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KRIS HUNDLEYNewspapers are taking a closer look at circulation numbers in an effort to reassure advertisers and others that they're legitimate.
At Knight Ridder's 31 dailies, circulation managers, as well as publishers and chief financial officers, are being asked to sign quarterly circulation statements.
Three of Media General's papers, among them the Tampa Tribune, have been scrutinized by a team of executives from headquarters as well as other Media General publications. The chain expects to complete its review of all 25 dailies' administration and operations by mid 2005.
And at Cox Newspapers, which owns 17 dailies including the Palm Beach Post, circulation directors were given an ultimatum by the chain's president, Jay Smith.
"I told them, "If there's anything you want to say, anything that gives you pause, now is the time to say it. If I find out you held back something, there will be hell to pay,' " he said.
John Murray, vice president of circulation marketing for the Newspaper Association of America, said the industry recognizes the importance of its credibility with advertisers.
"Even if you don't have the remotest suspicion about your numbers, you need to let advertisers know you're going to address the issue," he said. "If only so you can sit across the table from them and say, "I was comfortable about my numbers before, and I'm still comfortable.' "
Newspaper executives have found themselves grilled by both advertisers and Wall Street analysts about single-copy and third-party sales, two areas reportedly abused in the circulation scams. Douglas Arthur, an analyst with Morgan Stanley, reported in August on major newspapers with a high percentage of sales in those two categories, singling out, among others, Knight Ridder's Miami Herald for its bulk sales and the Philadelphia Daily News for single-copy sales.
Polk Laffoon, Knight Ridder's vice president of corporate relations, said the Herald has an unusually high percentage of papers sold out of the country, to hotels and at three large flea markets, all categorized as "other" circulation. The tabloid in Philadelphia, meanwhile, has always been designed for street sales, with less than 10 percent home delivery, he said.
"These scandals have put more of a spotlight on the distinction between single-copy and home delivery and other paid circulation," Laffoon said. "But all newspapers' circulation delivers readers. That's what's important."
The St. Petersburg Times equipped ad reps with talking points to reassure customers of the validity of its circulation numbers. An independent auditor verifies that papers sponsored by a third party reach their promised audience, for example. And to encourage sellers of single-copy papers to keep track of copies they don't sell, the paper gives them full credit for the unsold papers.
"You've got to examine your rates and incentives," said Jerry Hill, circulation director at the Times. "If you are spending more than you are making for selling newspapers, then a door has been opened that some may see as an opportunity."
Maurice Beausoleil is an independent contractor who handles Sunday Times sales in Pinellas County and west Pasco County. He buys papers from the Times at a discount, then sells them through subcontractors, 63 in Pinellas and 24 in west Pasco. These street-corner hawkers work on consignment, getting a commission for each paper sold.
On Monday mornings, Beausoleil returns all unsold papers to the Times, receiving a credit on his account for the following week. He also provides the Times with an audit of sales by location.
Beausoleil, who has been selling the Times for three years, said he is constantly trying to beat his previous year's sales. If he inflates figures one year, he would have to inflate them higher the next year, all at significant personal cost.
"Why would I want to compete with myself?" he asked. "I have no incentive whatsoever to cause me to even think about fudging a number."