MONEYWEB: Last night we had a fascinating discussion on circulation fraud as it has been perpetrated by members of the Naspers magazines group. And today, just to pick up from the other side, from inside the Audit Bureau of Circulations, Gordon Patterson is the deputy president of the organisation. Gordon, thanks for joining us. Let's just have a look first of all at maybe just recapping exactly what went on. I said last night in a different context that if it happens once, it's an accident, twice is a coincidence, and three times is a trend. And it's been more than three times now in the Naspers Group that they've been fingered for circulation fraud. I'd guess there's a perception coming out of that group that the Audit Bureau of Circulations is singling out Naspers?

GORDON PATTERSON: Well, that could be the perception, but it's obviously not the reality. The Audit Bureau of Circulations have a very even way of looking at all media owners, and I can assure the listeners that that's not the case.

MONEYWEB: Last night Sandra Gordon was explaining to us that there were different issues that had occurred, and we'd like to delve into those in a bit more depth with you. But the real crux is that advertisers pay for sales of magazines, and if magazines are given away for free they're not as happy to pay the same prices. Is there any definition or distinction you can make between the two?

GORDON PATTERSON: Well, I can confirm with you that advertisers certainly are unhappy. There's absolutely no question about that. The Audit Bureau of Circulations figure is, if you like, a guarantee of performance, and when the ABC discovers that a publication or a group has habitually misled advertisers, not only does it affect the credibility of the entire print industry, but it also infuriates the marketers and advertisers. We've seen with not only the publications that were included in the initial circulation fraud, but the subsequent ones that came through a few days ago, when the announcements were made, the advertisers are already furious. And the attempts by Media24 to undermine the judgements of the ABC I think are reprehensible.

MONEYWEB: FinWeek's editor, Rikus Delport, is equally furious. He says that he got permission to do these, what look like real sneaky moves, from the Audit Bureau of Circulation?

GORDON PATTERSON: Well, let me just focus on that for a second, because the Audit Bureau of Circulations, certainly as long as I've been involved in it, is really there just to provide transparency so that people who are in purchasing decisions for print know what they're buying. I have no issue, and the board has no issue, with media owners and publishers getting involved in innovative marketing efforts. The problem comes in when those marketing efforts are not, (a), seen to be marketing efforts, where they're disguised as circulation, which is obviously a no-no, and when advertisers have to pay for that circulation. There is a problem. The publication in particular that you've raised, FinWeek, is a classic example. Their marketing efforts - I'm not going to comment on whether or not I believe that is appropriate for FinWeek to be doing deals with Bicycling or Golf Digest or whatever. That's their business. But people who are in a position where they have to decide whether or not they should advertise in FinWeek or the other titles, should actually know what they're getting. And for each one of those copies that is reflected as being a "sold" copy, the purchaser should have made a decision; they shouldn't have got it free. And that really is the key issue. The other thing is, when you're embarking on marketing efforts, and you're doing it within your own company, it's a lot easier to convince the other party that it's good for them. And the whole issue of intra-company deals or, as I've termed it, boardroom circulation-building, needs to be investigated in a more thorough way. And advertisers should be aware of what proportion of the circulation that they think they're buying is included into this area. I had a meeting with the Marketing Association several weeks ago, and their viewpoint is very clear indeed. They're only interested in net sales and single-copy subscribers. Now that is quite a harsh way of looking at circulation, but it's a very accurate way. And my concern as a media decision-maker is, if Media24 persists in trying to defend what frankly you just can't defend, we're going to have a situation where the marketers say, "Enough's enough". Let's not have any grey areas anymore. We want ABC's numbers to reflect net sales and single-copy subscribers, full stop. And then we'll see a very different landscape.

MONEYWEB: Well, from what Sandra said last night, they're trying to defend the indefensible, because you can't give away copies to university students who might or might not read the magazine, and then claim that they are sales. Or go to a friendly party in the same group and send off copies to their subscribers, unsolicited, and say that those subscribers have also paid for those publications. But where's the argument coming in, because Media24 are crying foul? They say that the ABC is singling them out and in fact they've done nothing wrong.

GORDON PATTERSON: I mean, I can categorically tell you and your listeners that the ABC has not singled them out. And I think that the petty attacks on certain members of the ABC and the chairman, in particular, are equally unacceptable. The ABC in the last few years, under the leadership of Gordon Utian, has achieved more gains and more advances in terms of the structure, the composition of the ABC, than certainly the last two chairmen put together. He's extremely objective and frankly, if anything, on this whole Media24 issue, I can assure you that when this issue was raised there were a number of board members around the table saying that Media24 should be treated like any other publisher caught with their hand in the till. They should be expelled - suspended, expelled, finish and klaar. And had it not been for the pragmatic approach of Gordon Utian, and many other board members, I have to say, that wouldn't have happened. Media24 have been dealt with extremely leniently, their requests to have other publishing companies that they have significant interests in separated out in the problems on their circulation, we accepted. The errors in the classification of their circulation, because there was no evidence to prove any wrongdoing, were also accepted at face value. But I'm sorry, when it comes to the shenanigans, frankly, of circulation within FinWeek, enough's enough.

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