NEW YORK (AdAge.com) -- The Audit Bureau of Circulations' board has censured Tribune Co.'s Newsday and Hoy and Hollinger International's Chicago Sun-Times for circumventing ABC's bylaws and rules.
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The three newspapers, which last month acknowledged overstatements of circulation, will be required to submit circulation claims for more frequent audits. For the next two years, ABC will audit them every six months rather than annually.
For the next year, the papers' circulation claims will be excluded from FAS-FAX, ABC's semi-annual report of publisher circulation claims.
Finally, the newspapers will be required to give ABC's board an action plan to correct their practices.
'Deceptive and fraudulent'
ABC yesterday said its board was unanimous in its "condemnation of rules circumvention and of deceptive and fraudulent circulation practices."
"The relationship between publisher and advertiser is based upon trust," ABC Board Chairman Robert Troutbeck said in a statement. "Each member of the ABC board agrees that we, as an industry, do not tolerate rules circumvention, to say nothing of fraud, and will do whatever is necessary to preserve the trust between publishers and advertisers that all sides value so highly."
The issues came to light last month when Tribune Co. (at Newsday in New York and Spanish daily Hoy) and Hollinger International (at the Sun-Times) admitted to overstating circulation. An ABC audit uncovered the Tribune issue but not the Sun-Times overstatement.
At its July 7-10 meeting, ABC's board also implemented actions ABC said would "reinforce confidence in the integrity of ABC-audited circulation information."
All three papers said they accept the board's verdict.
Jack Fuller, president of Tribune Publishing, said in a statement that his company "will comply fully" with the board's ruling. "We have already taken steps to strengthen the internal controls at all of our newspapers to ensure the accuracy and reliability of our circulation figures," he said in a statement. "We have expanded our internal certification process to include circulation information. The vice presidents of circulation must now certify to the accuracy of their circulation figures and that all ABC rules have been followed. Misstatements of circulation figures will not be tolerated."
'Hope to restore trust'
Newsday Publisher-CEO Raymond A. Jansen said in a statement: "The actions announced today by ABC are both reasonable and appropriate. Newsday is cooperating completely with ABC to take all measures necessary to ensure the accuracy and reliability of our circulation figures. We want Newsday's circulation department to set industry-leading standards. ... We hope to restore the trust of our advertisers and readers."
Louis Sito, Hoy publisher and Tribune's vice president for Hispanic media, said in his statement: "Hoy intends to fully comply with ABC to ensure that the newspaper's circulation figures are accurate and reliable."
John Cruickshank, Chicago Sun-Times publisher and the chief operating officer of Hollinger International's Chicago Group, said in a statement: "We have been cooperating with ABC since we identified overstated circulation reporting practices and brought the matter to their attention last month. At the same time, we moved quickly to discontinue the practices that gave rise to it. We expected ABC to take action as a result of the issues that have come to light and will comply with the provisions and requirements ABC has issued today. ... We are focused now on ensuring accuracy and transparency in our reporting practices as a central element of our efforts to regain the trust of our advertisers."
At its meeting, ABC's board defined the censure provision and penalties. The censure rule will be applied to those newspapers that ABC said experience an adjustment of at least 5% and to those periodicals that have two consecutive audit adjustments of 5% or more.
Censure penalties will include more frequent audits (every six months for the two years after censure and exclusion from FAS-FAX for a year, as done with the Tribune Co. and Hollinger papers).
ABC said it will levy a cash fine against a publisher found to have submitted a fraudulent circulation statement. It also adopted principles of the American Institute of Certified Public Accountants as part of its stepped-up enforcement of audit rules.
Advertisers and media agencies rely on ABC circulation data in figuring how to spend ad money in print media. As such, ABC is under pressure to tighten rules and demonstrate the integrity of its numbers in the wake of the recent circulation scandals.
S. Scott Harding, chairman-CEO of Newspaper Services of America, said in a statement: "The actions represent responsible first steps in the process of preserving trust between publishers and advertisers."