NEW YORK — It turns out Gruner + Jahr isn’t the only publisher with circulation problems after all.

When G+J revealed in January that large portions of most of its magazines’ subscriber rolls had been disqualified by auditors, the company’s history of circulation shenanigans made it easy to believe it was just more of the same. G+J sympathizers, however, insisted the publisher was merely patient zero in what would turn out to be a wider outbreak.

Now the evidence is beginning to suggest the sympathizers might be right.

At a meeting last week, the board of the Audit Bureau of Circulations voted to censure EBSCO Consumer Marketing Services for improper recordkeeping. EBSCO is one of the country’s largest subscription agents, serving major publishers including Time Inc., Hachette Filipacchi Media and Condé Nast Publications (a unit of Advance Publications Inc., parent of WWD).

ABC president Michael Lavery declined to comment further on the reason for the censure, but a consumer marketing director said EBSCO was found to be categorizing sponsored subscriptions incorrectly, labeling them as individually paid at the request of publishers. “If a publisher said, ‘Can you do this?’ they would do it,” said the source.

It was a similar arrangement that led to Synapse, a subscription agent owned by Time Warner, being censured by ABC last summer, in a move connected to ABC’s decision to reclassify 20 percent of PC Magazine’s subscription file as unpaid. ABC’s board voted to lift the sanctions on Synapse at last week’s meeting, approving the “corrective actions” since taken by the agent.

Several circulation experts said they believed the EBSCO revelations would lead to more magazines having portions of their circulation claims disallowed. Spokespeople for Time Inc. and Hachette both said their companies do not participate in the programs that resulted in EBSCO’s censure, while a spokeswoman for Condé Nast declined to comment.

In another sign of possible trouble, Lavery revealed that the 2003 audits of 17 magazines have yet to be completed more than 14 months after the fact, despite ABC’s stated goal of reducing audit times to six months. “They’re being held up while ABC awaits documentation from agents providing information with respect to subscription order payment,” said Lavery. “There are a fair number of them open with respect to June 2004 for the same matter.” 

This story first appeared in the March 11, 2005 issue of WWD.  Subscribe Today.

It was a lack of documentation that led to the disqualifications at G+J, which resulted in five of the company’s six titles missing their circulation guarantees in 2004. In that case, the agent responsible for the unverified subscription orders was Publishers Communications Systems, a smaller agent that has not been censured by ABC. G+J has sued PCS for fraud and breach of contract over the dispute. PCS filed a motion to dismiss some of the suit’s claims on Feb. 28, and G+J has yet to respond.

In a move clearly intended to call to mind G+J’s history of circulation problems, a PCS spokeswoman said Thursday that the subscription agent had retained Lorna Schofield as a legal consultant on the suit. Schofield, of the New York law firm Debevoise & Plimpton, represented Rosie O’Donnell in her 2003 law suit against G+J, a suit that hinged on allegations that the publisher intentionally misreported the circulation of Rosie magazine.

After the conflict between G+J and PCS went public in January, Chip Block, vice chairman of the subscription agency USA Pubs, predicted other publishers would experience similar difficulties with their audits. “This is not just a G+J problem,” he told WWD.

In a sign of how sensitive the circulation issue is for much of the industry, several magazine company executives subsequently called Block and threatened to withdraw their business from USA Pubs if he made similar comments again, according to two sources. Asked about the threats, Block declined to comment.

load comments
blog comments powered by Disqus