Marketers unfazed by circ scandals

By Published on .

Marketers continue to complain-even sue-over a recent spate of newspaper circulation overstatements. But they're not fleeing the medium.

Tribune Co. and Belo have put dollar figures on what the overstatements will cost them. Tribune took a pre-tax charge of $35 million to deal with overstatements found at Newsday and Hoy, and Newsday faces lawsuits from a coalition of advertisers.

But Tribune's earnings release for July showed that Newsday's ad volume rose 4.7% for the month.

Belo's flagship Dallas Morning News indicated it would pay advertisers $23 million, set aside $3 million to cover related investigative costs and spend $4 million on related newsprint costs. All of this, the company said in a statement, would have "a modest effect" on ad revenue at the daily through the first quarter of next year.

The Morning News is the 11th-largest daily in the country, with a pre-overstatement daily circulation just shy of 530,000. It said on Aug. 5 it had overstated its circulation by about 8,000 copies daily and 38,000 on Sunday,

no loss of trust

Belo has yet to release monthly financial data for a post-overstatement announcement period, and a spokesman said he could not comment on whether or not advertisers had pulled back from the Morning News. Tribune executives declined to comment.

"I don't get the sense people are looking at newspapers and saying, `I can't trust you anymore,"' said Merrill Lynch & Co. analyst Lauren Rich Fine.

Still, she expressed surprise that Newsday's July number hadn't shown erosion.

In a recent report, she noted Newsday last year took in $622 million of revenue, 11% of total Tribune Co. revenue. She also estimated that advertising accounted for 80% of Newsday's revenue. (Ms. Fine made no estimates for Hoy, a much smaller business.)

National advertisers may become "a bit more reticent" to advertise in newspapers, said George Janson, managing partner/director of print for WPP Group's Mediaedge:cia, New York. But local advertisers, which make the majority of most papers' ad revenue, have few other options.

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