Brewster riles rivals: G&J circ boss out, scandal rumbles on

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Diane Potter, the executive whose testimony in the Rosie O'Donnell trial revealed that Gruner & Jahr USA Publishing overstated newsstand sales for Rosie magazine, abruptly resigned last week. But that alone may not quash the controversy surrounding the publishing house.

It was another tough week for G&J. In response to budgetary pressures, around 20 staffers were laid off across Family Circle, Fitness and YM, as well as Fast Company and Inc., as the last staffers at those titles' former Boston headquarters were told G&J would close that office.

Rival magazine executives, meanwhile, fumed over comments made by Gruner & Jahr USA President-CEO Dan Brewster in defense of his company's circulation practices. Talking to journalists after the O'Donnell trial ended, Mr. Brewster said, "I don't think we have adopted any practices that, frankly, aren't widespread throughout the industry."

Mr. Brewster said those comments have been taken out of context and referred not to the process of reporting numbers to Audit Bureau of Circulation but to general circulation practices. "When I was talking about industry practices, I was talking about them across the board, " Mr. Brewster said, "not isolated to ABC."

But several magazine executives interpreted the remarks as signifying that others in the industry misstate circulation numbers.

"I take offense," said Harold Shain, president and chief operating officer, Newsweek. "If he makes that charge to other magazines within his company, that may be true. I don't' think he can make that statement to an entire industry."


Nina Link, president-CEO of Magazine Publishers of America-the trade group of which Mr. Brewster is the outgoing chairman-called the controversy over Mr. Brewster's remarks "unfortunate" and "certainly not good for the industry." She touted an MPA analysis of three years worth of circulation, which found the industry as a whole slightly understated its circulation in initial filings to ABC.

"I am not going to believe the industry is misreporting numbers because G&J did," said Robin Steinberg, VP-director of print, Aegis Group's Carat North America.

An internal Time Inc. memo obtained by Ad Age and written by Exec VP John Squires, who oversees circulation, said, "Some publishers and media executives have suggested the practice of misrepresenting newsstand circulation is commonplace in the magazine publishing industry. While I can't vouch for the practices of other publishers I can safely say that, at Time Inc., we do not inflate our newsstand estimates or any other aspect of our ABC reporting."

An internal investigation of G&J's 2002 circulation numbers, which it finished conducting late last week, revealed newsstand overstatements-albeit of a significantly smaller magnitude than at YM or Rosie-at its largest title, Family Circle. For the first half of '02, the investigation found, the title overstated its newsstand sales by 4.7%. Two of its issues, an executive said, overstated newsstand sales by as many as 300,000 copies.

But the overall variance was smaller, since the title understated newsstand sales on some issues. For the full year, G&J found the title missed its 4.6 million rate base by about 18,000 copies.

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