Circ Scandal Spreads to 'Morning News'

By: E&P Staff When several weeks passed after revelations of circulation problems at Hollinger's Chicago Sun-Times and Tribune Co.'s Newsday and Hoy, some felt the scandal might not spread further. On Thursday that optimistic view was tested by news from Belo Corp. that it had overstated its circulation numbers at The Dallas Morning News, by 1.5% daily and 5% Sunday.

Belo also announced the resignation, effective immediately, of the paper's executive vice president/operations who was responsible for circulation. Belo's Providence (R.I.) Journal identified the executive as Barry Peckham. The company added that that it had no reason to believe that he acted illegally. The overstatement is mostly due to a 1999 change in the way the paper counted unsold returned copies, Belo said.

The Morning News will report a greater than expected decline in its September 2004 circulation, Belo said. An internal investigation at Belo newspapers, ordered in June, has disclosed practices and procedures that led to an overstatement in circulation, primarily in single-copy sales, the company said in a press release.

Due to other declines, it will result in a total slump in circulation of approximately 5% daily and 11.5% Sunday when compared with reported September 2003 figures, Belo said.

"When this thing developed at Tribune and the Chicago Sun-Times, I said that I suspected every publisher in America is probably investigating the circulation department," John Morton, president of media consultant Morton Research Inc., told Reuters. "It's conceivable there will be some more revelations and apparently this is the first one."

The paper has advised the Audit Bureau of Circulations "of its intention to revise its previously reported September 2003 and March 2004 circulation figures," a Belo press release said.

Belo said it does not anticipate any significant problems would come out of its review at its other two large papers, The Providence (R.I.) Journal and The Press-Enterprise in Riverside, Calif. When "questionable circulation practices" were uncoved at the Morning News, Belo said it hired a law firm to conduct a stepped-up investigation.

The company said that partly due to sales rewards programs, the overstatement of circulation grew worse over time. The rewards programs were stopped early this year, the company said.

"The company said it is developing a compensation plan for advertisers that likely would be released within seven business days," Reuters reported. "It said it would comment at that time how the plan would affect the company's third-quarter earnings."