If you are a registered user please log in to see more postings.
 

The AAO Weblog covers accounting issues and current events as they relate the practice of investment analysis. All posts prior to September, 2007 are in the public domain, but after September 4, only subscribers to The Analyst's Accounting Observer will see all posts going forward. Only selected, occasional posts will be released to the public domain from September 4 forward.

Subscriptions to full posts available for $500 annually.
Tribune: Circulation Scam Settled With SEC
Location: BlogsAAO Weblog (Public)    
Posted by: Jack Ciesielski 5/31/2006 6:04 AM
Yesterday the SEC announced the settlement of charges against Tribune Company, with the firm neither admitting or denying the charges but agreeing to "cease and desist" from such activities in the future.

What activities, you ask?

In 2002 and 2003, Tribune wanted to improve its circulation standing, to attract better-paying advertisers to two of its publications: Newsday and Hoy. Rather than improving circulation by providing content that readers wanted, Tribune made arrangements with news dealers and distribution agents to take papers that they would circulate for free, or not even circulate at all. They'd take back papers as well, but shift the returns into Saturdays, holidays and other days that didn't enter into the analysis of paid circulation by the Circulation Bureau - making their plumped circulation figures look even more valuable to advertisers.

Circulation figures were overstated in 2002 and 2003 for the two papers by 14% to 81%. The sales figures were genuine shams, and had the effect of misstating accounts payable and receivable, as well as revenue and expense figures. The company made misleading presentations to analysts and investors based on the trends presented by the bogus circulation, and ultimately cost the firm $90 million to settle advertisers's claims.

All things are connected, much more than suspected. Tribune ran afoul of the SEC in that the bogus circulation arrangements resulted in filing inaccurate financial statements with the Commission; the firms didn't meet the "accurate books and records" requirements. Whoever dreamed up the bright idea for boosting circulation and ad revenues probably didn't count on that.
Permalink |  Trackback