Reed Elsevier could face compensation demands from advertisers of at least £125m following admission that hotel and airline directories within its Travel Group had 'drastically overstated' circulation figures for the past six years. As yet, no heads have rolled but a wide-ranging independent investigation both in the UK and USA has been launched by City law-firm Freshfields. RE says it is too early yet to say whether the police will become involved, warning that 'a substantial write-down' is likely although 'a number of months' could elapse before the extent of the overstatement is known. Shares fell by 8% from 49.5p to 536.5p at the news. Compensation talks with the Travel Group's largest advertisers start almost immediately, with RE's fingers crossed that they will accept compensation in the form of discounts on future advertising.