'PRIMETIME' REPLAYS FOOD LION TAPE

MARK TOSH

SALISBURY, N.C. -- Food-handling procedures at Food Lion once again came under the spotlight when ABC News last week rebroadcast portions of the 1992 "PrimeTime Live" report that first questioned the chain's sanitary practices.

The video clips, shot by hidden camera inside Food Lion meat and deli departments five years ago, were shown on a special one-hour edition of "PrimeTime Live" that examined the issue of ethics in journalism, particularly in relation to hidden-camera reports and misrepresentation by the news media.

Food Lion had won a victory in the subsequent legal battle just four weeks ago when a federal jury in Greensboro, N.C., awarded the chain $5.5 million in punitive damages in its lawsuit against ABC News. The jury found ABC liable for fraud, trespass and breach of loyalty in their efforts to get jobs at Food Lion and then to videotape other employees at work. Food Lion did not sue ABC for libel, and the truth of the broadcast report was not at issue in the case.

ABC has said it intends to appeal that verdict.

However, questions about past food-handling practices at Food Lion were raised again as "PrimeTime" replayed some of the hidden-camera video from its controversial November 1992 broadcast and then vigorously defended the report's accuracy. The network stressed, however, that the report portrayed events from more than four years ago and wasn't intended to reflect current food-handling methods.

Among the clips rebroadcast was one in which a Food Lion deli worker was overheard telling a "PrimeTime" producer to "sell the bad stuff first." Another clip that was rebroadcast allegedly showed ground beef that had passed its sell-by date being mixed in with fresh product and repackaged for sale.

Food Lion officials, who appeared live on a special edition of ABC's "Nightline" with Ted Koppel following Wednesday night's "PrimeTime" broadcast, expressed surprise at the network's decision to re-air portions of the 1992 show.

"I think we saw some portions on [the] 'PrimeTime' program which we know to be false, and we know they continue to be false as they were in 1992," Chris Ahearn, manager of corporate communications at Food Lion, told Koppel. "We were very surprised to see some of those portions re-aired when evidence that has turned up in discovery directly contradicts those issues."

The following day, Ahearn declined to comment about either the "PrimeTime" or "Nightline" broadcast.

"We felt it was important to go on those broadcasts to get our point of view across," she told SN. "But we're not commenting on the broadcast or the case at all anymore. We won the verdict, and now we're concentrating on taking good care of our customers."

After the 1992 "PrimeTime" broadcast, Food Lion's sales and stock price plummeted. The chain estimates it lost hundreds of millions in sales and more than $200 million in profits in the 18 months that followed the "PrimeTime" show.

Last Thursday, a day after the latest "PrimeTime" broadcast, Food Lion stock closed at TK, TK up/down TK, in over-the-counter trading. The company's shares had gained 78 percent in 1996, fifth-best among all publicly traded retailers.

Jonathan Ziegler, an analyst in the San Francisco office of Salomon Bros., said he thought Food Lion was portrayed as "neutral to slightly positive" in last week's news shows.

"I think there were some positives that came out," he said, noting that ABC News acknowledged that some 45 hours of hidden-camera video were never broadcast. "I think it left a lot of issues open to question whether this [hidden-camera footage] actually happened or whether it was a set-up."

Food Lion has long contended that "PrimeTime" created "false impressions" by its selective editing of that video, but did not question the accuracy of the report in its lawsuit. Ziegler also noted that "PrimeTime" took pains to note that the Food Lion video was five years old. He said "nothing new" was revealed and that it's unlikely the broadcast will have an effect on Food Lion's sales.

Debra Levin, an analyst at Morgan Stanley, New York, said she doesn't expect any sales impact on Food Lion from the broadcast. She said half the "PrimeTime" show was not about Food Lion, but rather about other hidden-camera investigations; she also noted that it was very clear the videotape was from 1992 and not from a current investigation.

"I think Food Lion has gone a long way towards improving its relationship with the customer," she added. "They've really become much better merchants in recent years and have had really strong sales trends as a result."

Levin has Food Lion stock rated as a "strong buy."

A number of the jurors who decided Food Lion's lawsuit also appeared on the "PrimeTime" and "Nightline" broadcasts. Most of the jurors noted they had "problems" with the producers' misrepresenting themselves to get jobs at Food Lion; three women from the jury said "PrimeTime" should not have used hidden cameras to get the story.

SN's parent, Fairchild Publications, is a unit of the ABC division of Walt Disney Co.