Posted on 07/05/2004 7:08:45 AM PDT by Pikamax
Publishers Seek Scapegoats for Circulation Woes
Sun Jul 4, 1:29 PM ET Add Entertainment - Reuters to My Yahoo!
By Anupama Chandrasekaran
NEW YORK (Reuters) - Newspaper and magazine publishers facing lawsuits and probes for lying about their circulation numbers are getting circulation managers to take the blame -- either by firing or by getting them to resign.
It sounds straightforward enough -- after all these are mostly the executives who signed off on the figures in question. Yet, industry experts and some publishers ask whether they are becoming the scapegoats for a much bigger problem that goes further up the corporate ladder.
Just as pressure to deliver good numbers from CEOs led lower-level officials to commit accounting shenanigans in recent years, demands for increased circulation may have had a similar impact in the publishing industry.
In some cases a climate of fear may have been created, with managers anxious about delivering bad news that would put their jobs at risk. In others, senior executives may have been prepared to turn a blind eye to questionable figures as long as the advertisers accepted them.
"The pressure is from the top," said Dan Capell, editor of Capell's Circulation Report. "The circulation manager is merely executing the plans made by the publisher or someone higher."
The dilemma is particularly thorny at a time when many newspapers and magazines have suffered from reduced advertising revenue and readership. First, because of the weak U.S. economy in 2001-2002, and then due to increasing competition from the Internet and cable television.
Circulation is the lifeblood of the newspaper and magazine industry because ad rates are usually based on sales levels.
Last month, Tribune Co. said an internal audit had discovered that two of its newspapers, Long Island, New York-based Newsday, and the Spanish-language Hoy, inflated numbers for parts of 2003 and 2004 and had misreported data during 2002.
The admission came just days after Hollinger International Inc.'s Chicago Sun-Times said an internal probe revealed overstated circulation figures for a number of years, deceiving audits that failed to discover the inaccuracies.
The circulation chief of The Chicago Sun-Times resigned, and Newsday placed its vice president of circulation on administrative leave.
Such personnel moves have become standard practice in the industry soon after a problem with circulation figures is revealed.
In November 2003, Diane Potter, a top circulation executive at Bertelsmann AG (news - web sites)'s unit Gruner + Jahr, resigned after it was revealed in court that 2002 newsstand sales of its Rosie magazine were overstated.
But last month, Potter was hired by Working Mother Media, a media company focused on women, after its Chief Executive Carol Evans did some research and found out that Potter was probably not at fault.
"I called my biggest advertisers and asked them what they thought about our plans to bring in Diane Potter and I got 100 percent positive responses," Evans said. "Most of them thought she was a scapegoat. Not one of them came back with a negative recommendation."
BLAME GAME
Gruner + Jahr spokeswoman Sue Geramian said the company doesn't comment on former employees. Tribune Co. also declined to comment on the issue.
Hollinger International's spokesman Jeremy Fielding said the company is reviewing its circulation practices and that it is "premature to point fingers."
But despite the departure of some executives at these companies, the recent circulation scandals are likely to hurt parts of the publishing industry.
Advertisers, which until now have always accepted circulation figures put out by publications, might ask for refunds or additional ad space if the numbers don't match those of independent auditors such as Audit Bureau of Circulations, industry experts said.
"There is a lot of pressure on circulation executives to post numbers as high as they can possibly post them but you should never be forced to lie and fabricate numbers," said Richard Weltman, a media lawyer at New York-based law firm Weltman & Moskowitz.
"For management to suggest the circulation executive is preparing these numbers in a vacuum is disingenuous to say the least," he said.
If their papers aren't selling, maybe they should look inside and see what's driving people away.
I'm glad to see this. Audit Bureau of Circulation will finally have to do an actual audit and not just go out to lunch and dinner with the publisher, accept a check for their services, and catch a plane to the next newspaper office. I've seen this happen many times in my 20 plus years of newspapering. Advertisers deserve to know how many and where their ad dollars are going. The waste alone can be unbelievable in some major metro dailies.
Plenty of gays and atheists there too. Providing their unique spin to common news items. Not only spin but in choosing what's worthy of coverage. I'm so disgusted that whenever I get a phone solicitation I tell them exactly why I won't subscribe to their fish wrap. Here it's the Sun Sentinel
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