 |
||||||
 |
||||||
Inflating Circulation . . . It's as Simple as ABC
What's this fresh catastrophe at the Sun-Times? The parent company, Hollinger International, announced last week that the paper had been cooking its books for years, inflating its circulation figures. If true, that's fraud. Not just shameful but criminal. How's the staff taking it? "This one is darker than any I can remember," said a lugubrious veteran. "People were sort of comparing other low points -- Murdoch coming, [former editor] Matt Storin leaving. Nothing compares to the incredible, almost physical feeling that this one has engendered. It cuts across all departments, ages, and tenures." So now what? The Hollinger board's audit committee is running an investigation -- and the audit committee's led by Jim Thompson, a U.S. attorney before he became governor. The Securities and Exchange Commission is investigating. And the Audit Bureau of Circulations is about to begin what might be the most exacting, if oddest, audit it's ever done. Exacting, why? Because its reputation's on the line. Hollinger said the rigging of circulation figures was going on for years at the Sun-Times, apparently starting small and becoming more extreme, as the gap between illusion and reality widened. And the ABC didn't catch it. Once a year the ABCaudits client papers so that advertisers can trust the circulation figures they're given. John Payne, who's an ABC vice president, told me the ABC runs the numbers "through an extensive computer analysis, looking for anomalies," interviews distributors, shows up at mom-and-pop groceries to ask about single-copy sales, follows the trucks, even calls up listed subscribers to make sure they're legit. If the ABC took those measures at the Sun-Times, they obviously didn't work. "It's certainly embarrassed us," Payne told me. "We have every motivation to find out what the facts are, and we will." Oddest, why? When the ABC audits a newspaper, it's looking for evidence that the paper exaggerated its circulation. But Hollinger's already admitted to doing that. In this case, the ABC's duty is to consider the possibility that it's the admission that's exaggerated. You mean Hollinger could be telling some kind of Machiavellian lie? I don't think anyone inside the ABC believes for a second that's the case. But the situation is so strange already, why not imagine it even stranger? The list of usual suspects at the Sun-Times is two names long: Conrad Black and David Radler. Black was never around, but during the years when circulation figures were allegedly manipulated Radler was both the Sun-Times's publisher and the president of Hollinger International. Late last year Radler quit those jobs under fire. Now he and Black are being sued by Hollinger's board for ripping off the company to the tune of tens of millions of dollars. A fraud accusation is one more stick to beat them with -- which is why the ABC needs to keep an open mind about ulterior motives. How's Radler taking it? I called him in Vancouver. "I'm preparing a response to all that crap," he said, but it wasn't ready yet, and he wasn't sure when it would be. Radler used to say whatever was on his mind without thinking twice. Now lawyers are involved. Had he read Roger Ebert's piece in the Sunday paper? Ebert wrote, "Who would have thought such a penny-pincher might possibly be pinching millions for his own pockets?" "That's what I'm responding to," Radler said. I told him that around the Sun-Times these days he enjoys roughly the status of original sin. He knows. "When it comes to profits, no one blames me for that. I quadrupled profits," he said. "Does anyone give me credit for the Trump deal? You realize that was my deal. Who had faith in Trump?" Radler claims that when he was still in Chicago he didn't know of any problem with circulation numbers. And Hollinger Inc., the holding company Black still controls, issued a statement insisting that it knew nothing of circulation practices that were "outside industry norms." If circulation's dropped, said Black's office, blame the new bosses: the old ones knew better than to raise the single-copy price from 35 cents to 50. Which the Sun-Times did on April 1. Right. And naturally the new publisher, John Cruickshank, was watching closely to see how the hike would affect circulation and revenues. The numbers he got back didn't make sense -- given the circulation he thought he had. About seven weeks ago he told Hollinger's new CEO, Gordon Paris, "We have a real problem here." Shouldn't the ABC have detected fraud if it went on for years? Touchy subject. Payne says the ABC would have fingered the Sun-Times sooner or later, hopefully sooner -- like this year. He also says that when newspapers set out to intentionally deceive the ABC, they can, especially if distributors are in on the scheme. What's unnerving is Newsday, which Payne's touting as an ABC success story. Last week Newsday also confessed it had been overstating circulation. The paper's knocking 7 percent off the daily circulation it declared last September, or about 40,000 copies, and 9 percent off its Sunday circulation. Payne says the truth emerged during an ABC audit that began in February and will be made public in mid-July. And maybe it did. But here's the thing. On February 10, Newsday and a sister paper, Hoy, the parent Tribune Company and Tribune Publishing Company, and four distributors were sued for $100 million by advertisers who claimed the papers had been faking circulation numbers for ten years. According to the suit, the distributors accepted more papers than they could ever hope to sell, then dumped the leftovers instead of bringing them back unsold. Allegedly, a computer program known internally as "Fudge ABC" was set up to help hide the truth. Would the ABC have penetrated the deception on its own? There's nothing like a $100 million lawsuit to send auditors a heads-up that everything might not be hunky-dory. This sounds like a bigger scandal than the Sun-Times's! Could be. Let me tell you, circulation's worse than demon rum at driving the upright into the jaws of perdition. What's the real Sun-Times circulation? Hard to say. This spring the ABC, working off the Sun-Times's own figures, reported a 486,936 weekday average. But now the ABC has "recalled" that report. The Tribune's Jim Kirk wrote that his sources told him the Sun-Times had been overstating newsstand sales by "at least 25 percent, or more than 78,000 a day." Cruickshank insists Kirk's number is too high, but says the real number's bad enough. Canada's primary national paper, the Globe and Mail (which pays rapt attention to all of Black's follies because Black's a product of Canada and launched the competing National Post) said it was told the Sun-Times inflated its circulation by about 10 percent. That's about 45,000 copies daily. |
