A class action has been filed against New York-area papers Newsday, Inc., and Spanish-language Hoy, LLC, both owned by Chicago-based Tribune Company, on behalf of all commercial advertising customers of the papers who paid for any advertising at rates which were based upon the defendants' representations as to the newspapers’ circulation. The action alleges that the newspapers misrepresented their circulation figures over a period of years, so that advertising rates charged to commercial advertisers were artificially inflated, in violation of New York’s deceptive business practices act. The action seeks unspecified compensatory and punitive damages.

On June 18, 2004, Newsday admitted that it had overstated its circulation in the period ended September, 2003. Newsday's circulation figures of 580,000 on weekdays and 672,000 on weekends were inflated by about 40,000 and 60,000 respectively, according to the paper's statement. In its press release, the Tribune Company also admitted overstatement of circulation of its Spanish-language paper, Hoy, and stated that it is currently auditing circulation divisions in 12 other papers.

In a new development, a grand jury has been impaneled in U.S. District Court in Brooklyn to hear testimony on the alleged frauds. News sources indicate that neither the U.S. Attorney's office nor the IRS, both of which are investigating Newsday's practices, would confirm the existence of Grand Jury proceedings, but at least one subpoena has been issued.

Since first admitting to overstating some circulation (after months of denials), Newsday and Hoy, Newsday's Spanish-language publication, have been censured by Audit Bureau of Circulations (ABC), an Illinois-based organization that authenticates newspaper and magazine circulations for advertisers. It's the first time in decades—possibly the first time in its 90-year history—that ABC has censured a publication. The paper has now admitted that its circulation fraud was more extensive than previously thought, and dates back longer. The internal audit of Tribune Publishing Company, Newsday's and Hoy's parent company, has been extended back to 2001. Tribune acquired both publications in 2000 as part of its purchase of the Times-Mirror Company (former publisher of Newsday and Hoy).

In mid-July 2004, Newsday Publisher Raymond Jansen and Hoy Publisher Louis Sito both "retired." Jansen said his retirement was planned for the end of this year, and he was only moving up the date to help the paper restore credibility. Indeed, Newsday seems to be giving Jansen a red-carpet departure, quoting his claim that the circulation fraud was a "rogue operation" of which he had no knowledge, in addition to running a story on July 21 about his charity work.

Sito isn't getting quite as gentle a send-off as Jansen. In fact, some people believe he's being set up to bear the brunt of blame, along with Brennan. Sito was the driving force behind Hoy, Tribune's Spanish-language daily. Hoy's circulation turned out to be exaggerated by 15%, even more than that of Newsday. Sito's previous experience included a long-term stint at the Chicago Sun-Times, a paper now owned by Hollinger International which has also admitted to circulation fraud in the past few weeks. Newsday's July 20, 2004, story on Sito, widely reputed in the publishing industry to be foul-mouthed and hard-driving, was far less flattering than its coverage of Jansen.

The class action has now been amended to include several new allegations, such as the practice of cheating retailers on unsold copies. Distributors allegedly were forced to dump thousands of unsold newspapers which the paper would then claim had been delivered. Tribune is still denying that any dumping takes place, and Newsday's own investigation did not offer independent reporting on the issue. A search through dumpsters in different towns throughout Long Island allegedly revealed that distributors were dumping not only Newsday and Hoy newspapers, but advertising circulars as well.