Sunday, June 20, 2004

More on the newspaper circulation scandals

I mentioned the latest scandal last week, but the NY Post has more - Bad Circulation:
The circulation scandals that roiled the newspaper industry last week are only a symptom of larger problems, experts say.

On Thursday, Newsday admitted to fudging its circulation figures by as much as 9 percent. Just two days before, the Chicago Sun-Times copped to overstating its numbers, although it didn't disclose by how much.

Newspapers are desperate to keep advertisers even as readers flee, and the group responsible for checking the numbers — the Audit Bureau of Circulation — admits it can't always spot fraud.
Aside from the coupons, most large newspapers exist to provide paychecks for politically correct scolds. There's still interest in local news, but who would trust them or their wire services on anything national or international? Anyhow:
Without proper oversight, analysts predict more circulation scams, as well as the class-action suits from advertisers and distributors that are sure to follow.

Angry Newsday advertisers already are suing the paper for $100 million, saying the paper defrauded them by goosing its circulation. Chicago Sun-Times advertisers also are taking legal action.

In Texas, a group of newspaper distributors are suing the Hearst Newspaper Partnership for "constant pressures and demands" to inflate sales, said plaintiff lawyer Jerry Payne.

"These scandals are going to affect the whole industry," noted one newspaper executive, predicting that the lawsuits clams will reach "massive numbers."

As the inquiries widen, negligent newspapers face the possibility of criminal charges as well. On Friday, the Nassau County District attorney said it opened an investigation into Newsday's number pumping.

Newspapers base their advertising rates in part on the number of paid subscribers. When they don't make the guaranteed audience numbers, they give advertisers a "make good" in the form of free or reduced-price advertisements or, on rare instances, a refund.

But Joseph Giaimo, an attorney representing the Newsday plaintiffs, said the standard payback isn't good enough.

He's suing under a federal racketeering statute and holding out for triple damages.

And observers expect more legal action to come. "This is a dream case for class-action lawyers," the newspaper executive said.
"Newspaper circ is really, really shady."
Woohoo, sounds like party time. And all along, I thought they were paragons of virtue!