SHARE THIS ARTICLE Share Tweet Post Email

Photographer: Nati Harnik/AP Photo Photographer: Nati Harnik/AP Photo

Walt Disney Co.’s ABC News is heading to trial in South Dakota, where the network faces as much as $5.7 billion in potential damages over allegations that it made false and misleading statements about the food additive “pink slime” in a 2012 series of reports. Beef Products Inc., a closely held company based in South Dakota, said the coverage caused sales to plummet, costing the company $1.9 billion and forcing layoffs.

1. What’s pink slime?

It’s an unflattering nickname for lean, finely textured beef, or LFTB. ABC News reported in 2012 that the product was added as a filler to 70 percent of the ground beef sold in U.S. supermarkets to reduce the overall fat content, though this wasn’t disclosed on the labels. It’s made from trimmings -- smaller pieces of fat that contain bits of beef -- that are heated and spun to separate out the meat, much like cream from milk. Ammonia and water are used in processing to control harmful bacteria by raising PH levels. The U.S. Department of Agriculture has said it’s safe to consume. A USDA microbiologist, in the early 2000s, coined “pink slime” in an email about BPI’s product.

2. What’s the lawsuit about?

Beef Products sued in September 2012, accusing ABC News of intentionally maligning the company and LFTB and of falsely implying that it wasn’t beef. The company seeks treble damages under a South Dakota law against disparagement of agricultural products. The company will have to show that ABC News knew its reporting was false and intentionally tried to destroy demand for LFTB.

3. What does ABC News say?

“We believe in the principle that people deserve to know what’s in the food they eat and are confident that when all the facts are presented in court, ABC’s reporting will be fully vindicated,” the company said in a statement.

4. What was the fallout from media coverage?

The media coverage of LFTB and resulting consumer concern led fast-food chains including McDonald’s Corp. to discontinue using beef that contains the additive. More than 220,000 people signed an online petition calling on the Agriculture Department to stop using pink slime in the federal school lunch program, which the agency administers. Beef producers and politicians in states with significant beef industries have said the coverage of pink slime amounted to a smear campaign.

5. What did this do to the industry?

Beef Products had to suspend production at three plants because of a drop in demand for its lean, finely textured beef. The company claims it lost $1.9 billion because of the controversy. AFA Foods, a ground-beef processor owned at the time by billionaire Ron Burkle’s Yucaipa Cos., sought bankruptcy court protection after media coverage cut demand for its products.

6. What does this mean for Disney and ABC?

Since BPI says it lost $1.9 billion, and South Dakota law allows for treble damages, Disney could owe about $5.7 billion in damages in a worst-case scenario, according to Bloomberg Intelligence analysts Tamlin Bason and Matthew Schettenhelm. (Disney posted net income of $9.4 billion on revenue of $55.6 billion in the fiscal year ended Oct. 1.) “Disney’s already difficult task of facing a local jury likely to be sympathetic to the beef industry is complicated by concerns over so-called fake news,” they write. “BPI’s 2012 complaint says ABC’s sensationalized reporting valued ratings over truth. Those allegations play into current concern about news integrity.” Among its defenses, Disney is challenging the constitutionality of South Dakota’s law allowing triple damages in cases of defaming food products.

The Reference Shelf

The case is Beef Products Inc. v. American Broadcasting Companies, 12-292, South Dakota Circuit Court, First Judicial Circuit, Union County.

Bloomberg Businessweek looked at the history of Beef Products Inc.

looked at the history of Beef Products Inc. South Dakota’s law on food disparagement.

law on food disparagement. ABC News video reports on pink slime.

video reports on pink slime. Scientific American explains how LFTB is made.

explains how LFTB is made. A Bloomberg QuickTake on food safety.