Angry in the Great White North

As quoted from Newsday at Captain's Quarters:

Newsday has disclosed that its reported circulation was inflated by about 100,000 copies on weekdays and Sundays in the 12 months ending September 2003. Last year, the Spanish language paper Hoy acknowledged that its reported daily circulation of 92,604 was inflated by about double for the same period.

Increased circulation rates leads to increased ad revenues, so the point of the fraud is clear.

But how do they get away with it? There are organizations that specialize in circulation audits. For instance, there is the Audit Bureau of Circulations:

The objects of the Audit Bureau of Circulations shall be to issue standardized statements of circulation data or other data reported by a member; to verify the figures shown in these statements by auditors' examination of any and all records considered by the Bureau to be necessary; and to disseminate data for the benefit of advertisers, advertising agencies and others interested in facts in the advertising and publishing industry.

In Canada, there is the Verified Circulation (VC) Program:

The Verified Circulation (VC) Program was launched in 1971 by the Canadian Community Newspapers Association, and provides agencies and advertisers with access to reliable audited circulation figures for the media. Today, more than 540 community newspapers participate in the VC program.

If a publisher wishes to have its publication’s circulation verified, the publisher must be able to prove how many copies were distributed and where, by backing up the circulation figures with documents such as press run certifications, postal receipts, subscriber lists, carrier receipts, cash sales records and records of complimentary copies.

The VC office regularly provides Canadian Advertising Rates and Data (CARD) with the most recent verified circulation figures for members. This ensures that advertisers have the most current data available.

Google "circulation audit" and many more organizations will be listed.

In fact, they did not get away with it. The problems were revealed by the Audit Bureau of Circulations:

Audit Bureau of Circulations reported weekday circulation of 481,816 copies at the Long Island tabloid for the year ending in September 2003, down from the 579,599 copies originally reported by Newsday.

Auditors also reported Sunday circulation of 574,081, down from Newsday's original estimate of 671,820.

Newsday parent Tribune Co. said earlier this year that an internal probe of Newsday and the Spanish-language daily Hoy had found poor record keeping and programs that intentionally violated the audit bureau's regulations.

This was back in 2004, and apparently problems went back as far as 2001. One of the reasons it took so long to discover was that one of the people arrested today was a liason between Newsday and the Audit Bureau of Circulation, which put him a position to manipulate the information.

Needless to say, lawsuits are pending as advertisers try to get back the money they paid for inflated ad values.

In the mean time, questions need to be asked about the honesty in the system of circulation reporting. For a fraud to be perpetrated under the nose of the auditors for up to three years suggests a severe failure in the audit process. Questions about the thoroughness, or even the integrity, of the auditors will be raised.

Shades of Enron and Arthur Anderson.