Newspaper group asks appeals court to block Valassis deal

As promised, the Newspaper Association of America has asked the DC Circuit Court of Appeals to block the US Postal Service’s Negotiated Service Agreement (NSA) with Valassis. The NSA would provide Valassis with discounted postage rates in return for increased advertising mail volume. Newspapers haven’t been very happy about the prospect of competition in their local markets, and have been editorializing against the plan since it was first proposed.

From the NAA filing:

This case satisfies the requirements for a stay. NAA is likely to succeed on the merits because the PRC engaged in arbitrary and capricious decision making by approving postage rate changes that will cause unreasonable harm to the marketplace, will worsen the net financial position of the Postal Service, are unduly and unreasonably discriminatory, and are not available on public and reasonable terms to similarly situated mailers. In addition, NAA and its newspaper company members will suffer irreparable harm absent a stay. The Order permits Valassis, a direct competitor of newspaper companies, to immediately offer highly discounted, predatory postal rates to advertising clients. This will place NAA’s members at a significant competitive disadvantage, will result in the restructuring of newspaper companies’ business models and operational capacities, and will cause financial injury from lost advertising revenues that cannot subsequently be recovered. The balance of hardships also favors a stay, which would preserve the status quo by keeping the current postal rates in place pending NAA’s appeal. Finally, a stay is in the public interest because it would leave newspaper companies’ news gathering and reporting functions unaffected.

Here is the press release issued by the NAA:

Arlington, Va. – The Newspaper Association of America is stunned by the U.S. Postal Regulatory Commission’s decision today to approve an anti-competitive and damaging negotiated services agreement (or special contract rate) between the U.S. Postal Service and Valassis Direct Mail.

“NAA believes this decision is contrary to law, and will challenge it immediately and vigorously in the U.S. Court of Appeals for the District of Columbia Circuit,” said NAA Chairman James M. Moroney III, CEO and publisher of The Dallas Morning News.

Prior to the decision, NAA and its members called on Postmaster General Patrick R. Donahoe to acknowledge the overwhelming opposition expressed by the newspaper industry and others in the mailing community during this proceeding, and urged him to withdraw this special deal that benefits only one mailer.

As NAA’s comments filed with the PRC noted, granting this special rate to one major competitor in the mailing business will cause significant financial harm to newspapers throughout the country, and will not improve the financial condition of the nation’s postal system.

“In reaching this decision, the Postal Regulatory Commission ignored the many compelling comments it received objecting to a profoundly anti-competitive proposal,” said Caroline H. Little, NAA president and CEO. “In fact, the Public Representative appointed by the Commission itself to represent the views of the general public pointed out that this is the ‘first NSA that is designed to manipulate prices and to alter the balance of market forces.’ The Public Representative also said that ‘this NSA as currently structured is a lose-lose proposition for both the newspaper industry and the Postal Service.’

“The nation’s newspapers and the Postal Service share a long history of working together to keep Americans informed and connected with one another,” Little added. “The Postal Service should focus on cutting costs and getting the mail delivered on time – and not on using rates to confer a significant and unwarranted advantage on one competitor at the expense of an entire industry. This special arrangement calls into question whether the Postal Service should offer these types of deals in the first place.”

View NAA’s full comments to the PRC.