A.H. Belo Wants 'Dallas Morning News' Circ Scandal Suit Dismissed

By: Mark Fitzgerald Fresh from an appeals court victory, A.H. Belo Corp. and its former parent Belo Corp. are asking for the dismissal of a lawsuit related to the 2004 circulation scandal at its flagship Dallas Morning News.

Last week, the U. S. Court of Appeals for the Fifth Circuit upheld a lower court's denial of class action certification sought by shareholders who sued after the circulation fraud was disclosed, claiming Belo had violated federal securities law by misrepresenting the circulation. They alleged they were harmed by the falling stock price of Belo after the overstatements were revealed.

The Fifth Circuit concluded the plaintiffs had not presented sufficient evidence for the case to proceed as a class action.

"The company and the other defendants will now seek to dismiss the litigation," A.H. Belo said in a statement.

In 2004, at a time when circulation overstatements were discovered at Newsday, New York Hoy and the Chicago Sun-Times, Belo announced an internal investigation had discovered that during a six-month period in 2003, Morning News Sunday circulation was overstated by 5% and its daily circulation by 1.5%. Barry Peckham, the executive vice president in charge of circulation at the time, resigned from the company.

"This is a very important victory for Belo," A.H. Belo CEO Robert W. Decherd said in a statement. "From the outset, we believed that there was no evidence that the conduct of the company or any of its officers caused harm to the company's shareholders, and the opinion definitively holds that the plaintiffs did not provide any meaningful evidence supporting that allegation. All along, we said we would vigorously defend against the allegations in this litigation, and we are gratified by the Court of Appeals' decision."

Last year Belo spun off A.H. Belo as a pure-play newspaper company and continued to operate its broadcast business. Belo and A.H. Belo were named as defendants as were Decherd, Peckham and Morning News Publisher and CEO James M. Moroney III.