ABC auditors are said to have uncovered as many as 200,000 free subscriptions in each of the two years that Ziff Davis improperly classified as paid circulation under ABC rules. Most of those subscriptions were believed to be for PC Magazine, although one executive with knowledge of the matter said it extended to other Ziff Davis titles.
This is the third time in a month the publishing industry has faced significant issues over circulation claims.
The ABC board, gathered in British Columbia for a regular meeting, was scheduled to vote July 10 on a Ziff Davis request for an exception to allow the circulation claims.
Ziff Davis President-Chief Operating Office Bart Catalane denied there was any controversy. "There is no dispute with ABC, we are a member in good standing with ABC [and] we follow their rules to the letter.... Unfortunately, the facts [Advertising Age was] given are incorrect."
ABC President-Managing Director Michael Lavery declined to discuss the situation. "Pursuant to ABC's rules, I cannot comment on any matters that are or are not in front of the board," he said.
A switch to BPA?
People familiar with the matter said Ziff Davis could move its consumer magazines from ABC to rival auditor BPA Worldwide if the situation isn't resolved to its satisfaction. Mr. Catalane denied that, saying Ziff Davis "absolutely" would stay with ABC.
ABC audits Ziff Davis' PC Magazine and a number of its video-game magazines. PC Magazine reported average paid circulation of 1.2 million for the six months ended Dec. 31. BPA currently audits three Ziff Davis controlled-circulation tech titles: eWeek; Baseline; and CIO Insight.
The ABC dispute centers on subscriptions generated through freebizmag.com, a subscriber-acquisition service run by Synapse Group. Synapse, a subscription agent majority owned by Time Warner's magazine group, declined to comment.
Freebizmag.com allows professionals in various industries to sign up for relevant controlled-circulation trade publications. Ziff Davis offers its three controlled titles on the site.
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. One person with knowledge of the matter, however, said Ziff Davis was not able to persuade ABC to accept the subscriptions as paid.
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.