Audit Bureau Rules Against Ziff Davis

Magazine Publisher May Cut Paid Circulation Figures

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NEW YORK (AdAge.com) -- The Audit Bureau of Circulations rejected Ziff Davis' request for an exception to ABC rules on paid circulation, and the tech magazine publisher today said it "may be required" to cut a portion of its stated paid circulation figures by reclassifying some subscriptions as non-paid.

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May appeal
The controversy was the subject of a cover story in the print edition of today's Advertising Age, but ABC's board made its decision July 10 after the issue went to press. Ziff Davis said ABC informed it of the decision today. The publisher said it may appeal ABC's decision.

ABC auditors are said to have uncovered as many as 200,000 free subscriptions in 2002 and 2003 that Ziff Davis improperly classified as paid circulation under ABC rules. Most of those subscriptions were believed to be for PC Magazine. Ziff Davis has reported that the title had an average circulation of 1.2 million for the six months ended Dec. 31.

Subscriptions dispute
The ABC dispute centers on subscriptions generated through freebizmag.com, a subscriber-acquisition service run by Synapse Group, a subscription agent majority owned by Time Warner's magazine group.

ABC said its board had censured Synapse for improper record keeping. Synapse will be required to submit a plan for correcting its practice to the board.

Ziff Davis wouldn't comment beyond a press release it issued today. ABC declined to comment and referred calls to Ziff Davis. Synapse declined to comment.

The Synapse Web site, freebizmag.com, allows professionals in various industries to sign up for relevant controlled-circulation trade publications. Ziff Davis offers three controlled titles on the site.

Free subscriptions
The Web site has also offered free subscriptions to PC Magazine, a paid title, as an incentive for filling out a survey. Those subscriptions were free to readers, but Ziff Davis is believed to have told ABC that it received payments from business partners of freebizmag.com.

In its statement today, Ziff Davis said Synapse "represented to Ziff Davis that all of the subscriptions were individually requested by subscribers and that payment for the subscriptions would be made by a third-party sponsor. Furthermore, ABC's audit process independently verified that these subscribers requested PC Magazine and received copies of the magazine."

In an ABC audit, Ziff Davis said, "Synapse Group stated that it did not yet bill the sponsor for certain of these subscriptions generated through freebizmag.com, but would do so and also indicated that the sponsor would pay the to-be-issued invoices."

Don't qualify as paid
Because the payments would occur more than seven months after the start of service for these subscribers, Ziff Davis said, the subscriptions would not qualify as paid circulation under ABC rules. Ziff Davis asked ABC for an exception, but ABC's board turned it down over the weekend.

As a result, Ziff Davis said it "may be required to reclassify a portion of its subscriptions generated through [Synapse] from 'paid' to 'analyzed non-paid direct request.' "

Ziff Davis said it believes the subscriptions should be classified as paid and may appeal the decision.

The publisher said: "Ziff Davis may seek from ABC either a reconsideration of the denial or a finding that the rule does not apply to these subscriptions, and strongly believes that the lack of timely billing by the agent should not affect the classification of the subscribers as paid. Ziff Davis will report the results in accordance with the final determination by ABC."

Circulation controversies
The Ziff Davis flap is the third major circulation concern to come to light in the past month. In June, Tribune Co. (at Newsday and Spanish daily Hoy) and Hollinger International (at the Chicago Sun-Times) admitted to overstating circulation. An ABC audit uncovered the Tribune issue but not the Sun-Times overstatement.

Issues involving overstated circulation have caught the attention of advertisers and media agencies, which rely on circulation statements to make decisions on how their money is spent.

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