Progress seen as Newsday emerges from scandal

75% of largest advertisers have accepted rebate offer

December 09, 2004|By James T. Madore | James T. Madore,NEWSDAY

NEW YORK - Newsday's parent told stock analysts yesterday that the newspaper has made progress recovering from its circulation scandal, with more than three-quarters of the largest advertisers accepting rebate offers.

Tribune Co. executives reported that Newsday has settled with more than 20,000 of the 40,000 advertisers harmed by its inflated circulation numbers. They said among those accepting restitution offers and waiving their right to sue the paper are more than 75 percent of the 350 largest accounts, including the 10 biggest.

"I would say we are very encouraged with the dialogue with key advertisers," said Scott Smith, incoming publishing division president. "How long will it take to generate robust ad revenue? It's too early to give you a clear sense."

At dueling Media Week investor conferences in Manhattan, Tribune chief executive Dennis FitzSimons said the $90 million set aside this year to pay rebates to advertisers of Newsday and the Spanish-language daily Hoy, which also inflated its circulation, "will be adequate."

FitzSimons also said Newsday was moving quickly to repair "frayed relationships with advertisers." In an interview, he said the paper had experienced "no ad dropout" because of the circulation scandal.

Circulation didn't dominate the question-and-answer period the way it had at a similar meeting last summer. And Tribune officials repeatedly emphasized that the fraud discovered at Newsday and Hoy hadn't been replicated at the company's other dozen papers. FitzSimons said 16 employees had been fired because of the scandal.

This week, Tribune appointed Vincent Casanova to the new job of circulation vice president in the publishing division. He had been circulation chief at the flagship Chicago Tribune and corporate audit director. His appointment was listed yesterday among the corrective actions taken in response to the circulation problems.

The company also has slashed expenses at Newsday and the Los Angeles Times by $50 million a year through a host of measures including job cuts.

At Newsday, 100 positions are to be trimmed from a payroll of 3,000 through either voluntary buyouts or layoffs. In the editorial department, where half of the reductions are expected to occur, top editor John Mancini said last night in an e-mail to employees that "the buyout deadline has passed and it is clear now that we will not have layoffs in the newsroom."

Company and union officials said they would know later in the week about whether layoffs would be required in other departments.

Separately, a new selling strategy for the Los Angeles and Chicago editions of Hoy was unveiled yesterday. Both will be given away for free beginning next month, after months of charging a cover price of 25 cents. The change doesn't affect the paper's New York edition.

"Our goal is to maintain flexibility and respond to reader and advertiser demand in a cost-effective manner," said Hoy publisher Digby Solomon Diez.

Copies will be distributed to homes in Hispanic neighborhoods, restaurants, vending machines and stores.

Newsday is a Tribune Publishing newspaper.

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