As Crikey has been reporting for the past month, Australian newspapers and magazines are enmeshed in a scandal – the scandal of how they inflate their audited circulation figures in order to fraudulently deceive their advertisers.

But what happens when you’re a reporter on a newspaper or magazine that could be doctoring its own circulation? Can you possibly cover the sham? Will your bosses instruct you to ignore a story that could severely damage their business and reputation? Whose interest are you serving – the reader, the defrauded advertiser or the CEO or proprietor?

Well, to their credit, Neil Shoebridge in the Financial Review, Sally Jackson in The Australian and Julian Lee in The Sydney Morning Herald have been reporting on the circulation rorting raised by Crikey. But we haven’t noticed any teams of investigative reporters being assigned to one of the biggest business fraud stories in years – as it was in the US last year, where leading newspapers which inflated their audited circulations were forced by government authorities to repay more then $200 million to advertisers.

Surely a reputable newspaper or magazine that could be inflating its audited circulation is precisely the one that should be investigating itself – to protect its reputation and integrity? Which is exactly what happened at Newsday in the US – one of a string of American newspapers which last year were exposed as having wildly exaggerated their circulation numbers – and its media reporter James Madore.

Newsday appointed a five-member team to investigate its own paper’s business practices. In Madore’s words, the team discovered that Newsday‘s circulation department was “delivering papers to dead people, construction sites, burned out buildings, people who had never ordered the paper and did not want the paper.” The team’s report last June revealed that Newsday had inflated its circulation by 40,000 copies on weekdays and 60,000 on Sunday – numbers which were later revised to approximately 100,000, or about 15% of Newsday‘s paid circulation.

Read Madore’s amazing story here.

Meanwhile, there are two more reports from the rorts battlefield in Australia:

(1) From Sydney publisher Howard Duncan: “Another circulation booster for newspapers is handing out copies at cinemas. Greater Union has been giving patrons at Double Bay free copies of the Sun-Herald for over two years and has now moved this practice to its new complex at Bondi Junction. I do not know if this service is available at other venues.”

(2) From a Melbourne reader: “Last night I just happened to be in the Melbourne Museum. It was stacked high with free copies of The Age available to all and sundry. You can bet they are not compliments of Steve Bracks.

And it’s no wonder newspapers won’t investigate themselves, if today’s Age is any example:

Today The Age trumpets its new readership figures (that’s a figure taken from an opinion poll of people who tell a researcher they’ve read the paper within the past week, taken from a sample polled by the Roy Morgan organisation), with glowing puff stories on pages 1, 2 and in the business section.

Age readership at highest level in 11 years” is the page-two headline, reporting that the paper’s weekday readership has increased by 27,000 copies – “in sharp contrast, the Herald Sun suffered a further decline, losing 18,000 readers.” The story is accompanied by a graph (right) – “How The Age readership is surging” – which shows a huge upwards arrow indicating The Age, and a downward arrow indicating the Herald Sun.

But nowhere in any of the three stories today does The Age inform its readers of the most significant figures of all:

The Age weekday readership: 730,000

Herald Sun weekday readership: 1,520,000

At the current rate of “surging” Age readership and Herald Sun “decline,” The Age will catch the Herald Sun in 17 years.