From: Staff Notices
Sent: Thursday, 15 September 2005 9:56 AM
To: All_Fairfax_Staff
Subject: Message from James Hooke

Dear Staff

Some of you may have seen today’s Crikey story (Crikey, 14 September) about the circulation of The Sydney Morning Herald and The Sun-Herald. I am sending this email to correct the record as the Crikey story is grossly in error and baseless.

Ernst
& Young audit our circulation figures and have confirmed that these
figures comply with the audit rules. Earlier this year, at the
company’s initiative, KPMG also audited our publisher’s statement to
ensure we were in compliance with the audit rules.

The specific allegations contained in the Crikey story are all factually incorrect.

1.
We have had a commercial arrangement with some Greater Union cinemas
for purchasing our Sunday newspaper since the late 1990s. Other
publishers like News Limited also have had arrangements with cinemas.
Our arrangement with Greater Union has always complied with audit
rules. Crikey’s numbers are grossly exaggerated and the figure quoted
is incorrect.

2. For some years, we have had periodic commercial arrangements with Fitness First for purchasing copies of The Sydney Morning Herald and The Sun-Herald.
All of these arrangements have complied with audit rules. Crikey’s
numbers are grossly exaggerated and the figure quoted is incorrect.

3. We are currently engaged in an industry trial of selling copies of The Sydney Morning Herald and The Sun-Herald through select McDonald’s drive-thrus. This trial includes other papers such as The Daily Telegraph.

4.
Our event sales are well within the 1% permitted under the audit rules
and are fully audited. The City 2 Surf allegation is incorrect: all
copies that will be claimed are within the audit rules. Crikey’s
numbers are exaggerated and the figure quoted is incorrect.

5.
We sell small quantities of newspapers to several businesses and these
sales comply with the audit rules. It does not surprise me that this
report came out a day before a meeting on the audit rules by the Audit
Bureau of Circulation. Please be assured of Fairfax’s full commitment
to improving the audit rules.

James Hooke, Managing Director, NSW
Fairfax Metropolitan, Regional and Community Newspapers

CRIKEY: Yes, but what does this really mean? Here’s what one insider has told Crikey it means:

The question now seems to be the weakness of the audit rules on behalf
of advertisers. If such schemes to launder newspaper sales are so
easily justifiable under the current audit rules this suggests some
changes are needed to make all publishers accountable. Currently the
audit rules are vague at best and you can claim a publication sale for
a charge as little as .05 of a cent.

All
publishers exploit the audit rules to such an extent that the rules are
basically obsolete as there is always a way to get a round them. The
circulation numbers advertisers should ask for are:

1.The number of fully paid subscriptions (fully paid as advertised, not discounted subscriptions or term offers)

2.The number of fully paid casual sales (fully paid as per retails price listed on the cover)

Sit back and watch the squirming begin (not to mention the fraud).