O'REILLY: The Impact segment tonight, as we mentioned in the Talking Points Memo, I am not buying any shoes made by the Pony company, which is run by a Los Angeles entertainment group called The Firm.

Pony has hired quasi-prostitutes to market its products and that is going to impact on American children.

With us now is marketing expert Donny Deutsch, the chairman of his own company. How do you see this?

DONNY DEUTSCH: First of all, I don't think they're going to be too upset. You're not buying their product. I don't think that you're their audience.

My question is, I think we have a little bit of a double standard here. It's interesting, the Fox network, which I believe is the network that's carrying this show, employed Tracy Lords as a guest star on, I think it was Melrose Place. Now, Tracy Lords, who was an underage porn star.

So what's the deal? What's OK and what's not?

O'REILLY: To be fair to FOX, Tracy Lords is a repentant porn star. OK.

DEUTSCH: What does that men? She was underage -- She was doing pornography, 14 years old and Fox paid her money to be on their show.

O'REILLY: Let me explain -- Not at the time.

DEUTSCH: Jenna Jameson is not doing porn in these ads.

O'REILLY: Yes, she is.

DEUTSCH: In the ads, she's not doing porn.

O'REILLY: She's doing porn now.

DEUTSCH: But Tracy Lords is an underage porn -- she's employed by the Fox network. We've got a problem here.

O'REILLY: OK, you're spinning and I'm going to have to correct you with all due respect.

DEUTSCH: OK.

O'REILLY: Tracy Lords was an abused child who has now disowned...

DEUTSCH: Well, that's like the Ludacris explanation.

O'REILLY: You're actually interrupting me on my own program. I'm shocked.

All right. She actually has repudiated the porn industry. And we don't demonize people who repudiate their past and are trying to make a good life for themselves, as this woman is.

She's involved in helping children in the same circumstance that she was. And to punish her would be cruel and unusual.

DEUTSCH: We don't want to punish Tracy.

O'REILLY: No, we don't. Now if you do, then that's on you, it's not on me.

DEUTSCH: OK.

O'REILLY: Now Jameson at this point has an active Web site, OK so far? All right? Where she does all kinds of things that adults are free to see.

DEUTSCH: Right.

O'REILLY: When she gets in this Pony commercial, targeted at children the children, OK? The children are going to want to check this woman out on the web site. You connecting the dots here?

DEUTSCH: All right. Here's the dots I'm connecting. Are we saying that commercially it is appropriate or inappropriate to go into business with people who have done pornography before?

O'REILLY: It depends on what they're doing now.

DEUTSCH: The FOX Network, anybody can click on. Whereas Pony is aimed at -- I don't particularly like the ad but I do applaud their right to make a decision to target 18-year-olds with a cutting edge kind of sexy image.

O'REILLY: Not 18-year-olds. Thirteen-year-olds are going to see this and you know it. And you're applauding that?

DEUTSCH: As 13-year-olds saw Tracey Lords on Fox. The issue is, where is the freedom? I mean, it's very simple. We can't have it both ways.

O'REILLY: It's not about freedom. It's about rewarding terrible behavior.

DEUTSCH: Once again, children will be seeing porn? Of course not. But does Pony have the right...

O'REILLY: Have the right?

DEUTSCH: ... to make a marketing decision and then let consumers decide?

O'REILLY: Absolutely, absolutely.

DEUTSCH: Let consumers decide. If it's inappropriate and it's bad for business, then Pony will go out of business.

O'REILLY: We brought you in as a expert to try to predict how consumers are going to act.

DEUTSCH: As an expert, actually, Pony, which is coming from ground zero, has nothing to lose here. I mean, it's a long shot, you know. A Nike or Adidas, a much more established company, would never do it. But in the case of...

O'REILLY: Why wouldn't they do it?

DEUTSCH: Because they have too much to lose. Because it's a very, very dicey proposition.

O'REILLY: Why is it dicey?

DEUTSCH: Just like we're talking about it here. Because there are going to be people who are going to say, you know what? I think it's wrong and it's terrible. The irony is the audience they're going after, 16-, 17-year-old boy high on testosterone, is going to think it's a cool ad. And...

