Newsday Execs Plead in Circulation Scandal

Some former top execs at Tribune's (TRB) Newsday and Hoy newspapers pleaded guilty in a circulation-fraud scheme at the publications.

Defendants pleading guilty included Louis Sito, a former vice president of Newsday and Hoy's former publisher; Robert Brennan, Newsday's former circulation director; Richard Czark, Hoy's former senior vice-president for circulation; and Ed Smith, Newsday and Hoy's former liaison to the Audit Bureau of Circulations.

The pleas come in an ongoing probe of circulation-padding at the newspapers by the Securities and Exchange Commission and the U.S. attorney for the Eastern District of New York. Nine workers and contractors at the papers pleaded guilty in the case, the authorities say.

The SEC also settled its enforcement action against Tribune. Without admitting to any wrongdoing, the company agreed to a cease-and-desist order over its poor internal controls. There was no fine, the company said in a statement.

The defendants were each charged with conspiracy to commit mail fraud based on their participation in a series of programs conducted between 2000 and 2004 deliberately designed to report inflated paid circulation data to the Audit Bureau and through it to advertisers.

In July 2004, the Audit Bureau said it censured Newsday and Hoy, along with Hollinger's (HLR) Chicago Sun-Times, after circulation overstatement findings at the three papers.

The news comes as Tribune plans a sweeping restructuring that will involve a big stock buyback, the sale of some assets and another round of cutting costs.

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