Capital Cities/ABC’s startling decision to settle a $10 billion libel lawsuit against it by mighty Philip Morris Cos. is likely to lead network news departments to think twice about their targets.

Many news hounds decried what they viewed as last week’s cave-in by ABC, whose future owner, the Walt Disney Co., is said to have grown increasingly nervous about its financial exposure and the prospect of an unseemly airing of its reporting methods. First Amendment experts warned of the settlement’s possible chilling effect on coverage of the tobacco industry, which network news divisions steadfastly denied. Indeed, ABC officials say that in settling with Philip Morris they conceded only one key point in a segment whose central thesis they stand behind.

But it’s not just the “merchants of death”- as anti-smoking activists are prone to call their targets – who media are likely to fear. It’s really anybody with deep pockets and the will to take on those who dare to impugn their good corporate names.

“What’s going to come about is when stories reach the newsroom, the first thing they’ll consider is who they’re writing about,” predicts Los Angeles attorney Barry Langberg, who specializes in First Amendment cases. “From a practical standpoint, you’re going to end up with a double standard. They’ll be a lot more careful if they’re writing about a big company, because they know the company has a big stick and will use it.”

This comes despite the difficulty of pressing libel cases by corporate public figures, which must prove not only that statements were false but also that ABC, in this case, acted with reckless disregard for the truth.

Some TV journalists insist their ability to do investigative stories won’t be compromised. Don Hewitt, executive producer of CBS’ “60 Minutes,” says he’s never felt pressure to avoid stories on cigarette makers even though CBS’ current owner, Laurence Tisch, is one – through Loews Corp.’s Lorillard Tobacco unit.

“The influence of a cigarette manufacturer on the network he also owns is non-existent,” Hewitt says.

Despite its settlement, the case against ABC was far from solid.

A February 1994 broadcast of newsmag “Day One” made the inflammatory charge that the Philip Morris “artificially spiked” its cigarettes with nicotine, “manipulating” its content to “addict” smokers to their products. The charges have since been bolstered by other findings from researchers, and the Food & Drug Administration recently proposed that tobacco be regulated as a drug.

But no matter. Philip Morris seized on the “spike” word, and countered that it merely reconstitutes tobacco, adding nicotine that it had previously removed from the plants, in its manufacturing process.

ABC stood by its story, segment reporter John Martin and producer Walt Bogdanich. Last month, the network filed a motion to dismiss the case. But somewhere along the line, CEO Thomas Murphy decided a mea culpa was preferable to a $10 billion, or even $100 million, PR nightmare.

Instead, his critics contend, he hung his news division out to dry, airing an extensive and unprecedented scripted retraction on ABC’s “World News Tonight,” “Monday Night Football,” and “Day One.” Murphy also agreed to pay legal fees, estimated at anywhere from $2 million to $15 million, to both Philip Morris and R.J. Reynolds Tobacco Co., which had filed its own suit, although he reportedly balked at Philip Morris’ demand to run a $25 million print ad campaign. (Philip Morris in stead began its own ad blitz in last week’s newspapers, reprinting ABC’s retraction under the headline, “Apology Accepted.”)

CapCities also left Martin and Bogdanich in the uncomfortable position of hiring their own lawyers and refusing to go along with settlement of a case in which they’re also named as defendants.

But network spin controllers took pains to isolate what they viewed as a narrow concession – over the addition of outside nicotine sources – from what they contended was the main thrust of the segment, namely, tobacco companies’ “manipulation” of tobacco content by any means to keep smokers hooked.

The carefully worded statement agreed to by lawyers and released on Aug. 21, notes that the network “should not have reported” that nicotine is added to cigarettes, and doing so constituted “a mistake that was not deliberate on the part of ABC, but for which we accept responsibility and which requires correction.”

On the broader issue, “we continue to believe the broadcast speaks for itself,” an ABC spokeswoman said, adding the network was “prepared to have the issue resolved elsewhere.”

The settlement marks the second apology by a network newsmagazine in as many years. NBC similarly settled a case brought by General Motors Corp., which charged “Dateline NBC” with rigging a GM truck with explosives for a segment meant to dramatize charges that GM’s side-mounted gas tanks were dangerous.

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