NNA opposes USPS plan to divert newspaper advertising to Valassis

May 24, 2012

The National Newspaper Association today added its voice of firm opposition to that of other newspaper organizations in opposing a plan by the U.S. Postal Service to intentionally divert advertising from newspapers to national advertising aggregator Valassis Inc.

NNA’s comments were directed to the Postal Regulatory Commission, which is considering a proposed Negotiated Service Agreement between USPS and Valassis that would provide 20 percent to 34 percent postage rebates to Valassis if it produces one million new pieces of mail within 12 months after the agreement is implemented. The target for this new business is newspaper advertising, which USPS pointedly seeks to divert to the mail. In its request, USPS said it believed private distribution services were “increasingly” attracting saturation advertising from the mailstream and that the Valassis deal is intended to bring it back.

NNA called the deal “unjust and unreasonable,” and said the Postal Service should try to get the newspaper business back rather than creating favoritism to one customer. NNA said the proposal violates the Postal Accountability and Enhancement Act, which requires the Postal Service and the PRC to take into account the effect upon the marketplace of USPS actions. In addition to being inherently unfair, NNA said, USPS failed to account for the fact that many newspaper advertising shoppers and TMC publications are in the mail at a higher rate than Valassis currently gets, let alone the discounted rates it would have under the proposal. The NSA would cause USPS to lose mail volume as newspapers leave the mail in disgust and mail revenues from mail pieces being unnecessarily discounted.

NNA President Reed Anfinson, publisher of the Swift County (MN) Monitor-News, said that although the proposal appears to target only large newspapers, in fact it will affect many newspapers of all sizes. He said reaction to the proposal within the industry was swift and negative.

“Many of us cannot figure out why the Postal Service, with which we each spend thousands of dollars each year, would want to jeopardize this relationship to chase a special deal with one customer. NNA’s postal experts have examined the proposal and believe it would harm not only our own industry but the Postal Service’s own viability as well,” Anfinson said. “When you consider that one of the Postal Service’s obligations is to bind the nation together, you just have to shake your head at an idea like this. Here is one very bad idea that pulls us apart. NNA hopes the Postal Service has second thoughts about it and that the PRC makes it clear that special rate cuts that target the advertising markets are inherently unfair and anti-competitive.”

NNA Postal Committee Chair Max Heath joined in the NNA comments and assisted Landmark Publishing, which operates large and small newspapers, in expressing its own opposition.

“As most people know, I am the first to cheer the Postal Service when it does something right. And I am willing to criticize it when it goes off track. This idea is so far off track that I cannot imagine what postal management was thinking. It is simply a big postage giveaway that does nothing but disrupt the markets,” he said.

“The NSA could take free-standing insert business—paying regular Standard Mail carrier-route prices—from newspaper-owned shoppers and divert it to prices 20 percent to 32 percent lower, which is a lose-lose proposition for us and USPS,” said Heath. “USPS marketers fail to have any understanding of how much Standard Mail business is brought to them by newspaper customers.”

The PRC’s decision on the proposal is likely to come within two weeks. The law requires action within 45 days of the Postal Service’s filing, which was April 23, 2012.