Newspapers say USPS is raising prices while degrading service

National Newspaper Association President Robert M. Williams Jr., publisher of the Blackshear (GA) Times, strongly objected this week to the U.S. Postal Service’s announcement that it would close or consolidate more than 80 mail processing facilities after January and lower service standards for Periodicals and First-Class Mail.

In a letter to Postmaster General Patrick Donahoe, Williams said: “We deeply regret our long-time partnership with the Postal Service is about to be further stressed by another degradation of service. NNA does not understand how rising prices, slower service and further concentration of services into urban areas helps our nationwide mail service to survive Internet competition or any other threat.”

The Postal Service announced on June 30 that it is now targeting a broad list of mail processing plants for its second round of “network consolidation.” Though USPS is showing operating profits this year after several years of red ink, Donahoe cited a $40 billion debt on the USPS balance sheet as a reason. Most of the Postal Service debt is to the U.S. Treasury, which it owes for the accelerated prepayment of postal retiree health costs imposed by Congress in a 2006 postal law.

Many mailing organizations, labor unions and concerned postal users have lobbied Congress vigorously for the past eight years to relax the punitive requirements, which have been set up for no other federal agency. Williams emphasized again in his letter to Donahoe that NNA has set its Congressional Action Team in motion repeatedly to support legislative efforts to relieve financial pressure on USPS.

“We want postal reform legislation this year,” Williams said. “We have looked for several years now for legislation that balances the needs of USPS, of the postal workforce and of mailers, particularly those in rural areas hard hit by the previous round of postal plant closings. We recognize that the Postal Service is a powerful federal agency that influences our advertising marketplaces and therefore must be fairly regulated. But we object to Congress’s having tried repeatedly to use the postage-selling abilities of USPS as a cash cow. We are very hopeful that we will see legislation this year that strikes the right balance and that we can vigorously support it before these plant closings kick in. NNA firmly believes that mail service to rural and small-town America is critical to local economies. We will not stand by quietly when it is put at risk.”

Read more: National Newspaper Association.

Magazines, Newspapers Brace for Exigent Postal Rate Hike

Magazines, newspapers and direct marketers are girding for the possibility that the U.S. Postal Service will pass an exigent rate increase on top of the annual postal rate that is capped by the consumer price index.

The increase, made possible by a 2006 law that gives the postal service the option to raise rates in case of extreme circumstances like a terrorist attack, could be as high as 10 percent across the board.

It couldn’t come at a worse time for the media and marketing industries that depend on mail service.

Read more: Magazines, Newspapers Brace for Exigent Postal Rate Hike | Adweek.

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.