Reuters | September 22, 2005
The U.S. Attorney's Office in New York asked for information from Time Inc. on so-called sponsored sales programs, such as courtesy copies of magazines given to doctors' offices or promotional copies for other uses, a source familiar with the matter said on Thursday.
A spokeswoman for Time Inc., which publishes 155 magazines including Time, Sports Illustrated and People, said the company was subpoenaed for information on its circulation practices but could not specify the scope or the direction of the federal prosecutor's investigation.
She added that Time Inc., a unit of Time Warner Inc., was cooperating fully with federal prosecutors.
It was not immediately clear whether Time Inc. was a witness or target of the investigation or whether other publishers had received subpoenas. The U.S. Attorney's office in Brooklyn was not immediately available for comment.
The source said that sponsored sales programs account for about 5 percent of Time Inc.'s rate base, or circulation guaranteed to advertisers. The source also noted that some of the company's magazines have no sponsored sales programs at all.
Under circulation rules, sponsored sales programs must be specified as such within its stated rate base.
Several publishers were found to have overstated their circulation figures. These include Belo Corp.'s Dallas Morning News, Hollinger International Inc.'s Chicago Sun-Times and Tribune Co.'s Newsday from Long Island.