O'REILLY: But they've got that audience anyway.

DEUTSCH: They don't have any audience right now. That's the issue.

O'REILLY: They sell Pony footwear and backpacks.

DEUTSCH: It's a very, very small business right now.

O'REILLY: All right, so you think that by pandering to testosterone, as you put it, this is going to help their sales among their target audience and they don't care about the backlash from people like me?

DEUTSCH: They don't care what you think, frankly. You're not in their audience. Actually, they're going to probably get off on this in a strange way. Of you getting on -- the guy who's kind of the anti-what they're talking about, saying wrong, wrong, wrong. It makes them more rebellious. It's actually good for their image.

O'REILLY: All right, now what about if Sears, Modell's and Footlocker, their three big distributors...

DEUTSCH: Right.

O'REILLY: ... say, we're not going to carry the product anymore because we think that these people are hurting American business, what if that would happen?

DEUTSCH: That would happen, that would hurt them. But I think that's wrong. I think it's wrong, and this is where you and I disagree.

O'REILLY: Not me, no way.

DEUTSCH: Where you get on and, to me, in a form of terrorism say, you know what, stores...

O'REILLY: Terrorism?

DEUTSCH: ... don't carry that stuff. Let the consumers decide.

If Charlton Heston did an ad...

O'REILLY: Yes.

DEUTSCH: ... would it be right for me to get on and say to the stores, you know what, he believes in rifles. He believes in putting guns in the hands of 14-year-olds, if you...

O'REILLY: There's one difference. He has the constitution behind him.

DEUTSCH: As opposed to there's no constitution behind this?

O'REILLY: Yes. Correct. You can't go, if you're an underage person, and purchase pornography and that's who's going to see this.

DEUTSCH: We haven't established they're underaged.

O'REILLY: That's two invalid comparisons.

DEUTSCH: That's a very valid comparison.

O'REILLY: Well, that's up to you. We'll see what the audience thinks.

Now, I'm the CEO of Modell's or Footlocker.

DEUTSCH: Right.

O'REILLY: And I'm saying to myself, I don't want this kind of behavior, quasi-prostitution, to be rewarded by Pony.

DEUTSCH: Pornography is not quasi-prostitution!

O'REILLY: Of course, it is.

DEUTSCH: It's not prostitution.

O'REILLY: You sell your body for sex. You sell your body for money.

DEUTSCH: What do you think is going on on Fox TV? What do you think is going on in "JOE MILLIONAIRE"?

O'REILLY: Stop, will you?

DEUTSCH: That's all they sell on TV is sex.

O'REILLY: Stop it. This is ridiculous.

DEUTSCH: This is such a double standard.

O'REILLY: This is ridiculous.

DEUTSCH: This is ridiculous. What's ridiculous?

O'REILLY: That's like kissing and then going to some hooker on the corner. There's a big difference.

DEUTSCH: Nobody's talking about hookers here.

O'REILLY: I am. Porn performers are quasi prostitutes. They sell their body for money. Look it up. Look it up.

DEUTSCH: Prostitution is somebody paying for sex. Porn, the last time I looked -- which is legal. Is pornography illegal in this country?

O'REILLY: Pornography is legal in some places. It's not legal for 13-year-olds.

DEUTSCH: We're not talking about 13-year-olds.

O'REILLY: Yes, we are!

DEUTSCH: We're not talking about any 13-year-olds.

O'REILLY: That's what my issue is...

DEUTSCH: First of all...

O'REILLY: They're going to see the ad and go to the Web sites.

DEUTSCH: Thirteen-year-olds are going to see an episode of Tracy Lords on Fox. We can't keep the world like this. The reality is if they were buying ads on Nickelodeon, I'd have a problem with it. If they're buying ads in "Source," in magazine that the target is 18- to 34-year-olds...

O'REILLY: Are you kidding? You don't think kids read "Source"? I think kids see everything. You can't keep kids right. You can't reward bad behavior and keep the good will of the American people. Last word.

DEUTSCH: Let the consumers decide what they think is right.