Belo Chief Takes Blame for Circ Problems

By: Jennifer Saba Robert Decherd, Belo Corp. chairman, president, and CEO, took full responsibility for the circulation crisis at The Dallas Morning News while addressing analysts and investors during a conference call this morning. "I am accountable for this and all activities at Belo," he said. "It's the single most disappointing event in my 18 years as CEO."

Decherd detailed the steps taken since June, when he first ordered a review of all circulation throughout Belo's properties. By the end of July, circulation problems were found at its flagship paper, the Morning News, and an internal audit committee was formed to investigate the situation.

Decherd said that the committee met four times, conducted 140 interviews with senior management, circulation employees, and independent contractors, and catalogued more than 80,000 pages of documents before presenting its findings to Belo executives on Sept. 23. Announced earlier today, Belo said that daily circulation for the six-month period ending September 2004 will be roughly 5.1% lower than the same period a year ago, and Sunday circ will be 11.9% lower. The majority of the overstated figures involved single copy sales due to "aggressive pursuit of circulation goals."

Decherd also assured those on the call that the advertising make-good plan "appears to be going well." Of the 19,000 individual checks mailed out between Aug. 20 and Aug. 30, about 73% have been cashed. This statistic does not include the 900 checks sent back as "undeliverable."

When pressed by analyst Steven Barlow, of Prudential Financial, as to whether the remaining holdouts were signs of discord and if there will be a rate card reduction, Decherd replied, "We view that as a positive sign that almost three quarters of the checks mailed have been deposited. We asked nothing in return for those checks. There were no strings attached."

"We have no plans to reduce rates across the board by rate card. Even at these restated circulation levels the CPM efficiencies in this market is the highest in any market in the U.S.," he said.

The conference call also covered the review of Belo's operating strategy, which partially entails the reduction of its workforce by 250 employees across all units, mostly at the Morning News. Decherd stressed that the reduction would have been made regardless of the recent circulation misstatements, that the Morning News revenue has been flat since 2001. The reduction will be reflected in third-quarter results.

Belo plans to allocate $10 million to establish and maintain "a greater marketing presences" to be determined by November. "Let me assure you," Decherd said, "That any promotional activity related to circulation at any of our papers will be scrubbed, rescrubbed, and scrubbed again."