Tribune Tells of More Circulation Errors
Tribune Co. said Thursday that it had found additional errors in circulation figures for its Newsday and Hoy newspapers and set aside $35 million to compensate advertisers that may have overpaid.
An internal investigation found more circulation inaccuracies in 2003 and 2004 as well as misstatements for 2001 and 2002, said Tribune, whose holdings include the Chicago Tribune and the Los Angeles Times.
For the record:
12:00 a.m. July 17, 2004 For The Record
Los Angeles Times Saturday July 17, 2004 Home Edition Main News Part A Page 2 National Desk 1 inches; 40 words Type of Material: Correction
Tribune circulation -- An article in Friday’s Business section about circulation errors at Tribune Co. incorrectly said the Los Angeles Times eliminated 60 jobs in the second quarter. In fact, the paper cut 160 jobs, 60 from the editorial department.
The $35 million set aside, which amounts to 6 cents a share, helped reduce second-quarter profit by 58%, to $96.4 million, or 29 cents a share.
The disclosure may impair Tribune’s credibility with advertisers, which rely on circulation numbers to determine ad rates, said Barry Lucas, senior vice president of research at Gabelli Asset Management.
“There’s never just one worm in the can or just one cockroach when you turn on the light,” said Lucas, whose employer owned 4 million Tribune shares as of March.
Tribune said it would give advertisers cash or free ads to make up for the errors.
The overstatement is complex, and company executives said they might find more misstatements.
“It will take time to be fully resolved,” Tribune Chief Executive Dennis FitzSimons said during a conference call with analysts and investors. “It will be fixed as soon as possible.”
Tribune shares fell $1.12 on Thursday to $42 on the New York Stock Exchange.
Questions about Newsday’s circulation arose in February when several advertisers filed a lawsuit that alleged the paper inflated numbers to justify higher ad rates.
Newsday’s vice president of circulation was placed on administrative leave last month.
The inflated figures at Tribune and the Chicago Sun-Times spurred the Audit Bureau of Circulations, a trade organization that tracks magazine and newspaper circulations, to strengthen its audit practices and censure the newspapers.
Tribune said it was reviewing circulation practices at all 14 of its newspapers.
In addition to the payout to advertisers, Tribune recorded a pretax cost of $17 million, or 3 cents a share, to cut 375 jobs, including 60 at the Los Angeles Times.
Tribune said second-quarter revenue rose 3.2% to $1.5 billion, helped by advertising gains at its newspapers and television stations.
Tribune was forecast to earn 61 cents in a Thomson First Call survey of 18 analysts.
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