- The Washington Times - Wednesday, October 13, 2004

The Securities and Exchange Commission has started an investigation into newspaper circulation reporting after several publications acknowledged exaggerating their sales.

In the past two months, the commission has requested circulation documents from at least six major publishers, including The Washington Post Co., Gannett Co. Inc. and the New York Times Co., according to a report the New York Times published yesterday.

“The SEC is taking an industrywide look at circulation practices. We welcome the SEC’s action because we believe it will help to put to rest any lingering doubts created by the improper actions of a few,” said Catherine J. Mathis, a New York Times spokeswoman.

Representatives for the other publishers the newspaper cited declined comment or did not return messages.

A Securities and Exchange Commission spokesman declined comment.

The investigation was triggered by a series of circulation scandals that has left the $55 billion-a-year newspaper industry stained.

Since June, four newspapers have admitted to reporting faulty sales figures to the Audit Bureau of Circulations, an independent agency that audits circulation data for newspapers and magazines.

The Chicago Sun-Times disclosed that it inflated circulation by as much as 10 percent over six years. Its parent, Hollinger International Inc., plans to pay advertisers as much as $27 million to compensate for overpriced advertising based on the false numbers.

The Tribune Co. admitted that the circulation of two of its New York-area newspapers — Newsday and Hoy, a Spanish-language publication — was exaggerated during the 12-month period that ended in September 2003.

Newsday’s daily circulation was inflated by as much as 100,000, according to an internal investigation by Tribune, which plans to set as much as $95 million aside to compensate advertisers who were overcharged.

Belo Corp. said its Dallas Morning News had overstated its circulation figures for the six months that ended in September 2003. It has said it will set aside $23 million to compensate its overcharged advertisers.

The Securities and Exchange Commission is unlikely to uncover many more cases of fraudulent circulation data, according to John Morton, an independent industry analyst in Silver Spring.

“I don’t think they are going to find anything. I think it will turn out that most newspaper analysts make an honest effort to be honest,” he said.

The industry’s confidence in the Audit Bureau of Circulations has not been shaken by the scandals, Mr. Morton said. In the Newsday scandal, for example, it was the ABC that discovered the fraudulent circulation data.

The statement from Ms. Mathis, the New York Times spokeswoman, did not elaborate on the investigation.

“The SEC has asked us to treat the matter confidentially and we will honor its request. We believe our circulation-reporting practices conform to ABC rules, applicable standards and our company’s core values,” the statement said.

The commission regulates publicly traded companies. News World Communications Inc., a private company, publishes The Washington Times.

The Times conforms with the ABC’s rules and does not inflate its circulation figures, said Richard H. Amberg Jr., the newspaper’s general manager.

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