By: Jennifer Saba It's been an embarrassing week for newspapers, especially for those in circulation departments at Newsday in Melville, N.Y. and at the Chicago Sun-Times. Both papers admitted, after markets closed for the day, to puffing circulation figures. And though the end results are the same, the two stories differ in how they got caught (or didn't).
The ABC audit revealed the problems at Newsday and Hoy back in February, John Payne, senior vice president of communications for Audit Bureau of Circulations, told E&P. ABC plans to release its findings in July, though the Tribune Co., which owns Newsday and Hoy, essentially pre-empted ABC by announcing the overstated figures yesterday.
"It's very unusual to talk about an audit that has not been released," Payne commented. Newsday had inflated its circulation figures for the period ending September 2003 by approximately 40,000 daily copies and 60,000 Sunday copies, while Hoy jacked up its numbers by 15,000 and 4,000 respectively.
On Friday, according to a report at Newsday.com, Nassau County (N.Y.) District Attorney Denis Dillon announced that his office had opened an investigatin to see if criminal charges are warranted. "When advertising costs are inflated, those costs are passed on to the consumer in the form of higher prices," Dillon said.
Even though Newsday and Hoy admitted to inflating circ, executives insist that it's unrelated to a lawsuit filed by advertisers in February that claims that the papers increased circulation by dumping unsold copies. Gary Weitman, vice president of corporate communications for the Tribune Co., said in a statement: "We continue to believe that the allegations contained in the lawsuit are without merit. The ongoing Tribune Company audit of the circulation practices at Newsday and Hoy hasn't uncovered anything to demonstrate otherwise."
According to the Tribune Co., the two papers' inflated figures occurred because some copies that were distributed for free home delivery were counted as paid copies. And some single copy sales could not be verified because of inadequate record keeping by an outside distributor.
As for the Sun-Times, it totally caught ABC off guard. "We don't know how it occurred," Payne said. But he suspects that it happened gradually over time. "Let's assume that the 70,000 added copies is correct," he said. "It didn't go from 0 to 70,000 in a month."
Payne said nothing seemed fishy about the Sun-Times figures over the years. "The fact is an audit is not designed to catch collusion," he said, adding that usually managers and distributors have to work together to fake the numbers. Which basically means this: If you want to fool ABC it can be done.
ABC is frankly unsettled about the recent circ flaps. "We are really disturbed about this, especially about the Sun-Times situation," Payne said, adding that an audit there has started and will be completed some time in late summer or early fall. "We're reviewing our process internally but if there is a real concerted effort to cheat, it can work."
Newspapers that report circ numbers to ABC do so every six months. They are subjected to an audit once a year, though papers with circulations under 25,000 have the option of undergoing an audit every other year. For the audit, ABC does a computer analysis comparing past figures and reports. If a discrepancy jumps out, ABC conducts an investigation, usually going into the field and doing things like following hawkers and interviewing subscribers. ABC does 2,200 audits a year.
ABC reports all variances between the publisher's statement and audit reports -- leaving it up to advertisers to interpret the numbers.
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