Magazine article Editor & Publisher

Circulation 'Body Fat.' (in Newspapers)

Magazine article Editor & Publisher

Circulation 'Body Fat.' (in Newspapers)

Article excerpt

Like the human body, paid circulation is not all muscle, but, unlike the human body, what constitutes circulation "fat" is debatable.

When it comes to publisher statements and audit reports, newspapers would have advertisers believe fat content is insignificant. Internally, its another story, especially at budget time.

But there are ways to gauge "excess" circulation. The quickest and easiest is to identify nonrevenue-producing paid circulation -- this is not an oxymoron -- and divide it by total paid circulation. A good place to start is employee copies. After all, they are largely redundant, since most papers already claim a large share of employees under home delivery via a payroll deduction of some sort. Claiming them a second time may be a good way to pad paid totals, but it does nothing to serve advertisers or build circulation revenue.

Nonpay copies served to office collect subscribers is another source of fat. These are normally referenced in Paragraph 11 of audit reports as "representing copies served to subscribers that ordered delivery directly with and were billed by the newspaper and for which payment was not received and/ or short term arrears copies served to subscribers whose term has expired."

A friend of mine on a metro paper said his paper includes samples in the Paragraph 11 totals, since they don't exceed the ABC permitted 4% nonpayment allowance. He explained that it was cheaper than paying commissions to outside sales companies for no-good orders. Whether these copies result from subscriber churn, or sampling masquerading as bona fide orders, their essence is fat.

For newspapers with employee rack operations, another form of fat is rack theft. While independent contractors also experience theft, they are generally responsible for paying their bills to the newspaper in full. Newspaper employees who make collections can calculate the amount of theft in dollars and convert the loss to copies. For ABC purposes, allowable rack theft is 25%. In calculating fiat, there is zero tolerance.

Some situations would fall into a gray area where the newspaper would have to assess fat content of some copies. For example, some nonpay dealer accounts may end up as write-offs. Though the newspaper might forgo the revenue, these copies were still paid for by customers. It was the stores that failed to pay their bills. In instances where carriers do their own collections, there may also be write-offs on bills to the paper even though subscribers paid the carriers.

Generally speaking, in calculating Basic Fat Content as a share of paid circulation, it's best to stick with copies not paid for on the customer level. With carriers who make collections or distributors who service racks, newspapers probably will have difficulty identifying nonpay and theft factors. On one audit, I found the loss on employee racks approaching 50% and made appropriate adjustments. The following year the publication switched to independent contractors for servicing racks -- making it difficult to quantify any potential adjustment. Similar difficulties exist with carrier-collect nonpays.

Other nonrevenue-producing copies include: rack theft exceeding 25%, nonpay office-collect subscribers in excess of the 4% allowance, NIE papers not paid for by schools or sponsors, single-copy returns not deducted from gross totals. …

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