An internal investigation by Belo Corp. has uncovered practices and procedures that led to an overstatement of circulation at the media company's flagship newspaper, The Dallas Morning News.
Dallas-based Belo said Thursday that the overstatement will cause an estimated decline in circulation of about 1.5 percent daily and 5 percent on Sunday.
Belo said the largest part of the overstatement found late in July appears to be due to a change made in early 1999 in unsold newspaper returns. The company said those figures rely on reports by contractors that are verified by circulation managers. The company said a circulation sales reward program also resulted in overstatements. That program was discontinued in the first quarter of 2004.
Belo said the investigation is ongoing.
Robert W. Decherd, Belo's chairman, president and chief executive officer, said, "The Dallas Morning News circulation practices must be completely consistent with Belo's uncompromising standards. The Morning News will voluntarily provide fair compensation to its advertisers given the circulation overstatement. We believe the revised circulation figures to be submitted to ABC are a reliable baseline for future Morning News circulation."
ABC refers to the Audit Bureau of Circulation, an organization that monitors newspaper circulation.
A media company's circulation figures are important in the setting of rates for advertisers.
In the wake of the disclosures, Belo said a compensation plan for advertisers will be communicated to them within seven business days. Belo said that at that time the company will disclose the impact on net earnings and net earnings per share in the third quarter of 2004.