NEW YORK (AdAge.com) -- Two daily newspapers owned by the Tribune Co., Newsday and Hoy, disclosed late yesterday they had significantly overstated circulation in 2003 and 2004.
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Long Island, N.Y.-based Newsday before the circulation adjustments was the ninth-largest daily in the country; Hoy also overstated circulation figures for the six months ended March 31, but by a larger margin.
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Newsday placed its top executive responsible for circulation, Robert Brennan, on administrative leave. The Nassau County District Attorney Denis Dillon today announced the opening of an investigation into Newsday's circulation situation. The New York Times reported that the Securities and Exchange Commission was investigating the matter as well.
Newsday said that free copies distributed as part of a promotion were wrongly recorded as paid, and that some single-copy sales could not be verified, owing to what it termed "inadequate record-keeping" from an outside distributor.
For the six months ending last Sept. 30, Newsday's daily circulation of 579,729 was overstated by about 40,000 copies, and its Sunday circulation of 671,819 was overstated by almost 60,000. Hoy's overstatements, on a percentage basis, were larger. Its reported daily circulation of 92,604 was overstated by 19% (almost 15,000 copies), and its Sunday circulation was overstated by 14%.
In February a consortium of advertisers sued Newsday, charging the daily with improperly inflated circulation. That lawsuit is still pending, although Newsday executives told the paper they continue to believe those allegations are "without merit."
Newsday's announcement on the matter credited an internal audit with discovering the fraud, but Michael Lavery, president and managing director of circulation tracker Audit Bureau of Circulations, said the daily was tipped off by an ABC audit that was completed this month and will be released in July. Mr. Lavery said he was "disappointed" Newsday did not credit ABC with finding the impropriety.
The news comes shortly after Tribune Co., suffering from still-disappointing ad revenue, announced it would cut over 200 jobs from its newspaper division. Earlier this week, the Chicago Sun-Times admitted it had overstated its own circulation figures for several years, an admission that prompted a lawsuit from some of its advertisers.