NAA: Congress must stop special postal deal

  • Sep 06, 2012

The Postal Regulatory Commission approved a negotiated services agreement between the U.S. Postal Service and Valassis Direct Mail on August 23, despite opposition from hundreds of newspapers, state and national press associations, its own Public Representative, and many members of Congress.

Under the special arrangement, which is effective immediately, Valassis will receive rebates from 22 percent to 36 percent for “new mail” packages containing advertising inserts from national retailers of durable and semidurable goods. In its decision, the commission said the NSA is “highly contested precisely because it constitutes a price reduction in an attempt to better compete in a marketplace already populated by competitors.” This statement reinforces the commission’s inappropriate position that the Postal Service is a competitor in the advertising distribution market, rather than a government monopoly established to serve all participants in the advertising distribution marketplace in a nondiscriminatory, common-carrier manner.

NAA has filed an appeal with the U.S. Court of Appeals for the District of Columbia Circuit and has filed an emergency motion for a stay of the decision until an appeal can be heard. A decision on this stay request could come by the middle of September.

As we wait for the court’s decision, Valassis is currently using this pricing advantage to sell against newspapers in local markets. This has the real potential of moving advertising inserts from newspapers’ Sunday editions to the mail, and driving away a critical source of revenue that supports the distribution of news and information in local communities. 

We have heard from some in Congress − from both sides of the aisle and in both chambers – who are outraged over this special-rate deal and are concerned that it would cause harm to newspapers’ ability to serve their communities. These policymakers in the Senate and House need your help to build support in Congress for overturning the PRC’s illogical decision. 

Request for assistance

Please contact your senators and representatives and ask them to support legislative efforts to stop this special-rate deal before it causes significant financial harm to local newspapers. Also, please ask that senators and representatives express their support for legislative action with the congressional leadership. The newspaper industry is not requesting special treatment, but asking Congress to prevent the Postal Service – a government enterprise – from providing special treatment to one national direct mailer for the purpose of taking business away from newspapers. 

Below are discussion points that you can weave into an e-mail or phone conversation with your senators and representatives. The Capitol switchboard is (202) 224-3121.

If you have any questions or feedback on your communications, please contact Paul Boyle at paul.boyle@naa.org or (571) 366-1150.

Discussion points

  • The Postal Regulatory Commission – an independent regulatory body – recently approved a U.S. Postal Service proposal that would give one mailer – Valassis Direct Mail – discounts of 22 percent to 36 percent to go specifically after preprinted advertising inserts that are currently in newspapers' Sunday editions.
  • While these special-rate deals, called negotiated service agreements, are allowed under postal law, Congress made it clear that these types of deals should not cause unreasonable harm in the marketplace.
  • This special-rate deal has the potential of diverting up to $1 billion in advertising revenues from local newspapers. Preprint advertising is critical for newspapers to continue providing news and information in local communities.
  • In approving the special deal, the Postal Regulatory Commission said that it would help the Postal Service compete more effectively against others for pre-printed inserts. Unlike UPS and FedEx, newspapers don't compete with the Postal Service. We compete with Valassis and other direct mailers.
  • The Postal Service as a governmental enterprise should serve all mailers in a nondiscriminatory fashion – and not use its monopoly to pick winners and losers in the local competition for advertising.
  • This special deal will do little to improve the financial condition of the Postal Service. Even the Postal Service’s most optimistic estimates are that it would see at most $15 million in profit over three years from this deal, when it is losing billions of dollars annually.
  • This $15 million estimate ignores the fact that the Postal Service will experience massive revenue losses as newspapers – which mail ad inserts to nonsubscribers – pull out of the mail to cut costs to offset declines in ad revenue as a result of this NSA. According to an NAA survey, newspapers throughout the country will reduce their postage bills by $600 million over three years to lower costs in response to this special deal given to their biggest competitor. In short, this NSA will result in the Postal Service hemorrhaging more money, which will deepen the financial crisis for our nation’s postal system.
  • Congress needs to stop this special-rate deal before it causes significant financial harm to local newspapers. We ask that you encourage your colleagues, including those in the House and Senate leadership, to take legislative action to stop this unfair and inappropriate rate deal before it causes harm in local communities.

 

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