'Morning News' Earmarks $26M to Deal With Circ Overstatements

By: Jennifer Saba The Dallas Morning News announced Monday that it has set aside $26 million, mainly as compensation for advertisers, to deal with the paper's circulation overstatements. In a conference call Monday, Robert Decherd, Belo's chairman, president, and CEO, assured investors that executives put together the plan, which includes cash payments and make goods, in a "fair and expeditious manner."

Of the total amount, $23 million will go toward advertisers. The other $3 million covers the cost of the internal investigation launched by Belo. (The Morning News will incur roughly $4 million in newsprint expenses associated with advertising credits.) The company also anticipates that the compensation plan will "have a modest effect on advertising-revenue growth at the Morning News through the Q1 of 2005," according to Decherd.

The bulk of the money will go to advertisers who made media buys in the Sunday papers, since that circulation was off the most by 5%. Advertisers will receive 10% of their total Sunday advertising expenditures from Aug. 1, 2003 through July 31, 2004.

For the same time period, all advertisers will receive a "credit bank" for future ads equal to 5% of total advertising expenditures including Sundays. The credits can be used Sept. 1, 2004 through Feb. 28, 2005, depending on each advertiser's contract.

The company plans to pay preprint advertisers an additional cash payment for excess costs incurred between Aug. 1, 2003 and Sept. 30, 2004.

Belo is also addressing classified advertisers and will give, upon request, any private party a five-line advertisement. Information regarding the free ad will run on the front page of the classified section starting Aug. 20.

Advertisers entitled to cash payments will receive a check within 12 business days.

Decherd said executives drafted the plan with what the largest advertisers would consider fair. "But we're applying it to every advertiser," he said. "It should be regarded as investment in the company's future."

As a result of the Aug. 5 announcement that disclosed circulation was off by 1.5% for daily and 5% for Sunday, Decherd told investors that all circulation figures are to be vetted through the financial department. He also said that he is recommending that executives and management in circulation should not receive bonuses or compensation this year, including himself.