Valassis special postage deal goes out with a whimper

Nov 23, 2015

By Tonda F. Rush
Chief executive officer and general counsel | NNA

WASHINGTON—The long struggle between the newspaper industry and Valassis Inc. over the direct mail company’s special postage discounts from the U.S. Postal Service appears to have ended with a whimper. In November, Valassis filed a report saying it had carried out no mailings eligible for the special discount. It announced it had paid an agreed $100,000 penalty to USPS last September.

The tension between newspapers and its long-time insert customer began in April 2012 when the Postal Service requested a special contract rate for Valassis that was designed to pull advertising inserts out of Sunday newspapers and into a new weekend Valassis direct mail package. If the program had launched and successfully mailed 1 million qualifying mail pieces, Valassis could have earned a 22 percent to 34 percent Standard Mail postage discount. The newspaper industry fought the proposal, even taking it to the U.S. Court of Appeals. But in the end, the market ruled.

Valassis announced it had launched programs in May 2013 in Atlanta, Phoenix and Washington. It reported mailing 2 million pieces in 2013, but that these were not qualifying pieces under the rules of the contract agreement. There were no mailings in 2014 or 2015.

NNA President Chip Hutcheson, publisher of the Princeton (KY) Times-Leader, said the $100,000 fine was a fitting end to an unfortunate chapter.

“We want to think of this whole experience as an episode of recession fever at the Postal Service. They were facing grim markets, as we all were, and USPS was grasping at straws. The fever ignited this idea of picking winners and losers in the advertising marketplace for the sake of maybe getting in some new mail volume. We at NNA didn’t think it would work, and it didn’t. So USPS got $100,000 and spent unreported thousands in lawyers and analysts’ time. The newspaper industry and Valassis spent heavily to advance their various viewpoints. And in the end, there was no new mail. Newspapers were undoubtedly hurt in those test markets, and Valassis couldn’t come up with the advertisers.

“There is a moral to this story that every parent knows: don’t play favorites in the family. No good comes of it. We are glad this chapter is over, and we intend to continue to work with Valassis to develop its markets and with USPS to improve the mail. Money is tight. We need to plant our seeds where they can grow.”