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Circulation Fraud Contained, Audit Group Says

Last month, the Securities and Exchange Commission began an investigation to determine if the phony numbers were confined to the four papers or reflect an industry-wide problem.

A small group "of wayward publishers cannot be allowed to undo what we have collectively spent 90 years doing, and to jeopardize the non-negotiable trust between buyers and sellers," Troutbeck said in his address at Toronto's Fairmont Royal York Hotel.

Troutbeck's comments came one week after the SEC subpoenaed the New York Daily News regarding its home delivery circulation practices.

The Daily News, owned by Mort Zuckerman, has been in a circulation war with the New York Post, owned by News Corp., which gleefully has detailed a $12.5 million lawsuit against the Daily News by home-delivery distributors. The distributors claim they were forced to deliver the paper to non-subscribers.

The circulation scandal was in the forefront on the first day of this conference.

Sunni Boot, president of ZenithOptimedia Canada, a media-buying firm, said the ABC should advertise to explain its practices to outsiders and help repair its image. Last week, the ABC attempted to shore up support with an open letter to ad buyers and publishers in some publications, arguing that its methods are sound and advertisers can count on the circulation numbers it provides.

Jay R. Smith, president of Cox Newspapers Inc., which owns the Atlanta Journal-Constitution and several other papers, called the scandal "heartbreaking, sickening" but said the ABC system generally has worked.

Troutbeck also blamed an "irresponsible" news media for fanning the controversy while covering the scandal, saying they "care more for the angle than getting it right."


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