Tobacco Punts

WASHINGTON, D.C.: The two largest cigarette makers in the U.S. are negotiating a sweeping settlement with lawyers from eight states that could give the industry broad legal shelter in return for a possible payment of as much as $300 billion over the next 25 years. The talks, which began about two weeks ago, may bring concessions long considered unthinkable by the tobacco industry: accepting some regulation by the FDA, disclosing the hundreds of chemical additives in cigarettes, and banning outdoor advertising and the use of people in ads. Why, after nearly four decades of successfully fighting off lawsuits, would big tobacco rather settle than fight? A deal makes sound business sense, notes TIME Wall Street Columnist Daniel Kadlec: "The tobacco industry knows it could pay for this entire settlement by just increasing prices. It wouldn't affect their current operations at all. It would finally give them immunity to lawsuits, and stocks will soar." In fact, the news received a warm reception on Wall Street, with Philip Morris up 4 1/4 and RJ Reynolds up 3 1/4. Still, a number of of possibly insurmountable hurdles remain. For one thing, any deal that would shield cigarette companies from future litigation would require an act of Congress. Tobacco firms and plaintiffs also reportedly differ on the total compensation by about $100 billion. And anti-tobacco activists may not like the deal, TIME's Bruce Van Voorst notes, feeling that the industry should be made to suffer and made to shrink. But as Kadlec notes, lawsuits are ultimately about compensation, and this may be the best deal the plaintiffs are going to get: "The plaintiffs will never be able to put the cigarette companies out of business. The industry has all the money it needs to keep the battle going for another 40 years. And even if they could win a few class action suits, it could be 20 years before they ever get a dime."