To Lose One WSJ Publisher Is a Misfortune. Two Looks Like Carelessness.
Les Hinton, the former publisher of the Wall Street Journal in the U.S., knew about the the circulation scam at the paper's European edition last year and didn't do anything about it, according to The Guardian.
That's an inconvenient piece of information for Hinton, a former News Corp. (NWS) executive who resigned from the WSJ after it emerged that he had also failed to do anything about the phone hacking scandal at the News of the World when he was in charge of News' tabloid division.
Hinton faces a parliamentary select committee in London -- for a third time -- on Oct. 24 in which he will be asked why he appears to have given false testimony to a 2007 select committee investigating phone hacking. Members of parliament will be free to ask him what he knew about the WSJ faking its circ numbers. It could be an uncomfortable couple of hours for Rupert Murdoch's former right hand man.
The circulation scandal, which broke late yesterday with the resignation of WSJ Europe publisher Andrew Langhoff, reveals how feeble the WSJ's foothold is outside the U.S. According to The Guardian:
- WSJ Europe's circulation is just 75,000, smaller than many American local newspapers.
- The circ-boosting scheme -- in which the WSJ paid sponsors to buy its paper at discount rates -- was responsible for 41 percent, or 31,000 copies, of the paper's daily sales.
- One sponsor, Executive Learning Partnership, to whom the WSJ had promised positive coverage in return for its cooperation, was responsible for buying 16 percent, or 12,000 copies of the WSJ's daily circ.
- The scheme was so complicated -- it involved special editions with sponsored coverage and secret payments funneled through third party companies to conceal the fact that papers were being bought that no one was reading -- that Langhoff needed a diagram to explain it to his co-conspirators.
The fish rots from the head: Both WSJ publishers have now been linked to unethical behavior at News Corp.
No one reads the WSJ in Europe: It only sells 75,000 papers across Europe, Russia and Africa.
WSJ publishers ignore reporters who do wrong things: Both Hinton and Langhoff oversaw reporters they knew were engaged in wrongdoing (Hinton arranged a reward package for a reporter who had hacked the phones of the royal family; Langhoff pressured reporters into writing positive articles about ELP). Neither stopped their actions until they were exposed by competing publishers.
WSJ publishers write contracts that require wrongdoing: Hinton approved a contract with royal family reporter Clive Goodman for 243,000 after he was convicted of hacking; Langhoff's scheme included a written contract that promised the WSJ would write articles favoring a sponsor.
Actions have consequences. The last time a major circ scam was uncovered in the newspaper industry, three Newsday executives were charged with fraud and other crimes.
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