WSJ confirms side deals in paid circulation boost at Journal’s Europe edition
The Wall Street Journal
The Wall Street Journal follows the Guardian's story about a circulation scheme at the Journal's sister paper in Europe with its own story confirming many of the details first reported by its competitor. The Guardian's Nick Davies wrote that the Wall Street Journal Europe "had been channelling money through European companies in order to secretly buy thousands of copies of its own paper at a knock-down rate." The Journal describes an "alleged deal to boost the reported circulation numbers of The Wall Street Journal Europe, in which the paper sold bulk copies to a consulting firm and simultaneously directed money to the firm for separate services."
A Dutch company called Executive Learning Partnership agreed to buy heavily discounted newspapers as part of a sponsorship arrangement with The Wall Street Journal Europe. In addition to the sponsorship, the Journal in Europe also set up a variety of "side deals" with ELP when the company said it was unhappy about the arrangement, the Journal reports.
The Journal quotes ELP partner Nick Van Heck, who says that the company did provide services in exchange for the payments from the Europe Journal. The Guardian reported on the side deals as well, but reported that when ELP threatened to end its sponsorship -- which would cause circulation to drop -- that Wall Street Journal Europe publisher Andrew Langhoff "set up a complex scheme to channel money to ELP to pay for the papers it had agreed to buy – effectively buying the papers with the Journal's own cash."
The Journal confirms the Guardian's reporting that the Europe Journal routed the money to ELP through other companies:
Mr. Van Heck said the billing arrangement was unusual. ELP was asked to "send invoices to different organizations and not to The Wall Street Journal Europe," which he found surprising.
Dow Jones said Wednesday that "the manner in which they [ELP] were paid was admittedly complex but nevertheless legitimate." But the Journal quotes someone at one of the pass-through companies as saying, "I also received from The Wall Street Journal assurances that this would not be made public."
While Dow Jones has said that it terminated the relationship with ELP because it was uncomfortable with the appearance of impropriety, ELP says it's the one that ended the relationship.
While the Guardian reported, based on documents it has reviewed, that The Wall Street Journal Europe also agreed to provide "a minimum of three special reports" featuring ELP, the Journal story describes it as a "pledge of possible editorial coverage." The Journal quotes an ELP statement stating that the company was never promised editorial coverage and that publisher Langhoff emphasized editorial integrity.
The Journal reported earlier that Langhoff had "personally pressured" reporters for stories about ELP; the Europe Journal published two stories featuring the company. Langhoff resigned Tuesday, for what Dow Jones described as a "perceived breach of editorial integrity."
Counting discounted copies
The Journal notes that providing free or discounted copies of newspapers and magazines is not new. Last fall, the U.S. Audit Bureau of Circulation started to count heavily discounted copies sold to sponsors as "verified" rather than "paid." "But the ABC in the U.K. continues to classify bulk sales as paid circulation; for The Wall Street Journal Europe, such deals account for a little over 46,000 of its 74,800 average circulation per issue."
In rebutting the Guardian's story, Dow Jones said in a statement to Poynter, "The Guardian mischaracterizes a former employee as a 'whistleblower.' In fact, that employee was first investigated by the company because of concerns around his business dealings."
The Journal reports that the side deals with ELP were negotiated with Langhoff, The Wall Street Journal Europe publisher who resigned Tuesday, and a circulation employee named Gert Van Mol. Van Mol told the Journal that Dow Jones only started to investigate him after he complained about Langhoff's dealings and the ELP relationship.
The Journal reports that the internal investigation "didn't identify the problems with the editorial component of the ELP deal that led to Mr. Langhoff's resignation. ... Those problems only came to light last week, months after Mr. Van Mol began emailing complaints to Dow Jones executives. That's when the paper re-examined the situation."
The Journal doesn't explain how the issue came to light; the Guardian reports that its inquiries led to Langhoff's resignation.
Crisis management: "News Corp. is still keeping true to its strategy of covering up anything embarrassing until Nick Davies uncovers it, at which point an executive or two is thrown under the bus," writes Felix Salmon. "As a result, the rest of the world is simply going to assume the worst — that anything rumored or imagined is probably true and has just been successfully covered up for the time being." (Reuters)
Part of the business: Jack Shafer notes that the stories in question appeared in a special section, and that many newspapers publish themed sections filled with "soft or backgrounderish copy ... So great is the publisher’s appetite for special sections that if The New York Times could persuade Eukanuba, Purina, and Hartz Ultraguard Plus Rid Worm tablets to take out gigantic ads, it would gladly print a 'Your Dog’s Retirement' section." (Reuters)
PR coup: Ryan Chittum looks through archives and can't find any instance of ELP being cited in a news story besides the two in The Wall Street Journal Europe. (Columbia Journalism Review)