Cheat-Seeking Missles

Saturday, November 13, 2004

Circulation Scandals Rock MSM Newspapers

I used to get up early on snowy mornings and deliver the Chicago Tribune to subscribers in South Bend, Indiana. A generation earlier, my dad tied up all the newsboy routes in Sardis, Mississippi, in an early highlight to his entrepreneurial ventures. Not once did a Tribune Company circulation official ask me to fudge my numbers, nor was Dad ever asked to cheat for the greater glory of the Sardis and Memphis papers.

But circulation-fudging scandals are now rocking a number of major papers around the country. Despite its self-heralded objectivity, the media are largely ignoring their own scandal, reporting only when forced to, or when they’ve already been busted.

In one lurid example of how circulation cheating is carried out, the circulation staff at Newsday sought to “prove” its inflated street corner sales by having the companies that distribute the paper “buy” bundles of newspapers from their own employees, posing as street corner hawkers.

Other practices include “delivering” bundles of papers to dumpsters and to the homes of dead people – ominously akin to some Democratic election tactics.

Inflating circulation is, of course, illegal. It’s done for the simple reason that it boosts advertising revenue, which is what keeps newspapers alive, not newspaper sales. Claiming more readers means you can ask more money for ads.

Despite the efforts of the industry’s auditing arm, which many have challenged as too little, too late and too loopholed, the scandal appears to be growing. Consider this:

  • Tribune Company (owners of the Chicago Tribune and Los Angeles Times) set aside $35 million to settle claims from advertisers in its Long Island Newsday and Hoy newspapers. Subsequently, officials decided to up the reserve to $90 million.
  • Hollinger International Inc., admitting it boosted circulation figures at The Chicago Sun-Times, The Jerusalem Post and two Chicago-area suburban papers, recorded a pre-tax charge of $27 million to cover the estimated cost of resolving related advertiser claims.
  • The Belo Corporation set aside $23 million to compensate advertisers for exaggerated circulation figures at The Dallas Morning News.

Some newspaper industry executives excuse these transgressions as an ice cube, saying there is no iceberg lurking underneath. Don’t be so sure.

The Securities and Exchange Commission is investigating the matter. While it will disclose no information about its ongoing investigation, a Cheat Seeking Missiles media search found that some of our favorite targets have received inquiries from the SEC: The New York Times, The Washington Post, USA Today and the Knight Ridder chain. The Tribune Company is conducting an internal investigation of circulation figures at the Los Angeles Times and Chicago Tribune.

Expect more scandals with the SEC report, or as newspaper publishers announce settlement set-asides in advance of the report.

Newsday overstated its circulation by 100,000, or about 20 percent. The Tribune Company’s Hoy Spanish-language tabloid claimed 93,000 while its actual circulation was somewhere between 45,000 and 55,000. The Chicago Sun-Times started with a 2,800 overstatement in 1998, and like an addict needing ever more smack, was inflating its circulation by as much as 50,000 daily copies by 2004.

This isn’t fudging; it’s a big lie. It proves that the corruption that permeates the left-leaning newsrooms, which lie in saying they are objective as they work aggressively to influence policy and tilt elections, is just as prevalent in some circulation departments.

The media’s coverage of this scandal has been pathetic. When the SEC requires disclosure, they disclose. After they’re busted, they write long, painfully frank pieces about those bad boys in circulation. But I have found no instance of a proactive investigation by reporters of what’s going on at the papers that employ them – or even of their competitors’ practices.

How hollow the media’s calls for investigations of Halliburton appear in this light. As I wrote earlier, the McClatchy chain’s CEO tried to excuse the MSM circulation scandal by saying, “All newspapers know that circulation departments are big, complex, far-flung operations.” Translation: We can't be expected to know how many newspapers we sell a day in our little burg, but Halliburton must not be excused from any error that occurs in purchasing, transporting and providing tons of materials to troops in a hostile war zone.

These are the same newspapers that accuse blogs as uncontrolled and untrustworthy. Yet they cheat in the newsroom by pretending they’re objective (just look at the Scoundrel Chronicles for proof of what a lie that is), then they cheat in the circulation department, and then they circle back and cheat in the newsroom again by not undertaking a meaningful investigation of their own industry’s scandal.

Please, pay no attention to the man behind the curtain.