PriceWaterhouse Deal Challenges ABC’s Circulation Clout
The cold war between newspaper titans The Los Angeles Times and The Orange County Register has taken an unusual new direction. They have agreed upon a common enemy–the Audit Bureau of Circulations.
The two newspaper organizations, in an unusual challenge to the 85-year-old Schaumburg, Ill.-based ABC, have hired an independent auditor, PricewaterhouseCoopers LLC, to track their circulation on a quarterly basis. Also, they are trying to recruit other newspapers to do the same.
“It’s no secret that we are unhappy with the way we’ve been treated by the ABC and where is it written that there’s only one place to audit?” said Register Publisher and CEO N. Christian Anderson III.
ABC is the final word in counting newspapers. Its semi-annual circulation audits have generated uniform numbers that advertisers use to determine a paper’s marketing reach. It’s also provided newspapers with the basis for bragging rights (or humiliation). That’s been the case in the circulation wars between the Register and the LA Times’ Orange County edition, where ABC figures have been the measuring stick of who was gaining and who was losing ground with subscribers.
“I would expect the ABC will be aggressive in responding and unhappy with us and they will probably change their position for the appropriate reasons based on the situation,” Register President and COO Ron Redfern said.
It’s a sign of ABC’s clout that the two newspapers felt they could only take the step of hiring an independent auditor jointly.
“Neither the Times nor OCR could do a separate audit on their own and make it stand up with advertisers. But with the two SoCal powerhouses doing it jointly, this is a very strong statement to the industry, to advertisers and to the ABC,” Anderson said.
However, the two papers will also continue to report their figures to the ABC.
ABC President Michael J. Lavery responded matter-of-factly to the Times and Register action.
“We would consider input they or any other member has with respect to our reporting format or qualifications, but we don’t anticipate any immediate action,” he said.
Lavery noted that the non-profit ABC is governed by a board comprised of advertisers, ad agencies and publishers, which determine the industry standard that works best for them. Advertisers need to know that they are paying for space in a vehicle that is read by consumers, he said.
The Times recently won a smaller battle with the ABC that allowed it to report sales of its main newspaper bundled with Spanish language newspaper La Opinion. (Times Mirror Co. owns 50% of La Opinion, which will also report its circulation under the new audit conducted by PwC.)
The new guidelines helped boost the Times’ average daily paid circulation by about 1% to 1,078,186 for the six months ended Sept. 30, the ABC report shows.
“Bundling the Times and La Opinion is an excellent example of how creative marketing efforts with complementary newspapers can help build longterm circulation growth,” Times Publisher Kathryn M Downing said in a statement.
Newspaper officials said the new approach began with Downing. She asked Redfern earlier this year about teaming up to hire an independent auditor, but they decided to discuss the subject with other newspaper publishers at an April meeting of the Newspapers Association of America in San Diego.
At the NAA, the Register’s Redfern and Anderson and the Times’ Downing and Robert G. Magnuson, regional senior vice president, sought to convince several publishers including the San Diego Tribune and Los Angeles Daily News to join the independent audit.
Anderson says they are both considering it. Neither the Tribune nor the Daily News could be reached for comment.
However, at least one of the papers that has been wooed by the Times and Register, the Riverside Press-Enterprise, has rejected the idea.
“They want to show bigger numbers,” said Marcia McQuern, president, editor and publisher. “But it doesn’t seem in the newspaper industry’s long-term interest to play games with circulation.”
“It’s a dangerous thing for the newspaper industry to engage in this,” McQuern continued. “The ABC has been recognized forever as keeping the newspapers’ credibility and to choose another organization where you dictate your own rules damages that credibility. For decades, our philosophy has been to build solid circulation that will ring cash registers for advertisers. We haven’t been playing the games with event sales and bonus days that we think hurt the credibility of circulation and raises suspicion for advertisers.”
Anderson noted that the P-E competes against the Times in Riverside County: “Marcia was concerned because she thought it might open the door for the Times to become very creative in discussing circulation and that it would have a negative impact on her newspaper.”
But he suggested the Register was even more vulnerable to the Times’ marketing efforts: “I thought if anyone had something to lose it’s us.”
Both the Times and Register are militant about increasing their reported circulation figures to maintain and attract advertisers.
The newspapers are restricted under the ABC guidelines from using some innovative sales methods and flexible pricing to increase their paid circulation numbers.
Under terms agreed upon with PwC, the publishers will be able to count copies that are sold at a token price when some other item is purchased. For example, papers given to motorists at toll-road booths for a token price will count as paid, whereas ABC doesn’t count them as paid.
Redfern says the ABC’s board crafts rules that “inhibit newspapers from competing effectively with other media who are not hog-tied with regulations.”
The Times and Register were upset because ABC had recently suspended the reporting of event sales in March after advertisers voiced concerns about mass distribution of newspapers at events. The ABC board of directors voted to suspend a policy that allowed newspaper sales tied to events to qualify as paid circulation. Later, in August, it reversed its decision and created a new policy that allows for regulated sales of newspapers at events that include specific pricing guidelines and pre-notification of the ABC which will send auditors to the site.
“Advertisers and newspaper publishers were concerned about use of the policy in ways that were not considered in the spirit of the policy,” said Lavery, adding that both Anderson and Magnuson were on the task force advisory board that helped rewrite the event policy.
The ABC prohibits newspapers from reporting circulation gains derived from selling copies with other products if they do not fall within ABC pricing guidelines.
The reason for the independent audit is to provide advertisers with more detailed reports of the newspaper’s circulation and encourage the ABC to modernize its policies, particularly rules that discourage creative marketing efforts to sell newspapers, Times and Register officials said.
“We intend to get a board of advertisers in our market to sit on an advisory board to review and recommend improvements,” Redfern said.
The new quarterly statements compiled by PricewaterhouseCoopers LLC were released last week, coinciding with the ABC’s semi-annual report. The difference between the PwC figures and the ABC’s weren’t much, although the newspapers expect that gap to widen once they develop new marketing campaigns.
Ironically, the Register wound up with fractionally higher numbers on Sunday by the ABC’s count this time around than by PwC; its daily numbers were a little over 1% higher by the PwC count.
The LA Times’ daily numbers were about 1% higher by PwC’s count for both Sunday and weekdays.
