(Updates with Guardian response in third paragraph.)
Oct. 13 (Bloomberg) -- News Corp. denied allegations that the Wall Street Journal Europe inflated circulation and the resignation of the newspaper’s publisher was related.
Andrew Langhoff resigned this week as publisher of the Journal’s European edition because of a perceived breach of editorial integrity, said Kate Dobbin, a spokeswoman for New York-based News Corp.’s Dow Jones & Co. She said his departure wasn’t linked to allegations about inflated circulation reported in London’s Guardian newspaper.
The Guardian’s story is “replete with untruths and malign interpretations,” Dobbins said. “We stand by our story completely,” the Guardian said in an e-mailed statement responding to the WSJ’s denial.
The Guardian reported yesterday that the European Journal’s relationship with a sponsor, Executive Learning Partnership, or ELP, was part of a broader effort to inflate circulation figures. Langhoff stepped down on Oct. 11, citing an editorial arrangement with ELP that could be viewed as undermining editorial independence. His e-mail to employees didn’t reference any circulation issues.
Langhoff arranged to funnel money to third parties to reimburse Netherlands-based ELP for buying copies of the Wall Street Journal Europe, the Guardian said, citing internal e- mails. ELP was responsible for 16 percent of the Journal’s European circulation, about 12,000 copies a day, and was paying just 1 euro cent per copy, the Guardian said.
News Corp. started with a promotional program, through which sponsors including ELP paid a discounted rate for newspapers and distributed them to students. In return the sponsors’ names were published in the Journal, the Guardian said. The Audit Bureau of Circulation in the U.K. ruled that the program, which accounted for 41 percent of the European Journal’s daily sales, was legitimate, the Guardian reported.
“If at any time a complaint is made about a member, we have strict, industry-agreed procedures in place to investigate such claims,” Richard Foan, ABC’s group executive director, said in an e-mailed statement. “These complaints are strictly confidential until a decision has been reached and upheld.”
Archived and current complaints are available on the ABC website, the group said in the e-mail. The Wall Street Journal is not listed in any of the complaints currently online.
ELP did not immediately respond to a request for comment.
The Guardian reported yesterday that after ELP became unhappy with the arrangement, Langhoff helped keep it going by setting up side deals that channeled cash to the Dutch company through third parties.
The Wall Street Journal, citing people familiar with the matter, said a circulation employee, Gert Van Mol, helped Langhoff set up the side deals and was fired after an investigation.
In a statement, Dow Jones called the payments “admittedly complex but nevertheless legitimate,” and said the publisher terminated the arrangement, the Journal reported.
ELP disputed Dow Jones’ account, calling it “contrary to the facts,” the Journal reported. “ELP stopped and ELP is not pleased that our name appears in this context,” the newspaper said, citing the company.
Bloomberg LP, the parent of Bloomberg News, competes with News Corp. units in providing financial news and information.
Dow Jones ended its business arrangement with ELP “because Dow Jones has zero tolerance for even the appearance of a breach of ethical standards,” Dobbins said in an earlier statement.
Langhoff, 49, cited a possible perception of impropriety involving two articles that originated with ELP, according to his e-mail to employees, a copy of which was obtained by Bloomberg News this week and confirmed by Dobbin.
“Because the agreement could leave the impression that news coverage can be influenced by commercial relationships, as publisher with executive oversight, I believe that my resignation is now the most honorable course,” Langhoff wrote.
The business deal that Langhoff cited was handled by another employee who is no longer with the company, according to his e-mail.
The Wall Street Journal Europe printed a clarification at the top of the two articles, both of which mentioned Executive Learning Partnership, on its website. The explanations say the stories were written in connection with a deal between the circulation department and the partnership, or ELP, that wasn’t disclosed to readers.
“The impetus for writing the article was the agreement, but the reporting and writing were solely the responsibility of the News Department with no input or review prior to publication by the Circulation Department or ELP,” the clarification reads.
Langhoff, who joined the Dow Jones in 2003 as general counsel for its Ottaway newspapers division, said he had already planned to leave his position at the end of the fiscal year and return to the U.S. from London.
News Corp. faces a U.K. parliamentary probe of phone hacking at one of its London newspapers. After closing the News of the World tabloid following the hacking scandal, News Corp. formed a Management and Standards Committee to investigate the company’s three other British newspapers, it said in a filing.
New Corp. Probes
Les Hinton, former executive chairman of News International and former chief executive officer of Dow Jones, will be questioned by the U.K. House of Commons Culture, Media and Sport Committee on Oct. 24 as part of its investigation into the scandal.
The company will begin a search for Langhoff’s successor. Kelly Leach, senior vice president and head of strategy for Dow Jones, will manage EMEA operations in the meantime, the company said in a statement.
--Editors: Peter Elstrom, Anthony Palazzo
To contact the reporter on this story: Edmund Lee in New York at firstname.lastname@example.org; Amy Thomson in London at email@example.com
To contact the editor responsible for this story: Peter Elstrom at firstname.lastname@example.org