Rosie trial focus to shift to magazine sales practices

By Advocate.com Editors

Originally published on Advocate.com November 06 2003 1:00 AM ET

In the courtroom battle between Rosie O'Donnell and her ex-magazine publisher, the comedian has been depicted as an obscenity-screaming "uber bitch," but O'Donnell is expected to fight back with some name-calling of her own, accusing the publisher of finagling circulation data. O'Donnell's attorneys are to begin presenting their case in the much-publicized breach-of-contract lawsuit later this week or next, after her former business partner, Gruner + Jahr USA Publishing, wraps up its presentation. Each side is suing the other over the demise of the short-lived Rosie magazine.

While the case has largely focused so far on whether O'Donnell was a fickle star who had to have her own way, her attorneys are expected to focus their case on the magazine's circulation data. They have already issued pretrial statements accusing G+J of improperly boosting newsstand sales estimates for the magazine. G+J denies the allegations. O'Donnell's lawyers contend G+J inflated estimates of the magazine's newsstand sales by more than 40% in the first half of 2002 as a way to keep O'Donnell from walking away from the joint venture because it did not meet financial targets. G+J, a unit of German publisher Bertelsmann AG, already has acknowledged its preliminary estimates for the magazine's sales during that period were "aggressive." But G+J says it did nothing improper and that its overall circulation data in 2002 were well within the variance permitted by auditors.

G+J is seeking $100 million from O'Donnell, saying she walked away from their joint venture, while O'Donnell has countersued for $125 million, saying G+J took away her editorial control. G+J attorney Marty Hyman depicted O'Donnell in court last week as "a celebrity who became addicted to getting her own way." He said O'Donnell "went from being warm and fun-loving on TV to an 'uber-bitch.'" O'Donnell's attorney did not deny charges that her client was difficult and said the magazine knew that when they signed the deal with her.

While circulation may be an arcane subject, it is the lifeblood of magazine publishers, as it determines the rates magazines can charge for their advertising. The preliminary sales numbers put forward by publishers in their filings to the Audit Bureau of Circulations, the industry's official auditor, often are at odds with those later reported by the ABC. Industry experts say publishers have long reported inaccurate sales data, although their errors are not necessarily deliberate. Still, experts say the issue is getting more attention as advertisers tighten their purse strings and look more closely at publishers' sales claims. "It's always been an issue," said Lisa Granatstein, an editor at Mediaweek. "But it really depends on the motivations--it can just be overestimating, and sometimes publishers underestimate, although rarely."

This isn't the first time G+J's sales figures have been scrutinized. The publisher previously came under fire from advertisers for circulation discrepancies at teen magazine YM. Whatever the Rosie trial's outcome, the dispute shows that publishers' sales estimates are often not precise, said Greg Jones, president of consulting firm Granite Bay Media. Sales of consumer magazines such as Rosie--known as "checkout titles" because they are often sold at supermarket checkout counters and newsstands rather than through subscriptions--can be particularly hard to gauge, he said.
It can take months to determine how many copies of a magazine actually were sold because vendors must send back the unsold copies, which then are taken to warehouses and registered as returned, he said.