RULES MAY SNUFF AD DOLLARS : TOBACCO SALES EXPECTED TO SURVIVE.

Byline: Daily News Wire Services

The tobacco industry and analysts agree that President Clinton's crackdown on cigarette marketing will have little immediate impact on sales.

Wall Street watchers predicted Friday that tobacco makers will succeed quickly in convincing a court to temporarily block the administration's rules.

So what's all the fuss about?

It's about the future. Giving the U.S. Food and Drug Administration the power to regulate cigarettes will eventually lead to mandated cuts in nicotine content and maybe a total ban, industry observers say.

The business impact is more immediate for the nation's advertisers and retailers. They stand to lose a significant chunk of the $1.1 billion the industry spends each year on magazines, billboards and store displays.

Much of the Clinton administration's program will be phased in over the next year, including the ad curbs and limits on vending machines. Rules banning cigarette sponsorships of sporting events don't take effect for two years because contracts for those are signed that far in advance.

Lawyers for R.J. Reynolds will meet with a federal judge in North Carolina on Monday to see how quickly the case can be heard.

Tobacco companies are afraid the FDA's move will hurt their defense in more than 200 lawsuits by smokers who say they were hooked and by 14 states that are trying to recover billions of dollars in health care dollars spent treating sick smokers.

And advertising executives are preparing to seek a court order Monday to block the FDA rules, which would put a sizable crimp in their profit margin.

The tobacco industry - a $49 billion-a-year enterprise - did get a temporary $150 million break in the rules announced by Clinton. The FDA dropped its proposal that the industry immediately set up a fund to educate teens about smoking's risks.

Instead, the six tobacco firms whose brands teens use most will be ordered to help FDA create televised health warnings and other educational materials that may cost them millions.

John Nelson of Brown Brothers Harriman, suggested that the industry might try to cut a deal with Congress to impose similar restrictions by law - but limit the FDA's powers over tobacco to prevent this succession of tighter rules.

Meantime, analysts note that the tobacco companies have a very strong backstop if domestic consumption declines because their business overseas is booming.

By next year, Philip Morris - the world's No. 1 cigarette company - will make more profits from sales outside the United States than domestically, they predicted.

``The tobacco markets in Eastern Europe used to be controlled by state monopolies. Now the U.S. manufacturers are picking up more and more share,'' noted Ronald Morrow of Rodman & Renshaw.

Investors, who have already beaten down tobacco stocks based on legal setbacks, took a mixed view Friday.

Philip Morris, maker of Marlboro, gained $1.25 to $88 while RJR Nabisco Holdings, maker of Winston, Salem and Camel, was up 37-1/2 cents to close at $25.50 a share on the New York Stock Exchange. Loew's Corp., owner of the Kent, Newport and True brands, was down 37-1/2 cents to $74.75 while shares of BAT Industries, parent of the company that makes Kool, were off 12-1/2 cents to $13.25.

Less sanguine about the future was John Kamp, senior vice president of the American Association of Advertising Agencies, who said the president's rules go far beyond simply protecting teens from ads.

``For the most part this is a ban in sheep's clothing,'' Kamp said.

In the fields of Pittsylvania County, Va., tobacco farmer Ned Cundiff said the Clinton plan will make it harder to make a living.

``The American people don't realize how much tax money is being made off tobacco,'' Cundiff said. Tobacco sales produce $13.1 billion in local, state and federal excise taxes across the country.

Now he and fellow farmers say they are putting off equipment purchases because they are uncertain of their crop's future.

``It's got us afraid to do anything,'' neighbor Wayne Osborne said. ``I wanted to buy a harvester to cut down on labor costs. You aren't going to invest in something when you don't know what's going to happen.''

Cracking down on tobacco

Tobacco billboards must be black-and-white, with no pictures, and none within 1,000 feet of a school or playground.

No more Joe Camel ads in magazines like Rolling Stone or Sports Illustrated. The same black-and-white rule applies for any magazine read by 2 million teens or whose readership is 15 percent youths.

Vending machines banned from grocery stores, restaurants and any other place where a teen might wander. They still will be allowed in bars and casinos.

No more brand-name sponsorship of sports.

No more T-shirts or hats bearing cigarette brands or logos.

CAPTION(S):

Photo, Box

Photo: (color) The White House rules on tobacco promot ion will ban name-brand sponsorship of sports events like the Winston Cup.

Associated Press

Box: Cracking down on tobacco (see text)