Attorney Tim Smith of Kent State University’s Media Law Center said Becky Smith’s comment “pretty well sums it up. It comes down to ‘damned if we do and damned if we don’t.’ ”
In the newspaper business, circulation numbers drive revenues. The higher a publication’s circulation the more it can charge for advertising, including preprinted inserts. Without third-party audits, advertisers have no independent verification of a publishers’ circulation statements.
When presented with the information from the Brown Publishing document, Tim Smith said, “It’s certainly unethical and dishonest. Whether it constitutes fraud, I don’t know.”
In 2008, nine employees of Newsday received probation after being convicted of mail fraud for inflating the New York newspaper’s circulation by as much as 100,000 copies per day.
Audits are no guarantee of accuracy. In 2004, circulation scandals surfaced at Newsday, the Dallas Morning News and the Chicago Sun-Times, all of which are audited by the pre-eminent Audit Bureau of Circulations. But if newspapers cease allowing audits, Tim Smith said, “that’s a clue” they may be fudging circulation numbers.
ABC spokeswoman Kammi Altig said the Brown Publishing-owned Troy Daily News, Piqua Daily Call and Sidney Daily News withdrew from the bureau in spring 2005. Most Ohio dailies, including the Dayton Daily News and the Springfield News-Sun, are audited by ABC.
“There are many smaller papers that don’t do an audit because they’re too expensive,” said Rick Edmonds, an expert in the media business for the Poynter Institute, a school for journalists in St. Petersburg, Fla. “Then there are some — the Washington Times comes to mind — where they want to tell their own (circulation) story.”
In a written presentation for a Jan. 18, 2008, meeting of 12 Brown Publishing executives, Group Publisher Frank Beeson, who oversees the Troy, Piqua and Sidney papers, told Chief Financial Officer Joseph Ellingham and other executives that “major retailers are growing more and more concerned regarding the validity of our ‘claimed’ daily circulation in each of the three markets.”
In a telephone interview, Ellingham said he knew nothing of inflated circulation numbers and denied the authenticity of the document. Beeson and Becky Smith couldn’t be reached.
Two others at the meeting, who asked to remain anonymous, said the document is legitimate and that inflated circulation was discussed. The Dayton Daily News and the Springfield News-Sun have a copy of the document.
John Carnahan of Oakwood, who oversaw major advertising accounts for Brown’s Troy, Piqua and Sidney papers from 2005-2007, said circulation concerns preceded Beeson’s tenure as publisher.
“I thought they needed to have an aggressive circulation promotion program to correct their circulation problem,” he said.
Brown executives were most concerned with preserving revenue from preprinted ad inserts that are supplied by advertisers and distributed with the newspapers, the document shows. “Preprints are very important to newspapers,” Edmonds said. “They’ve held up pretty well when classifieds have declined.”
Preprint ad rates also have held up well, he said. Typically, a newspaper’s Sunday edition, which contains the most preprints, is responsible for half of a newspaper’s weekly revenue, Edmonds said.
Randy Novak, director of newspaper strategy for NSA Media, a Chicago company that places preprint advertising in newspapers including Brown’s, said he had never heard any talk about inflated circulation numbers by Brown Publishing. “No one has given us a reason to believe that that has been happening,” he said.
Another advertiser, Jim Taylor of Jim Taylor’s Troy Ford, said his experience with Brown Publishing has been positive. “I would be shocked if there were any integrity problems,” he said.
The company’s website lists current circulation numbers as 10,900 for the Troy Daily News, 12,410 for the Miami Valley Sunday News and 13,250 for the Sidney Daily News. All three totals exceed the inflated numbers included in the 2008 document.
Brown Publishing filed for bankruptcy in April, listing assets of $94 million and liabilities of $104.6 million. Most of the assets were purchased as part of the bankruptcy case by Brown Media Corp. — a new company run by Brown Publishing executives Ellingham, Roy Brown and Joel Dempsey — for $22.4 million. Unsecured creditors complained about the speed of the sale and the fact that the company’s newspapers were purchased by insiders.
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