Circulation Conspiracy?

The Audit Bureau of Circulations (ABC) is a bit of a joke. For those who rely on its figures to make supposedly informed commercial decisions, the joke isn’t altogether funny.

From his home in the heavens, if that’s where he now resides, the departed Marius Jooste can steal a smile. As executive chairman of Perskor in the late 1970s, at the time of Infogate, he presided over the most notorious circulation scandal in South African history. Wanting to inflate circulation figures of The Citizen, then published by Perskor under surreptitious sponsorship of the National Party government’s Department of Information, Jooste had Perskor purchase quantities of the newspaper, which it then dumped in the veld.

Then, as now, the figures were audited alright. Then, as now, a coach and horses could be driven through them. What distinguished the Perskor manipulation was its scale, its lack of subtlety and the outrage which accompanied its exposure. These days the ploys are more subtle, barely scrutinised and apparently sanctioned by the ABC.

But in principle they are little different, and in practice perhaps not too uncommon, for they artificially bolster the ABC certificate. Then the intention was to deceive. Now it has the same effect because the concept of paid sales can include sales for which the reader doesn’t pay.

It works around the corollary that the higher the purportedly paid circulation, the higher the justifiable advertising rate. At least it helps keep newspaper proprietors in denial about their industry’s parlous state.

Dare it be suggested that today there’s a conspiracy of silence, condoned by the ABC? Might it suit the major proprietors, influentially represented on the ABC, to close ranks and shut up? Why are today’s investigative journalists, unlike the vociferous Infogate generation, now so quiet and selective when it comes to their own industry? After all, it’s not that they don’t know about the little wheezes and supposed grey areas.

Take this excerpt from an October 2003 editorial in Business Day: “As newspaper advertising shrinks, so does the newspaper, if it is not to be lured into the many ruses media managers use to ward off the Grim Reaper – selling in bulk to retailers who in return are given free advertising space, or simply trading editorial for advertising. The more it happens, the worse the reputation of the press becomes.”

To keep it hidden is one way not to worsen the reputation of the press. But then it must stay hidden, and nobody must know that it is being hidden. When the ABC asked Business Day to elaborate, the ABC was told in summary to get stuffed. So that’s what the ABC meekly did.

It’s curious that Business Day offered no evidence to substantiate the allegation. If it had no evidence, it’s shameful that the allegation was made. If it had evidence, there was a public-interest duty to divulge it. Either way, an aspersion on the integrity of ABC certificates is allowed to stand.

Put differently, the ABC abandoned a perfect opportunity to explore which newspapers are “selling in bulk to retailers who in return are given free advertising space”; what effect this practice has on their ABC certificates; whether the practice is legitimate in terms of ABC rules; whether any similarly misleading practices prevail, and what steps (such as restatement of relevant ABC certificates) it should take to institute remedies.

Maybe it was just too much bother, in which case the ABC abdicated the responsibility which justifies its existence. Or maybe the ABC saw no contravention of its rules, in which case it applies one standard for its larger media members and another standard for outsiders.

The point is illustrated by a formal complaint lodged with the ABC, some five years ago, by one media conglomerate against another. The two companies owned rival publications. The essence of the complaint concerned a practice whereby the one publication had entered back-to-back deals with certain advertisers.

Instead of the advertisers paying for their advertisements, they were given their advertisements free of charge. In exchange, the amount of money they were to have spent on advertising contracts was paid to the publication for copy subscriptions at a 50% discount on the cover price. This enabled the publication to claim advertising sales (which they were) as copy sales (which they weren’t).

Thus, for the advertisers and the publication, the transaction was revenue-neutral. For the advertisers, it was six of one and half a dozen of the other. For the publication, its ABC figure shot up.

On receiving the complaint, the ABC acted smartly. It extracted an admission from the offending publication that ABC rules had been contravened, forced it to terminate the practice and ensured a downward restatement of its ABC certificate. In doing so, the ABC imposed a condition: that, by agreement, both the complainant and the offending publication would maintain confidentiality of the “settlement”.

When justice is done, it isn’t always seen to be done. Mocking its own “transparency you can see” motto, where justice is done and where it isn’t becomes impossible to establish. Let any ABC member, or the ABC itself, contend that the rules on “bulk sales” aren’t a godsend for widespread abuse latterly refined and exacerbated in the beloved phenomenon of “sponsored copies”.

This isn’t simply a “ruse”, as Business Day would have it. Rather, favouring the bigger abusers, it distorts comparison between rival publications. Worse, it can perpetrate a fraud on advertisers who base their spending decisions on the vital cost-per-thousand measure of paid circulation.

I’m involved in the launch of a new publication. If somebody can tell me where to access reliable like-for-like circulation figures, in order to benchmark advertising rates, I’d appreciate a call.

Allan Greenblo is former managing director of BDFM, publishers of Business Day and Financial Mail, and was a co-founder of Finance Week. He has recently launched Today’s Trustee, a monthly title aimed at facilitating communication between pension fund managers and trustees. Greenblo’s career as a financial journalist began in 1967.

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