Reed revamps circulation audit and rules out IPC break-up
Reed Elsevier, the publishing group which revealed irregularities in its Travel Group circulation figures two months ago, is to change the firm of auditors it uses for some of its magazines. As Cathy Newman reports, the move coincides with news that Reed has ruled out selling IPC, its consumer magazine division, to consortia or companies intending to break the group up.
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Your support makes all the difference.Reed Travel Group's hotel and airline directories, where circulations were overstated between 1991 and 1996, have been audited by VAC group.
However, following the circulations debacle, which wiped more than half a billion pounds off Reed's share-price the day it was disclosed, VAC will no longer be retained by the Anglo-Dutch publisher. Instead, BPA International, which is based in New York, will now audit the Travel Group magazines.
Reed has appointed a team to investigate the irregularities. They are expected to report on how the company intends to compensate advertisers before Christmas.
So far, Reed has not established the size of the charge needed to cover compensation claims from advertisers. However, City analysts have said the hit could exceed pounds 200m.
The change to the auditing arrangements will be interpreted by many in the City as the first sign that VAC may not have been as rigorous as it could have been in checking circulation figures for the travel publications. Nigel Stapleton, co-chairman of Reed, said at the time the irregularities were declared that he and Herman Bruggink, also co-chairman, would take personal responsibility to ensure that circulation figures for Reed Travel Group were reported "in accordance with the highest standards of the publishing industry".
Neither Mr Stapleton nor Mr Bruggink would comment on the change of auditor last night.
It also emerged yesterday that Reed, which is considering selling IPC, will not dispose of the group to companies bidding in tandem. The move stymies speculation that Kohlberg Kravis Roberts and CINven, two venture capital companies, would launch a joint bid for IPC. Reed has also ruled out selling IPC to groups intending to break it up. That causes problems for dominant consumer publishers such as Emap, which, if it succeeded in a bid, would favour selling off parts of IPC to avoid being hauled in front of the competition authorities.
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