By: Jennifer Saba After a lengthy internal investigation, Belo announced today that the circulation misstatements at The Dallas Morning News stemmed from "aggressive pursuit of goals by former senior circulation managers" coupled with an inadequate system to monitor and verify figures. Incentives involving cash and trips, employee bonuses, and low newspaper wholesale rates fueled the pressure to increase circulation with single-copy sales and home delivery, the committee found.
The company also announced it plans to layoff 250 employees by November 1, the majority coming from the Morning News.
The investigation cleared present senior management at the paper and at Belo. However, Belo Chairman, President, and CEO Robert Decherd reiterated that he recommended to the board that executives forego bonuses and salary increases through 2005 representing approximately $2.1 million.
Other Belo publications were under the microscope during this investigation and the committee found that the situation was isolated to the Morning News.
The internal investigation conducted by the law firm Seyfarth Shaw also revealed that circulation at the Morning News for the six-month period ending September 2004 will be slightly less than previously reported in mid-August. For that time, the flagship paper expects circ to be roughly 5.1% less daily and 11.9% less Sunday when compared to the same period last year. Originally, executives expected the number to be 5% less daily and 11.5% less Sunday.
"This investigation has been painstaking and thorough," said Henry Becton, Jr., chairman of Belo's Internal Audit Committee, in a statement released this morning. "The committee feels that all necessary information has been reviewed, fully analyzed and put into proper context. Every person important to the investigation was interviewed by the investigation team, some more than once.
"The investigation team reported that management at every level of the The Dallas Morning News and Belo Corp. was cooperative and forthcoming throughout the course of the investigation. While this matter has been difficult for the company, the Audit Committee believes that all appropriate responses have been or are being made, and considers the investigation to be complete."
The circulation process at Belo's Providence Journal, The Press-Enterprise (Riverside, Calif.), the Denton (Texas) Record-Chronicle, the Spanish paper al dia, and the youth paper Quick were found to be "significantly different from those used at the Morning News," the company reported.
"We have already made and will continue to make changes dealing with circulation at The Dallas Morning News, as indicated by the recently completed investigation," Decherd said in a statement. "We will cooperate fully with the Audit Bureau of Circulations, and continue to seek process improvements in concert with the Circulation Review Team and the senior management of The Morning News."
The committee's recommendations for improving the process of verifying and counting circulation at the paper, speared headed by Howard Sutton, publisher, president, and CEO of the Providence Journal, is expected to be completed by November.
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