Time to Go Postal Over New Revenue Threat?

By: Lucia Moses

Updated at 1:10 p.m. Eastern Standard Time, Aug. 1

The D.C. power brokers are at work, and newspaper groups are uneasy. No, it’s not another challenge to the FCC on cross-ownership. Trade groups are fretting over possible changes to the United States Postal Service that they believe could threaten a large revenue source for the industry.

Last week, subcommittees of the presidentially appointed commission to review the postal service recommended changes that would give the service greater flexibility to strike rate agreements with individual customers.

Advo, newspapers’ biggest direct mail competitor, has said it wants such a Negotiated Service Agreement (NSA), and newspaper organizations worry that if it succeeds, it’ll let Advo offer better rates to users of newspaper preprints, which account for one-fourth of newspaper ad revenue.

To newspapers, more postal service NSAs would be the latest example of its practice of favoring big mailers in its effort to encourage the use of direct mail advertising.

The recommendation was foreshadowed earlier this year, when the postal service struck its first NSA with Capital One, giving the mailer a volume discount for first-class mail.

Paul J. Boyle, senior vice president for public policy at the Newspaper Association of America, said the NAA was disappointed groups wouldn’t be able to review NSAs prior to approval. The recommendations call for NSAs to be available to “similarly situated mailers.” Whether that rule actually lets newspapers compete on a level playing field with direct mailers remains to be seen, Boyle said.

A subcommittee also recommended expanding the service’s ability to raise rates within certain boundaries, a change that could have plusses and minuses for small newspapers that rely on the postal system for delivery, said Tonda Rush, public policy director for the National Newspaper Association (NNA). The association is representing many of those papers.

For NNA members, rates have always been a chief concern. Since the postal service started charging for in-county mail delivery, papers have sometimes faced steep increases for in-county delivery. “Our newspapers are captive mailers,” Rush said.

A proposal to streamline the rate increase process could lead to regular, predictable rates and simplify the appeals process, but also could force papers to appeal rate increases after the fact, Rush said.

Newspaper lobbyists found much to like, however, in a subcommittee’s recommendation that the postal service stick to its mission of being a public enterprise devoted to universal mail delivery.

Lobbyists feared that a more privatized postal service could compromise the agency’s rate impartiality.

The recommendations are due at the Treasury Department July 31, and will then be sent to President Bush for approval.

Correction: The original version of this story referred incorrectly to Tonda Rush. She is public policy director for the National Newspaper Association, not the Newspaper Association of America. It is NNA members, not NAA members as the story originally read, for whom rate increases have been a chief concern. Posted at 1:10 p.m. EST, Aug. 1

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