• by November 13, 2003

In the immediate wake of Gruner + Jahr USA's admission that it knowingly overstated circulation data for Rosie magazine to the Audit Bureau of Circulation, pundits quickly identified media firms and publishers as the parties who would be affected most by the revelation. If an industry giant openly admitted to lying about the information around which the entire business is centered, the pundits speculated, the already contentious relationship between agencies and publishers could only take a turn for the worse.

But hours after Judge Ira Gammerman essentially pronounced the G+J/Rosie O'Donnell skirmish a stalemate on Wednesday ("It seems to me on the issue of damages, neither side has proved any," he said), members of the media community tempered their predictions that G+J's acknowledgement of wrongdoing would have a drastic affect on the interaction between agencies and publishers. Why? To put it simply, agencies had long suspected that publishers were not entirely honest with circulation reports.

"I think that there's a lot of suspicion about circulation numbers," said Debbie Solomon, senior partner, group research director at MindShare Worldwide. "It's not one company or another, just a general suspicion that some publishers are playing games with circulation."

Others felt that since the circumstances surrounding Rosie were far different from those of a typical magazine, one should be cautious in attempting to extrapolate lessons for the whole industry from it. For example, Rob Fydlewicz, vice president-director of research at Carat Insight, noted that the magazine didn't have a long history, and was bound by unique contractual obligations that contributed to the ABC fudging.

Still, there's no question that the trial will have at least some lingering impact. "Print has enough things they are battling against," Fydlewicz continued. "And they have so many strengths, but things like this cast a negative light on the industry and make people nervous. I mean, having Gruner + Jahr executives take the stand and admit to this, it's like the quiz-show scandal."

As for G+J, members of the media community were split on the effect the trial revelations would have on the company's overall business. Solomon said she was inclined to suggest that one bad apple wouldn't spoil the whole bunch, noting that many other G+J publications are "exemplary." Similarly, magazine consultant Rebecca McPheters of McPheters and Co. scoffed at suggestions that the ABC distortions reflect negatively on publishers within G+J's walls as well as the industry as a whole. "I think most publishers can be trusted," she said. "I don't think there's anybody out there who deliberately misrepresents what they're doing."

Nonetheless, McPheters acknowledged the obvious, saying, "It's particularly unfortunate that these people made some decisions that will impact so many others in the business." Added Susan Nathan, senior vice president and director of media knowledge at Universal McCann: "It does bring up a very tricky issue. Are publishers actually being honest with ABC? In effect, we are dependent on their word, because we are dependent on the pink sheet and the pink sheet is only as good as their word." As for possible solutions, she proposed that publishers sign affidavits attesting to their pink-sheet estimates.

Solomon brought up another potentially interesting side issue concerning G+J's commitments to Rosie advertisers. "People are wondering if Gruner + Jahr owes some make-goods, because we now know that Rosie didn't come close to the rate base they were promising." Since Rosie has gone the way of the manatee, make-good ads in that publication are out of the question, but it should be interesting to see how marketers approach the situation.

So after all the sniping, after all the breathless trial accounts that barely registered outside the publishing community, one question remains: why did G+J get into business with Rosie in the first place? One consultant said it wasn't too difficult to predict how the G+J/O'Donnell relationship would end. "Really, how could they have been stupid enough to do this [magazine] in the first place? Her agenda wasn't a secret. The lesson that everybody should take away from this is that if you're going to be in partnership with a celebrity, you better do your due diligence about who that person is and what they represent."