The Los Angeles Times from Los Angeles, California • 48

BU Cos Atujctcs S'imcs Monday, November 12, 1984 CCPart IV For What It's Worth S. J. Diamond i Foes Seek to Dry Up Ads for Beer and Wine Price of Gas Not Expected to Shoot Up Once-Feared Surge Now Held Unlikely as Deregulation Nears i mm wnjrffss ft InK'JX -vSkMi III MARY FRAMPTON and LARRY BESSEL Los Angeles Times Ai-v Ml I. I 1 fli. tn Richard Thalheimer's new downtown store, the Sharper Image, will feature sophisticated gadgets for adults.

Other stores selling such items are the Price of His Toys in Beverly Hills (with manager Alvin Cooperman demonstrating a pogo stick) and Future Tronics (with Beverly Center manager Hamid Esamli holding a phone worth more than $600). The Sharper Image Comes to LA. Last June, the Center for Science in the Public Interest in Washington established SMART (Stop Marketing Alcohol on Radio and Television), whose other members ranged from the Consumer Federation of America and National Congress of Parents and Teachers to the National Christian Temperance Union. The goal: to ban beer and wine advertising from television and radio, or win equal time for counter-messages. That could be costly to both alcoholic beverage makers and broadcasters.

According to the Television Bureau of Advertising in New York, beer and wine makers constituted the fifth -largest television sponsors last year, providing almost $560 million worth of ads. It's also just another in a growing series of threats, including a new federal law encouraging all 50 states to raise their drinking age to 21, stiffer laws and penalties for drunk driving, "dram shop" laws putting liability on servers of drinks, and a host of proposed state bills prohibiting, restricting or taxing alcoholic beverage advertising. No one quarrels with the center's statements that alcohol contributes to more than $120 billion in economic damage and over 100,000 deaths a year, including many homicides, suicides and, according to the National Safety Council, at least half of last year's 45,000 traffic fatalities. What they dispute is SMART'S theory that a ban would help to restrict the industry's promotion of alcohol beverages, which aims at "getting more people to drink and to drink more," says the center's George Hacker. The center cites studies indicating that promotion works.

One "Content and Effects of Alcohol Advertising" compared the number of alcohol ads young people saw with the amount they drank and found that those "more heavily exposed to advertisements drank 20 to 30 more than the less exposed," says Michigan State professor and co-author Charles Atkin. Nor could they easily avoid such exposure, given the number of such ads broadcast during sports events, specials and prime time. 'Quick-Fix' Solution The National Assn. of Broadcasters responded by deriding the proposed advertising ban as a "quick-fix" solution and taking the surprising stance that advertising makes no difference. "Exposure to mass media," it said, "is generally considered to be among the weakest or non-existent influences on alcoholic (sic) consumption behavior," adding that broadcast advertising affects only "brand preference" and not "consumption levels." Broadcasters and brewers naturally prefer to control drinking, not advertising, and driving, not drinking.

They therefore support public education about alcohol abuse and moderation, groups such as Mothers Against Drunk Drivers and Students Against Driving Drunk, and an increase in public-service announcements about the problem. Both hard liquor and cigarettes, of course, are not advertised over the air. In the wake of Prohibition and lingering public disapproval, makers of distilled spirits adopted a voluntary "code of good practice" that forbade broadcast advertising and haven't seen fit to change it, even after the advent of television. The effect on sales is debatable: Per capita consumption of liquor has dropped 11 since 1973, according to the Distilled Spirits Council, while beer consumption increased 11 and wine 28, but the decline may reflect changes in American life styles not caused by competitive advertising. The more obvious comparison is cigarettes, banned from TV in 1971.

The center, says Hacker, thinks the ban is clearly "one of many prevention measures that over time have brought (per capita) cigarette consumption down, but it's hard to measure." The broadcasters, however, take their odd advertising-isn't-important stance; NAB President Edward Fritts, for example, points out that "consumption rates by young people who have never seen or heard a broadcast cigarette advertisement remain exceedingly high." Actually, anti-smoking ads may have brought down consumption. "In the late 1960s, broadcasters were required to carry one public-service message for every five cigarette ads," says Atkin, "and after three years, advertisers thought that was doing more harm than not advertising, so they accepted the ban." Questions of Fairness, Free Speech Even if advertising does increase consumption, the industries question the fairness of a ban. Brewers see it "not as an attack on beer advertising," observes Scott Hume of Advertising Age, "but more on the beer industry. They're saying: 'Don't kid yourself; we're looking at the new But Don Shea, president of the U.S. Brewers Assn.

in Washington, says: "It's not a prohibition fear, but it would amount to the same thing, There's an implicit and explicit message, that an alcohol product is bad." Broadcasters and advertisers are more concerned with free speech. "If there is a hazard associated with a product," Fritts has said, "the most direct remedy is to ban the product. Beer and wine use and consumption are as old as history, and as lawful and legitimate products their manufacturers have the First Amendment right to advertise the uniqueness of their products to the public. As long as these products are presented in a tasteful and appropriate manner, then they have a right to present themselves to their audience." Taste is not usually a criterion for First Amendment protection, but there are many others at issue. Legal experts debate whether advertising, or "commercial speech," should have the same protection as, say, scientific ideas or political beliefs.

