his visit will "light a fire" under the public and the politicians.

"The heartlessness of the people who work in the tobacco companies is beyond the imagination of most New Zealanders," says Dr Marewa Glover, director of the Centre for Tobacco Control Research at Auckland University. "We are a little bit naive about how evil people can be."

Wigand went into the industry hoping to do good. His job was to make a safer cigarette, and make tobacco reviews.

The scientist had spent 25 years in the medical and healthcare industry. He was, he told a US congressional subcommittee on whistleblower legislation in 2007, "steeped in the mindset of using science to search for the truth, to make products better and to improve the quality of life and save lives".

Smoking Mad: ANA Files Briefs To Challenge Tobacco Ad Ruling

The Association of National Advertisers still believes restrictions on tobacco advertising violate free speech.

The ANA joined with two other industry groups in filing a "friend of the court" brief challenging decisions made to withhold restrictions on tobacco advertising.

The brief is against a recent U.S. District Court for the Western District of Kentucky decision that upholds the Family Smoking Prevention and Tobacco Control Act of 2009.

Dan Jaffe, executive vice president of government relations for the ANA, stated: "The District Court went against 30 years of commercial speech precedent in upholding a majority of the most burdensome restrictions ever passed by Congress pertaining to the truthful advertising of a legal product."

That act placed restrictions on advertising tobacco products. It bans all outdoor advertising for tobacco products within 1,000 feet of any elementary or secondary school or playground; requires all ads to contain a government statement -- in addition to the current Surgeon General's warning -- about the possible dangers associated with the use of tobacco products, and bans promotional items, such as hats or T-shirts containing the name or logo of a tobacco product.

In addition, the court ruled that any sponsorship of athletic, musical, social or other cultural events by corporate name be restricted to adults.

It also demands compliance with more stringent requirements enacted by state and local governments and authorizes additional restrictions if the number of minors who use tobacco products has not decreased by 50% from 1994 levels.

Joining ANA in the amicus brief were the American Association of Advertising Agencies and the American Advertising Federation.

Azerbaijan bans demonstration of cigarettes on TV channels

The demonstration of cigarettes in the TV programs, films on the Azerbaijani television will be banned based on the bill "On Restriction of smoking in public places in the Republic of Azerbaijan ", whose adoption is expected this year in the Milli Mejlis (Parliament) of Azerbaijan, Parliamentary Social Policy Committee Deputy Chairman Musa Guliyev told Trend.

"Advertising of cigarettes is banned also in accordance with the law "On tobacco and tobacco products", adopted in 2001. However, despite this, the mechanism of fines and supervision in this regard does not exist. The new bill also specifies that cigarettes will not be demonstrated on television, and in the movies shots on cigarettes will be demonstrated in such a way that cigarettes would not be visible," Guliyev said.

Guliyev said the bill also specifies that all the television companies in Azerbaijan should demonstrate TV programs regarding dangers of smoking, ways to get rid of this fatal habit lasting at least 90 minutes a month.

Guliyev said the law "On Restriction of smoking in public places in the Republic of Azerbaijan" will be adopted at the autumn session of the Milli Mejlis.

"In many countries of the world legislative bases for the establishment of environment without tobacco are determined. There are rules banning smoking in places where there are children and young people," he said.

"Experiences of various countries are used in developing the bill " On Restriction of smoking in public places in the Republic of Azerbaijan", Guliyev said.


"Due to the fact that some details of the law have not been fully worked out, it was not submitted to the spring session. Probably, in the autumn session, the bill will be submitted and accepted", Guliyev said.

Top 5 Companies in the Tobacco Industry Offering Investors the Best Cash Flow (AOI, UVV, LO, RAI, MO)

Below are the top five companies in the Tobacco industry as measured by the price to cash flow ratio. Often companies with the lowest ratio present the greatest value to investors.

Alliance One International (NYSE:AOI) has a price to free cash flow ratio of 3.7x based on a current price of $4.4 and a free cash flow per share of $1.19.

Universal (NYSE:UVV) has a price to free cash flow ratio of 6.6x based on a current price of $46.27 and a free cash flow per share of $6.97.

Lorillard (NYSE:LO) has a price to free cash flow ratio of 17.7x based on a current price of $73.01 and a free cash flow per share of $4.12.

Reynolds American (NYSE:RAI) has a price to free cash flow ratio of 18.2x based on a current price of $50.58 and a free cash flow per share of $2.77.

Altria Group (NYSE:MO) has a price to free cash flow ratio of 20.9x based on a current price of $20.16 and a free cash flow per share of $0.97.

SmarTrend is bullish on shares of MO and our subscribers were alerted to Buy on March 11, 2009 at $16.48. The stock has risen 22.3% since the alert was issued.