Tribune Co. settles false circulation charges


WASHINGTON (AP) – Federal regulators on Tuesday charged big media group Tribune Co. with reporting falsified circulation figures for two of its newspapers in New York. Nine former employees and contractors of the two papers have pleaded guilty to criminal charges related to the alleged scheme.

Chicago-based Tribune, the third-largest U.S. newspaper company in terms of circulation, paid no fine in settling the Securities and Exchange Commission’s charges concerning the two papers – Newsday and the Spanish-language Hoy. Tribune neither admitted nor denied the allegations, brought by the SEC in an administrative proceeding, but did agree to refrain from future violations of the securities laws.

Tribune has set aside $90 million to reimburse advertisers who were overcharged on the basis of the alleged inflated circulation figures.

The SEC accused Tribune of failing to uncover inflated circulation figures at Newsday and Hoy from January 2002 to March 2004 because it lacked adequate internal financial controls. A number of major U.S. newspapers have been accused of or admitted to falsifying circulation numbers in the same time period.

Nine former employees and contractors of Newsday and Hoy pleaded guilty to related criminal conspiracy charges in federal court in Brooklyn, N.Y., six of them last week.

Newsday has acknowledged that, from 2000 to 2004, it inflated its circulation by nearly 100,000 copies on weekdays and Sundays. Hoy doubled its reported circulation, according to federal prosecutors.

The individuals who pleaded guilty included four managers who worked in sales, circulation, distribution and home delivery. Two men who worked for companies that distribute newspapers face four to 20 years in prison.

Three executives who pleaded guilty include Louis Sito, vice president for Hispanic media at Tribune; Robert Brennan, former Newsday vice president for circulation, and Ed Smith, an independent consultant for Newsday circulation.