Some say the 1971 cigarette ad ban, though upheld by the U.S. Supreme Court, might not be left standing today, but others point out that the court also refused to hear a recent Mississippi case over that state's restriction of alcohol advertising. It may never come to a legal test. Led by the NAB, the broadcasters for all their assertions that mass media advertising is ineffective are madly making, exchanging and running a lot of public-service announcements about alcohol abuse in an effort to avert the threat of an advertising ban. If such spots are as successful as the anti-smoking spots were, they may actually accomplish SMART'S goals.

By PATRICK BOYLE, Times Staff Writer On New Year's Day, just as winter cold settles over the country, price ceilings will be lifted on more than half the nation's natural gas supplies. This prospect once raised worries about pensioners being unable to pay their heating bills and factories having to switch to some other source of fuel to run their assembly lines. Prices were expected to shoot up as much as 50. But the picture has changed dramatically. Now experts are predicting that the long-awaited deregulation' of natural gas, a commodity that has been under price controls since the 1940s, will cause "not even a blip" in the price of the fuel.

"If anything, prices could go down," says Thomas A. Page, chairman of San Diego Gas Electric Co. "All the price pressure is down." This sharp turnaround in thinking has sent jitters through the nation's gas industry and raised concern that with lower prices, gas producers won't have enough economic incentive to search for new gas deposits. And although most industry experts expect prices to remain at their current levels or decline, some consumer groups fear that a lifting of price ceilings will ultimately lead to higher gas prices. Congress recently turned aside an effort to have price controls extended for two more years to assure stable gas prices for residential customers.

Several Reasons Cited Experts expect prices to remain flat, at least through 1985, for a number of reasons. Oil prices are falling, forcing gas suppliers to lower their own prices in order to hold on to industrial customers who can easily switch to burning oil in their plants. The gas surplus that has plagued the industry for five years could hang on for another five years because conservation has brought growth in demand to a halt. And pipeline companies are continuing to find ways of circumventing contracts that required them to pay a higher-than-market price for gas, hoping to bring the price they are paying closer to the market level. Industry officials say the expiration of most price ceilings will lead to the kind of shakeout in the gas business that other industries have gone through as government regulations were lifted.

"We're moving very rapidly toward more and more deregulation in the gas markets and more and more competition among the participants," said Kenneth L. Lay, chairman of Houston Natural Gas one of the nation's leading pipeline companies. "We're way past the point where this egg can ever be unscrambled." More Orderly Market The competition is resulting in a more uniform price for natural gas and the formation of an orderly market, with posted prices and a sort of exchange for buyers and sellers. Some brokerage firms are even discussing using gas futures contracts to give producers and consumers a hedge against changes in the market price. (A futures contract gives the investor the right to buy or sell a specified amount of a commodity to' be delivered at a certain date for a Please see GAS, Page 4 'Toy Stores' Catering to the Yuppie Crowd By LOUIS SAHAGUN, Times Staff Writer The Pacific Rim South Korean Giant Moves Into Electronics other things.

"In my stores," Thalheimer said, "instead of asking, 'May I help salespeople ask, 'May I show you how that Thalheimer's foray into Los Angeles has not gone unnoticed by the couple of local competitors who also deal in products aimed at people who only thought they had everything. Hamid Esamli, president of a local three-store chain called Future Tronics that mostly sells the latest in electronic gadgets, got wind of Thalheimer's designs on Los Angeles a few weeks ago. Ever since, he has been searching for a downtown Los Angeles location of his own. (Two of his stores are on the Westside and one is at the Glendale Galleria.) Gadgets and Gizmos "I'm hoping he (Thalheimer) will push up my sales," said Esamli, who vowed to visit the Sharper Image on opening day. Larry Koenig, owner of Beverly Hills-based the Price of His Toys, which is a tiny store with a national reputation for its ever-changing line of gadgets, gizmos and "adult toys," said: "I've had rivals before." However, he added: "I'm always concerned about what the competition is doing." The Price of His Toys, which generates sales of $800,000 a year in 500 square feet of floor space, more closely resembles the Sharper Image in concept and product line than does Future Tronics.

