The circulation figures of three of the Republic's top women's magazines have been overstated by as much as 30 per cent during the past three years, according to their publisher, Smurfit Communications Ltd.
Woman's Way, Irish Tatler and U Magazine are the publications affected. The overstatement was discovered in February by Smurfit Communications chief executive Ms Norah Casey, who began an internal investigation.
Sales and marketing director Mr Ciaran Havelin and financial controller Mr Glenn Kilroy have resigned from the company. It is not known whether their departures are connected to recent events. Both former executives have agreed with Smurfit Communications not to comment and, in a statement, the Jefferson Smurfit Group Ireland said it was not prepared to comment on who was at fault.
In the past week, Smurfit Communications' management have been in negotiation with advertisers, directly and through their advertising agencies, regarding compensation.
It is understood that most of this will take the form of free or low-cost advertising in future issues.
Smurfit has not subscribed to the Audited Bureau of Circulations, the industry standard for independent auditing of figures for more than four years, so advertisers have had to rely on the company's sales figures.
In the case of Woman's Way, the sales figure was 66,273 issues a week, when the actual circulation is believed to have dipped to around 48,000 in the period under investigation. Prior to the discovery, the glossy monthlies Irish Tatler and U Magazine were sold on the basis of monthly circulations of 20,410 and 20,643 respectively.
A Smurfit spokeswoman said the overstatement in figures varied from year to year and from title to title but averaged in the region of 20 to 30 per cent over the period.
Smurfit Communications is a Dublin-based publishing division of the Jefferson Smurfit Group. The three magazines are printed by another Smurfit company, Smurfit Web Press, and, as circulation figures are usually closely related to print figures, it is not clear why it took so long for the overstatement to be noticed.
Separated accounts for the subsidiary are not lodged with the Companies Office. They are consolidated in the figures published for Jefferson Smurfit Group, which irrevocably guarantees all liabilities for Smurfit Communications.
It is understood that a particular aspect of the investigation is focusing on product inserts.
All three titles regularly feature inserts whereby a product, typically a shampoo sachet or similar beauty item, is glued to a page. An advertiser for Woman's Way would normally be asked to supply in the region of 70,000 sachets for weekly inclusion, yet it appears that at times only 70 per cent of these would have been distributed.
Circulation figures are one factor that determine whether an advertiser buys space in a magazine. It is a particularly important consideration for advertisers using an insert to give a free trial of their product. That these figures were so overstated over the past three years has been a cause of particular concern to advertisers.
All three magazines have undergone editorial revamps since Ms Casey took over as chief executive two years ago. She took the surprising marketing step of slashing the cover prise of U Magazine by a third in May to €1 to boost circulation.
While price cutting is sometimes a feature of the newspaper industry, the cost of glossy magazine production is usually considered too prohibitive to drastically reduce cover price. Seen in the context of inflated circulation figures, the strategy to quickly boost actual circulation figures makes sense.
All three Smurfit magazines will now be independently audited by the Audited Bureau of Circulation although the first set of ABC figures will not be available until January 2003.
