The circulation of the U.S. Chamber of Commerce's magazine, Nation's Business, in recent months may have fallen more than 30 percent below the circulation listed in its advertising rate base, according to chamber documents and interviews with employes. Paid circulation provides a basis for setting advertising rates in the magazine.
As late as September, the chamber stated in an information sheet called "The U.S. Chamber Story" that it had a 1-million-subscribers advertising rate base.
In October, "The Chamber Story" said Nation's Business was the "largest circulation business magazine in America," a distinction that would put its circulation in excess of 800,000.
Internal documents report that "paid circulation" in September was 654,523, and chamber officials say the magazine's circulation has dropped this year because of changes in the number of magazines given to chamber members.
On Monday, the chamber sent a letter to advertisers promising a rebate "should a shortfall occur."
Another chamber document indicated that falling circulation may have been a problem for at least a year, a period in which Nation's Business said it had maintained more than 1 million subscribers.
The Nov. 4, 1981, interoffice memo said a survey by an outside firm "is devastating in its circulation-record implications." The memo from David Roe, manager of the chamber's publishing group, to Edward Zier, general manager of operations, said "an estimated 36 percent of our subscriber list apparently is invalid!"
Roe said that 16.4 percent of a sample "could not be located for such reasons as being deceased, no such person being at the given address or phone number, etc." Others "claimed they are not subscribers and do not receive the magazine," Roe reported.
"In view of the recent circulation shenanigans, some obvious questions come to mind about our records and what has been done to them," the memo said.
Chamber officials this week fired Richard S. Orens, 51, a senior chamber employe, accusing him of giving internal circulation data to The Washington Post and the Audit Bureau of Circulation, a firm that authenticates magazine subscription figures for advertisers. Orens has worked as a salesman and manager of the chamber since 1963.
On Tuesday, Thomas J. Donohue, vice president of development, sent a letter to Orens telling him he was fired "effective immediately." Donohue wrote that "we have no doubt that you are the one who released these documents."
Before his firing, Orens had taken legal action against the chamber. In October 1981, after he was demoted to salesman from the post of marketing manager for the mid-Atlantic area, Orens filed suit against the chamber in U.S. District Court in Baltimore. The suit, charging breach of an employment contract, said Orens was demoted even though his was among the most productive sales groups in the country and that he had earned about $100,000 a year in commissions for the past four years.
The chamber has disputed the charges and filed a motion to dismiss the suit.
Orens also filed a complaint with the Human Relations Commission in Montgomery County, where his sales office is located, claiming that Donohue ordered his demotion because he is anti-Jewish. Cynthia Wicker, a chamber attorney, responded, "We deny religious discrimination categorically. His demotion was based on business necessity."
In his letter firing Orens, Donohue wrote that on Sept. 23 Orens' attorney, Melvyn Weinstock of Baltimore, in a telephone conversation with the chamber's associate general counsel, Stephen A. Bokat, threatened to disclose "a confidential internal memorandum as well as other documents regarding Nation's Business circulation" to the press and the ABC.
Bokat said he took "contemporaneous notes" of the conversation, but did not show them to a reporter because of the pending litigation.
Weinstock said, "I deny that ever occurred. What I said is that I think it best for all concerned to settle the suit because if it went to trial certain matters could come out which would be possibly injurious to the chamber."
He said, "I cited, I believe, the differential in circulation between what the chamber told its advertisers and what it published internally to its own employes."
Howard W. Kutz, senior vice president of ABC, confirmed that his company got a copy of the Nov. 4, 1981, interoffice chamber memo from an anonymous source. He said that ABC, which as of Dec. 31, 1981, certified Nation's Business circulation at 1,155,913, had begun an investigation.
Carl Grant, the chamber's vice president for communications, confirmed that circulation has slipped because in 1980 Nation's Business changed its approach to adding subscribers. He said the chamber began combining the sale of memberships with the sale of subscriptions, causing a drop in magazine circulation. But he said the chamber has increased the number of magazine copies accompanying a membership and he was looking for circulation to climb again above 1 million next year.
Grant noted that a recent issue of the Gallagher Report, a New York newsletter reporting on the publishing industry, shows that many major magazines are failing to achieve the level of paid subscriptions on which their advertising rates are based.
Grant said that Business Week and Forbes now have larger circulations than Nation's Business. He said that Nation's Business, as of the July issue, stopped making the claim in the magazine that it had the largest circulation of any business magazine.