Audit Bureau Prez Discusses Plans for Tightened Rules

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The Audit Bureau of Circulations is planning several steps to hold publishers more accountable for their paid circulation reports, including compiling and disclosing a list of audits that are running late and the reasons for the delay.

Speaking by phone Friday from Toronto, where the group is holding its annual meeting, Audit Bureau president Michael Lavery said the group’s goal in taking the new measures was to close the “expectations gap,” or the difference between what an audit can realistically provide in and what people expect it to.

“While an audit can never provide absolute assurance, we want to move as close to that end of the spectrum as possible,” Lavery said. “The relationship in the media industry [between publisher and advertiser] is built on trust and confidence. … If ABC can do its part to enhance that trust and confidence we’ll do it.”

Newspaper advertisers and investors have been concerned about revelations earlier this year that four newspapers overstated their circulation figures — Newsday of Long Island, N.Y., and the Spanish-language Hoy, both owned by Tribune Co.; the Chicago Sun-Times, owned by Hollinger International Inc.; and The Dallas Morning News, owned by Belo Corp. This week, Newsday announced it was cutting 100 jobs in a bid to contain costs.

The Securities and Exchange Commission has begun an informal survey of the newspaper industry to see whether the misstatements are representative of other problems in circulation reporting.

Several publishers have tightened their own internal controls on circulation in the wake of the misstatements — which resulted in censures from the Audit Bureau — and reported no additional problems beyond those already disclosed.

Lavery said there was broad support among the Audit Bureau’s membership for efforts to increase transparency in circulation reporting. Those steps include narrowing the definition of “third party” sales, or papers that are distributed to readers but paid for by another party such as an advertiser.

The group also plans to increase record-keeping requirements on sales such as those made through street hawkers, allowing the Audit Bureau to make unannounced audits of the sales, and confirming directly with retailers the amounts of their newspaper sales.

The use of random calls to actual subscribers to confirm that they are, in fact, paying for and receiving the newspapers will also be broadened to all audits conducted by the bureau. That technique had been used previously on a smaller scale.

All this will require more staff at the Schaumburg, Ill.-based Audit Bureau. Lavery said he expects an increase of up to 15 percent in the group’s staff of 120 auditors.

Lavery said he was optimistic that the steps would lead to greater confidence in circulation figures, which are used to help set advertising rates. Noting that audit process uncovered problems at newspapers this year, Lavery said: “We feel strongly that the audit works.”

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