(An Please see TOYS, Page 3 Richard Thalheimer, who founded a wildly successful company that sells "an eclectic mix of products reflecting a yuppie life style," shyly admits that his method of finding the right location for new stores is a bit unusual but it works. "I just stand on street corners and count the number of people who walk by wearing suits and ties," said Thalheimer, whose mail-order catalogueretail operation, San Francisco-based the Sharper Image, made a profit of $2.5 million on revenues of $80 million last year. Although 95 of the 7-year-old company's revenues were generated through the Sharper Image catalogue, Thalheimer is directing most of his energy these days into building retail outlets. The newest one, which is scheduled to open today in Los Angeles, joins units in Denver and Houston and two in San Francisco. Thalheimer studied pedestrians at Westwood, Beverly Hills and Century City last June before choosing the corner of Wilshire Boulevard and Grand Avenue in downtown Los Angeles as home for his fifth haven for gadget freaks.

Potential Customers There among the skyscrapers, he figured, were throngs of young professionals with a potential soft spot for gold-plated dumbbells, sculptured pillows designed to look like Porsche and BMW cars, guns that fire pulses of infrared light and even tummy exercisers, among By SAM JAMESON, Times Staff Writer SEOUL, South Korea-Three, years ago, Hyundai Electronics Industries Inc. was just a vision in the mind of Chung Ju Yung, chairman of the massive Hyundai business conglomerate. Chung and the Hyundai Group, which until then had been involved almost exclusively in construction and heavy industry, knew very little about electronics. Now, the company that Chung incorporated in February, 1983, has moved from vision to manufacturing and has set goals that are beginning to attract attention at home and abroad. By 1987, the firm will have invested $500 million in manufacturing facilities, 60 to 70 of it in semiconductors, according to Lee Jong Woon, director of planning and coordination for the firm.

Financing No Problem At present, sales are so small that the company, which has not gone public, refuses to disclose financial details, Lee said. But according to a company brochure, the firm hopes to have sales of about $30 million this year. Financing the company's grandiose plans is no problem, Lee said. "Our chairman's name is good enough for all the credit we need." Chung, the doyen of South Korea's family-centered chaebol, or business conglomerates accord-Please see RIM, Page 3 Labor Harry Bernstein AFL-CIO Denies Its Early Jump on to Mondale's Bandwagon Hurt Him Critics of labor say the devastating defeat of Walter F. Mondale in the presidential election should have taught the nation's union leaders that they made a disastrous political error when they broke tradition and endorsed Mondale in 1983, long before the political parties made their own nominations.

Labor should not repeat its mistake of getting involved in the Democrats' battle to pick a nominee, the critics caution. Some political analysts contend that the AFL-CIO backing of Mondale was a significant factor in his defeat because unions generally are not popular with the American public and because voters don't like any organizations, especially unpopular ones, telling them how to vote. But union leaders across the country scoff at such criticisms, which have been increasing since Mondale's massive defeat. And at least two possible candidates for 1988, Sen. Edward M.

Kennedy (D-Mass.) and Sen. Gary Hart both say they would welcome labor's endorsement. In previous elections, the labor federation waited to endorse a candidate until the parties had made their choices. In all cases but one, the federation backed the Democrat. The exception was in 1972, when the labor organization stayed neutral rather than back either George McGovern or Richard Nixon.

(In 1980, the labor group reluctantly backed Jimmy Carter. This time union leaders said they wanted to have more influence in the selection of the Democratic candidate. They jumped into the fray, and almost all political experts agree that labor's backing was the primary reason Mondale won the nomination. In the primaries, Mondale was repeatedly attacked as labor's "captive" by other Democratic hopefuls such as Sen. John Glenn (D-Ohio) and Hart.

But the attacks came only after Glenn and Hart had both tried and failed to win labor's support. out of a near-certain defeat in his campaign for the Democratic nomination." But he argues that the AFL-CIO "created the problem in the first place by burdening him with the image of the candidate of special interests and 'old That, he said, "created enormous problems for Mondale among young voters and independents, groups that strongly supported Hart in the Democratic primaries." However, Reagan's aides thought so little of the issue that Reagan didn't use it once in his own campaign against Mondale. Even if other voters resisted Mondale, a majority of union members cast their ballots for him, exit polls showed. The Los Angeles Times poll, conducted by LA. Lewis, showed that 55 of union members voted for Please see LABOR, Page 5 Despite unions' massive investments of manpower and money into both the primaries and the general election, President Reagan handed labor's candidate one of the worst defeats in modern history.

One Democratic critic of labor complained that "the unions jammed Mondale down our throats and he was then perceived as a tool of labor and other special interests, such as women and blacks. That was a major cause of the size of his defeat." But AFL-CIO leaders insist that their critics are wrong, and, more important, they are so certain that their strategy was correct that they intend to endorse a candidate before the primaries in 1988 if two-thirds of the leaders can agree on a candidate. As AFL-CIO President Lane Kirkland put it: "We are on the right course for the future." William Schneider, a political analyst with the American Enterprise Institute and a political consultant for The Times, agrees that labor "pulled Mondale.