Unfair government competion not good for all newspapers
Published: Thursday, October 4th, 2012
Large and small newspapers across the country are currently engaged in a battle to keep the United States Postal Service (USPS) from cutting a sweet deal with one of the largest, or the largest, direct mail media and marketing services in the country.
Direct mail company Valassis, Inc. got the go ahead from the Postal Regulatory Commission (PRC) in August for its contract with USPS that will give it deep postage discounts if it develops a weekend insert package in competition with newspapers. That would be a huge financial blow to all Sunday newspapers that are loaded with inserts.
Small and large newspapers are opposed to the USPS plan to purposely lure advertising out of newspapers to Valassis, Inc. which bought direct mail company ADVO in 2006. Small newspapers like this one realize that what happens to large newspapers will eventually trickle down to them. Valassis handles a number of insert accounts for this newspaper.
The obvious goal of USPS is to create more advertising mail revenue in attempt to stop its financial bleeding. It seems that in many instances USPS would be biting the hand that feeds it because so many newspapers like this one are its weekly customers. What USPS would gain in Valassis revenue would be lost in newspaper mailing revenue because newspapers would be lighter in weight with fewer or no advertising inserts.
After the PRC voted 4-1 against the newspaper industry’s united opposition to the Valassis contract, the National Newspaper Association (NNA) and the Newspaper Association of America asked for a stay of the USPS-Valassis negotiated services agreement. The U.S. Court of Appeals for the District of Columbia Circuit denied NNA’s motion on Sept. 25.
The next step will be for the court to issue a briefing and hearing schedule which could take four months, with a decision possible in the second or third quarter of 2013. In the meantime, about 2,400 NNA-member newspapers will be contacting their elected representatives with the argument that USPS should not pick winners and losers in the local competition for advertising.
Both newspapers and USPS have been adversely affected by the internet. Some of the news and advertising previously found in newspapers has gone the way of the internet and former USPS customers have found it more convenient and faster to send emails instead of messages by “snail mail.”
While Congress gave the Postal Service authority to enter into negotiated service agreements, it is hard to believe the intent was for the Postal Service to use this authority to move $1 billion of advertising revenue from local newspapers.
Congress should take action to stop the Postal Service from using its monopoly to pick winners and losers in the local competition for advertising dollars.
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