Newsday, Hoy settle circulation-figure probe

Newsday and the Spanish-language publication Hoy have agreed to pay a $15-million fine to resolve a criminal investigation of a scheme to boost circulation figures, prosecutors said Tuesday.

In a statement, the U.S. attorney’s office in Brooklyn said it had decided to drop the prosecution in light of the newspapers’ “acceptance of responsibility for the fraudulent conduct.” It also credited the newspapers with cooperating with the investigation, paying $83 million in restitution and implementing reforms to combat further fraud.

Newsday had acknowledged that from 2000 to 2004 it inflated its circulation by nearly 100,000 copies on weekdays and Sundays. Hoy doubled its reported circulation, prosecutors said.

Chicago-based Tribune Co., which owns both Newsday and Hoy, had set aside $90 million to reimburse advertisers who were overcharged based on the inflated circulation figures. Tribune also owns the Los Angeles Times.

Timothy P. Knight, Newsday’s publisher, president and chief executive, said Tuesday that the newspapers had overhauled their circulation operations since the allegations arose in 2004.

“Over the past few years, we have made comprehensive changes in controls, systems, customer relations, policies and our management team to prevent this from occurring again,” he said.

Nine people have pleaded guilty to participating in the scheme, including vice presidents as well as home delivery and circulation managers. All are awaiting sentencing.