Hoy, Newsday & Tribune Adjust Circulation.

According to the NY Post, Newsday parent Tribune Company said the paper will reduce its daily circulation by a whopping 40,000 copies, or 6.9 percent, and its Sunday circulation by 60,000, or 8.9 percent.

Newsday, where circulation has been flat over the past three years, may have to rebate as much as $42 million to advertisers for failing to deliver the readership promised.

Newsday also expects to lower its circulation figures for the most recent six-month period that ended March, further deepening its circulation crisis.

Newsday put Robert Brennan, its vice president of circulation, on leave while it continues to investigate the circulation practices. A spokesman didn’t return calls seeking further comment.

The paper, which bases its ad rates on circulation, averaged 579,729 daily and 671,819 on Sunday for the six-month period ended September 2003, according to its report to the Audit Bureau of Circulations. Those numbers will change.

The disclosure comes just days after another major newspaper, the Chicago Sun-Times, admitted it had inflated circulation over the past several years. Advertisers yesterday sued the Chicago paper’s parent for allegedly hyping circulation.

The Sun-Times’ bombshell follows an even larger and separate accounting scandal involving the paper’s parent company, Hollinger International, and its former CEO Conrad Black.

Newsday also faces a $100 million class-action lawsuit from a group of angry advertisers claiming that Newsday defrauded them by fudging its circulation.

Newsday said it’s eager to clear up the problems over its circulation.

“We take these matters very seriously,” said Newsday Publisher and CEO Raymond Jansen. “Once these discrepancies were brought to our attention we moved quickly to correct the situation and are instituting new policies and procedures to prevent it from happening again.”

Newsday, whose circulation practices are also being probed by federal prosecutors, admitted that it improperly counted some copies of the paper as paid circulation when in fact they were distributed for free as part of a promotional home-delivery program.

The paper also blamed “inadequate record-keeping” at one of its outside distributors for its inability to verify certain single-copy sales.

Tribune said its problems with inaccurate circulation also extend to its emerging Spanish-language daily Hoy, which publishes editions for New York and several other major cities.

Hoy, which averages 92,604 daily and 33,198 on Sunday, will cut its figures by 15,000 and 4,000, respectively. Industry sources said Hoy is a drain on cash flow and hasn’t reached profitability since its 2002 launch.

Newsday said it has been working on the circulation controversy since February with the audit group, which tracks newspaper figures.

Earlier this year, the U.S. Attorney for the Eastern District of New York launched an informal inquiry into Newsday’s practices after a group of its advertisers filed the $100 million class-action suit accusing Newsday of fraud, claiming Newsday dumped unsold copies claiming them as true circulation.