Circulation Bureau Revamps Auditing Practices
The organization responsible for auditing circulation numbers that newspaper and magazine organizations report has censured three newspapers and reevaluated its auditing practices in response to recent reporting errors.
The Audit Bureau of Circulations (ABC) censured Newsday and Spanish language daily, Hoy, both owned by the Tribune Co., a and the Chicago Sun Times, owned by Hollinger International Inc. for falsifying circulation numbers and toughened penalties for newspapers and magazines who do stretch figures, making it a riskier proposition for publications to exaggerate.
ABC conducts newspapers and magazines audits once a year, and either verifies or adjusts the numbers that are reported, says Martha Dittmar, director of communications of ABC. The new auditing rules that apply to Newsday, Hoy and the Chicago Sun Times call for audits every six months for the next two years. ABC will also drop the newspapers' circulation claims from its FAS-FAX semiannual circulation report for advertisers and buyers for one year.
The new rules also apply to newspapers that experience an adjustment of at least 5 percent and to magazines that experience two consecutive audit adjustments of at least 5 percent.
ABC's new rules will also require censured publications to submit a plan of action for correcting their reporting practices, and the bureau will levy a cash fine against publishers found to have submitted fraudulent circulation statements. ABC claims this is the first time in 20 years that the bureau has publicly censured member publications for falsifying circulation statements.
"Have we caught magazines and newspapers committing errors [within] that time period? Of course we have," Dittmar says. "That's our job." She points out Rosie and YM magazines, published by Gruner + Jahr USA, as recent examples. The magazines overstated single-copy sales in 2001-2002. In 1999, the Oakland Tribune and four other San Francisco Bay Area papers published by the Alameda Newspaper Group, inflated their circulation figures, according to ABC's audits.
ABC also found that technology publisher Ziff Davis Media overstated paid circulation for PC Magazine in 2002 and 2003. According to a report in Advertising Age, ABC auditors uncovered as many as 200,000 free subscriptions in each of the two years that Ziff Davis improperly classified as paid circulation under ABC rules.
"ABC's board of directors felt that now was the perfect time to send a message that circulation fraud will not be tolerated, and they have chosen to enact the censure provisions," Dittmar says, adding that circulation fraud is extremely uncommon, and, as a whole, the industry is honest and self-regulating.
But Robert Sacks, a 34-year veteran of printing and publishing, and publisher of a daily industry e-newsletter, says publications pump up circulation rates more frequently than ABC contends, and that the situation gets more troubling the more one looks into it.
"I see falsifying circulation rates as a huge problem, with most people having their head firmly in the ground," he says. "The problem will just go away when we have marginalized our industry into impotence. And that is happening now."
Sacks says the new rules ABC has implemented won't change the business practices of the publishing industry, and suggests publishers implement a zero-tolerance policy.
But an industry analyst, who wished to remain anonymous, says that most magazines are not risking their reputations and relationships with advertisers. A very small percentage of consumer magazines have had reporting errors in their circulation numbers, the analyst says.
Michael Lavery, president and managing director of ABC, admits the system is not foolproof.
"No audit program can immediately identify every possible fraudulent situation. If a publication sets out with deliberate intent to misrepresent its figures, it is difficult to catch them initially."
- Warren Chiara