When ABC was notified that its newsmag “Day One” had won the prestigious George F. Polk Award for its investigative report of the tobacco industry – also the target of a $10 billion lawsuit – officials on the award committee got the distinct impression that the network was less than elated about receiving the honor.

This struck committee members as strange, because this was the second major award the controversial series had garnered. Last month, it was cited as part of a body of work that led to the news division receiving a Gold Baton, the Alfred Dupont Awards’ highest honor. But the piece, alleging cigarette companies spike their smokes with extra nicotine, had been submitted for the Dupont competition early last March, before the lawsuit was filed.

“They seemed reluctant at first to accept it,” says Ralph Engelman, chairman of the journalism department of Long Island University, which administers the Polk Award. “Maybe they don’t want the piece to get any more attention and they can just get their lawsuit settled.”

Perhaps the reluctance stemmed from confusion at the ABC News Award office as to how the Polk Committee received the “Day One” story, because in the wake of the suit, ABC lawyers had prohibited its submission into award competition. Such is the standard operating procedure when a libel case is pending.

But the fact that a third party, not the network, nominated the piece, has left ABC “very happy” about the award, according to an ABC News spokeswoman.

Meanwhile, awards or not, the $10 billion libel suit filed by Phillip Morris against “Day One” has helped snuff out coverage of the tobacco industry. The suit is particularly onerous, because Phillip Morris has filed legal papers in a Richmond, Va., court to force the correspondent John Martin and the producer Walt Bogdanich to reveal confidential sources, as well as turn over travel and telephone records.

ABC lawyers objected, and the judge stayed the motion. He’ll hear both sides make their case on the motion March 1. “You can’t imagine the chilling effect it has had here,” says an ABC News veteran.

Last April, the New York Daily News reported that a documentary in the can for the ABC newsmag “Turning Point,” exposing how American tobacco companies are aggressively targeting overseas markets using marketing methods prohibited domestically, had been put on hold right after the suit was filed. ABC News brass told the News it would run. Last summer it was canceled.

Shortly after the lawsuit was filed late last March, stories related to the tobacco biz on “ABC World News Tonight,” “CBS Evening News” and “NBC Nightly News” fell off drastically, according to the Tyndall Report, an industry newsletter that monitors the Big Three flagship newscasts. “You have to remember that not only do you have this lawsuit, but it’s been filed by one of the biggest network advertisers,” says a veteran network news producer.

Indeed, Phillip Morris may be prohibited from advertising its cigarettes on the tube, but its subsidiaries, ranging from Kraft to Miller Beer, spent more than $424 million on network advertising last year.

The numbers are telling: In the first half of 1994, the evening newscasts spent 176 minutes on tobacco industry stories. During the second half the number dipped to a paltry 41 minutes.

“The first half of the year the tobacco industry was clearly on the defensive,” says Andrew Tyndall, publisher of the Tyndall Report. “But as soon as the going started getting rough, it seems like everybody threw in the towel.”