WSJ Circulation Scandal: Top Executive Resigns
The top European executive of News Corporation-owned Dow Jones & Co. resigned on Tuesday. Andrew Langhoff was the managing director of Dow Jones in Europe, Africa and the Middle East and the publisher of The Wall Street Journal Europe. A Wall Street Journal article says that Langhoff resigned after an internal ethics inquiry about two articles in the paper’s European edition that were written according to an “agreement the circulation department struck with Executive Learning Partnership, or ELP, a Netherlands-based consulting firm.”
But the Guardian reports that Langhoff resigned in the wake of an inquiry about a circulation scandal at the WSJ. The WSJ allegedly channeled money through various European companies in order to buy thousands of copies of the WSJ for as little as 1 cent. The companies, which sponsored seminars about leadership for university students, were compensated by having their names mentioned in a special section of the paper. The vastly reduced price copies of the WSJ were distributed to university students at no charge to them.
Langhoff is the second top Dow Jones executive to resign in the past several months. Last July, Dow Jones’s chief executive and “lieutenant” to Rupert Murdoch, Les Hinton, resigned in the midst of the initial revelations of the phone-hacking scandal that has since engulfed News Corp.
The circulation scheme carried out under Langhoff was ruled legitimate by the Audit Bureau of Circulation. By 2010, the arrangement provided for 41 percent of the WSJ European edition’s daily sales, for 31,000 copies out of a total of 75,000. But as the Guardian notes:
In early 2010 the scheme began to run into trouble when the biggest single sponsor, a Dutch company called Executive Learning Partnership, ELP, threatened to back out. ELP alone were responsible for 16% of the Journal’s European circulation, sponsoring 12,000 copies a day for which they were paying only 1¢ per copy. For the 259 publishing days in a year, they were sponsoring 3.1m copies at a cost to them of €31,080 (£27,200). They complained that the publicity they were receiving was not enough return on their investment.
On 9 April 2010, Andrew Langhoff emailed ELP to table a new deal, explaining that “our clear goal is to add a new component to our partnership” and offering to “provide a well-branded showcase for ELP’s valuable services”. On 30 April, ELP agreed to continue to sponsor 12,000 copies at the same rate. But that deal included a new eight-page addendum, which the Guardian has seen.
According to that addendum, the WSJ agreed to provide ELP with free advertising; both companies also agreed to organize more workshops and seminars about ELP’s concerns (in a case of business pushing its way into students’ undertakings?). Langhoff also said that the WSJ would publish “a minimum of three special reports,” to be based on surveys of the European market that ELP, with help from the WSJ, would run. It is these “special reports” that Langhoff says he is resigning about “because the agreement could leave the impression that news coverage can be influenced by commercial relationships.”
News Corp. has been having other struggles in the circulation figures for its media holdings. On September 28, an advertising executive close to Rupert Murdoch’s Daily said that the iPad-only newspaper is averaging only 120,000 readers a week, which is less than a quarter of the number Murdoch says the publication needs to turn a profit.
One has to wonder whether the university students who received one of those thousands of free copies of the WSJ’s European edition actually read, or even opened, the papers. Certainly most of my students are little likely to read a print newspaper, though they do expect their news to be delivered for free (so they would be very unlikely to subscribe to a digital paper such as Murdoch’s Daily).
Murdoch himself is to give a keynote address on the second day of a national education summit, the National Summit on Education Reform 2011: Education Everywhere in San Francisco, that is being convened by Jeb Bush and starts tomorrow, October 13. Murdoch is to speak about the power of technology to transform education. It seems fair game to wonder not only if summit attendees might be receiving a “complimentary” copy of the WSJ, but if Murdoch’s remarks might be informed by the revelations of the past few months, in which the tools of technology have been used to” transform the media industry, though in ways that are casting a dark shadow over all of Murdoch’s media empire.
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