The Audit Bureau of Circulations is facing a crisis of confidence following Trinity Mirror revelations that circulation figures for three of the group’s publications have been overstated for up to six years.
During that time, the regional newspapers concerned – the Birmingham Evening Mail, The Birmingham Post and the Sunday Mercury – have all been subjected to several random inspections by teams of ABC auditors. The last visit took place three months ago. ABC auditors failed to detect the alleged exaggeration revealed by Trinity Mirror in a statement to the Stock Exchange on November 4.
The board of Trinity Mirror estimates that over the nine half-yearly ABC reporting periods since June 1995, the actual circulation figures were about 17 per cent less than the stated ABC figure. In the case of The Birmingham Post, the figure is nearly ten per cent.
ABC director of consumer press Julie Ferguson says: “They were inspected in the past three months. There were a number of things picked up that weren’t being conducted satisfactorily, but they weren’t things that would have exposed this apparent problem.”
The period in question dates back to when the titles were owned by Midland Independent Newspapers, which was acquired by Mirror Group in 1997. Mirror Group merged this July with regional newspaper publisher Trinity to form Trinity Mirror.
Trinity Mirror claimed in its Stock Exchange statement that the irregularities which were uncovered – following an internal review with its new auditors Deloitte & Touche – were “part of a systematic process in Birmingham to overstate ABC circulation figures”.
Apart from when changes in ownership occur, circulation figures are audited on a six-monthly basis by either ABC auditors at the request of the publisher or by the publishers’ auditors which are trained by and are considered to owe a duty of care to the ABC. The ABC is now in the middle of its own investigation into the circumstances surrounding the apparent irregularities.
On its own admission, the ABC is only entitled to have access to records that relate to the last return – covering the period January to June 1999 – which was audited by Mirror Group’s then auditors PricewaterhouseCoopers.
Ferguson says: “We don’t have the right to inspect anything further back than the last set of returns and that is what we will be doing to give the industry a figure it can realistically work from.”
Pending the outcome of its investigation, the ABC – in agreement with Trinity Mirror – has suspended all the Certificates of Circulation relating to the titles concerned.
A new deputy managing director and a circulation director have been appointed by Mark Haysom, managing director of Trinity Mirror subsidiary Birmingham Post and Mail. They will replace circulation director Ian Hinton, who has left the company following the discovery of the irregularities.
In a statement, Chris Oakley, chief executive of Regional Independent Media, who was chief executive of Midland Independent Newspapers at the time of its sale to the Mirror, says: “I have asked for, but still not yet seen, any of the evidence on which Trinity Mirror has based its allegation. Therefore I cannot comment.
“I can say that under no circumstances would I have had any part in action outside the ABC rules to inflate sales figures. Nor would I have condoned such action by anyone else within the Midland Independent Newspaper Group.”
Former circulation director of MIN Neil Jagger, who left the company three months after the Mirror takeover in 1997, is now circulation director of the Evening Standard. He has been unavailable for comment.
The ABC investigation has been welcomed by other regional newspaper publishers.
Tony Witts, managing director of the Wolverhampton Express and Star, says: “What has happened is very damaging to the credibility and reputation of the regional press.
“We hope, however, that it will lead to stricter rules governing the reporting of circulation figures.”
Manchester Evening News managing director Ian Ashcroft adds: “Clearly this was difficult to find. We need to improve what we do.”
Ray Kelly, chairman of the media policy group for the Institute of Practitioners in Advertising, agrees. “It’s fairly obvious some changes are needed.”
The ABC has been described by one press buyer as the “healthcheck of a title” and it is one of the key factors which drive the decision to book advertising. For that reason, the IPA’s media policy group has called for “appropriate compensation” for advertisers.
Kelly comments: “Compensation should be in line with circulation shortfall going back over the period in question.”
So far, Haysom has written to about 6,000 advertisers (MW November 11) offering a freeze on ad rates until January 2002 on The Birmingham Post, Birmingham Evening Mail and Sunday Mercury. He is also offering a ten per cent discount on all ads booked throughout next year in those titles.
Trinity Mirror has made provision for a liability of up to &£20m, but it expects the true cost to be nearer &£5m. In any event, the group will no doubt consult its lawyers upon possible avenues of recovery.
A Trinity Mirror spokesman says: “We are working with advertisers looking at their particular situation.”
He claims that readership figures have remained relatively stable, and adds: “Advertisers haven’t been disadvantaged because readership demonstrates the shape of the business – independent of circulation figures.”
MediaVest client services director Nigel Conway says: “In the future, we have to ensure the ABC is acting in its role as a guardian because agencies are trading on that data.”
Mediacom TMB press director Steve Goodman comments: “People use both sets of figures – ABC and readership. Readership figures are used more to plan a combination of titles rather than buy an individual title.”
It will be some weeks before the ABC is able to provide buyers with new sets of circulation figures. But it will be even longer before its rules are changed to prevent the same thing happening again. Even then, there is no guarantee the new rules will not be abused.