SEC Initiates Circulation Inquiry
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Circulation numbers of newspapers have once again come under the microscope of the Securities and Exchange Commission, according to a report in The New York Times.
Following the admission of exaggerated sales by Newsday, The Dallas Morning News and The Chicago Sun-Times in recent months, the SEC has sent inquiries to more than six major news organizations in reference to their numbers and practices. Those companies include Dow Jones, Gannett, Knight Ridder, The New York Times Company and The Washington Post Company.
In a statement, The New York Times said it welcomes the “SEC's action because we believe it will help to put to rest any lingering doubts created by the improper actions of a few."
The move by the SEC was seen as more of a fact-finding mission to benefit investors of the publicly held companies and validate advertising rates, according to the report in The Times. Parent companies of Newsday, The Morning News and The Sun-Times have set aside more than $130 million to reimburse advertisers for overstating circulation numbers by tens of thousands of copies each day.
News of the SEC inquiry has the potential to weaken sluggish readership statistics, advertiser sponsorship and investor confidence should other news organizations be found at fault.