Leading Melbourne real estate agents repeatedly warned Fairfax management of distribution problems with its flagship real estate publication the Melbourne Weekly, before finally jumping ship to start a rival masthead run by former Age property editor Antony Catalano.

Correspondence obtained by Crikey shows an extended back-and-forth between leading agents and Fairfax management over distribution problems with the magazine, which last year failed to arrive on some eastern suburbs doorsteps for months.

One agent wrote last October:

“I am writing to you out of sheer frustration and to express our continuing dissatisfaction with the Melbourne Weekly.

“As stated previously to you and your colleagues, we feel that the Melbourne Weekly‘s distribution is bordering on fraudulent; we are getting multiple complaints from clients on a daily basis stating that they are not receiving, nor have received the Melbourne Weekly, or if they have they are only receiving it spasmodically.

“We are finding it increasingly difficult to represent the Melbourne Weekly as a credible medium for our clients.

“Your assurances as to rectifying the issue through a change in distributor has not achieved the desired outcome and the feedback from my colleagues is the worst that anyone can ever remember.”

In the letter, the agent, who still spends about $5 million a year with Fairfax, demands that the company release printing and distribution invoices to prove the audited circulation figures of 115,091 for the Melbourne Weekly could be backed by hard data.

Fairfax refused to release the invoices, pointing agents instead to the Circulations Audit Board figures for the period Oct 2008 to March 2009. Audited figures for April to September 2009 were promised, but have yet to be received. The Melbourne Weekly’s website, which lists the circulation figures, still references the old data.

After news of Catalano’s venture broke, Fairfax Community Newspapers Victorian general manager Colin Moss described the circulation complaints as a “smokescreen” for the agents’ quest to start their own publication and keep advertising profits for themselves.

The revelations come in the lead-up to the launch of the as-yet unnamed competitor to the Melbourne Weekly published by Catalano and partly owned by himself, Kay & Burton, Jellis Craig, Marshall White and Bennison Mackinnon. This week, Catalano’s vehicle MMP Holdings recently issued shareholder notices to change the firm’s ownership structure with Hocking Stuart, Woodards, Buxtons, Fletchers, Noel Jones, TBM and Gary Peer and Associates all securing stakes. This week, three additional firms joined up to take the number of agent shareholders to more than 20.

Despite abandoning the Melbourne Weekly, the agents are in a tricky situation because they retain a significant commercial relationship with Fairfax. Many still pay Fairfax millions of dollars to run their ads in Saturday’s Age — making them the largest bloc of Age advertisers and effectively subsidising part of the journalism that draws in readers.

Distribution problems with the Melbourne Weekly have been festering for years. Correspondence from April 2008, also obtained by Crikey, says that a $13,000 spend with the publication failed to bear fruit after copies of the magazine failed to be delivered to the vendor’s door. After complaining to the agent, the vendor received a $2,000 credit from Fairfax.

In a angry letter the agent stated:  “We are taking this matter extremely seriously… something needs to be done to resolve this issue because our vendors are spending large amounts of money with your company and are not receiving the results they are seeking due to the inconsistency of the distribution of your magazine.”

Crikey understands that other clients, following complaints to the Melbourne Weekly, had their accounts credited and were provided with free ad space, after reporting that the publication, which brings in about $10 million in annual profits for Fairfax, was nowhere to be seen.

Under federal law, the Australian Competition and Consumer Commission can investigate claims of misleading circulation following the receipt of a complaint. The practice of printing less copies of a publication than the claimed circulation to save money, known as “Swiss cheesing”, is believed to have been rife in the industry for years. Last year, the ACCC alleged that printing company PMP, led at the time by former Fairfax executive Brian Evans, charged its customers for delivering junk mail that never made it to household letterboxes.

Fairfax recently switched its distribution company from Salmat to Fermax, in which it has a 50% stake, following concerns the publication wasn’t being delivered to homes in large tracts of Melbourne’s leafy east, which contains the bulk of the city’s blue chip property portfolio.

There is evidence that pressure is beginning to mount inside Fairfax over the immediate future of the Melbourne Weekly.

Last week, editorial write-ups were removed for Catalano’s four founding agents — under long-standing commercial arrangements, the publication provides guaranteed editorial with the purchase of certain size ads. Last week, Fairfax distributed an email to Catalano’s gang of four, saying they could no longer guarantee the service.

On Monday, Fairfax distributed about 20,000 copies of the Melbourne Weekly to Age home delivery subscribers, with many receiving the hefty 224-page publication twice. Age subscribers in Fitzroy and Collingwood also received the magazine, despite real estate ads for those areas not being included.

Meanwhile, Crikey understands that Fairfax has asked The Age’s talented art director Bill Farr to redesign Melbourne Weekly in a last ditch attempt to save face.

Fairfax did not respond to Crikey‘s queries before deadline.