NNA strongly objects to Valassis NSA

Jul 2, 2012

By Tonda F. Rush

WASHINGTON—The National Newspaper Association registered strong objection in June to a proposal by the U.S. Postal Service to set up a contract direct mail rate for “marriage mail” advertising aggregator Valassis Inc. Individual newspaper companies and Newspaper Association of America also vehemently objected.
The objections were filed with the Postal Regulatory Commission, which is reviewing a proposed Negotiated Service Agreement between USPS and Valassis. Newspaper competitor ADVO was bought by Valassis in 2006.
“The (PRC) must grapple with what it means to the American public, as well as for postal competitors, for the Postal Service to set its sights on increasing its mail volume by cutting deals with advertisers. For larger newspapers, the NSA could deliver a final blow to publications already struggling to grapple with the impact of the Internet and the Great Recession. What the Postal Service seems not to understand is that the NSA would have an impact upon smaller newspapers as well,” NNA told the commission. NNA said the proposal was an improper use of the Postal Service’s market power. It urged the PRC to find that the NSA does not comply with federal law.
The proposed NSA would give 20-35 percent postage rebates to Valassis if it increased its mail volume by a million pieces in the following year in its existing markets by selling advertisers of durable and semi-durable goods into a new marriage mail package on another day. Certain restrictions apply. For example, it could not move mail from its current package to a new one. It could count only advertisers with retail outlets in more than 30 states. Some types of retailers, such as grocery stores, would not count. But from within the eligible advertisers, popular community newspaper inserters like Tractor Supply, Walmart, Auto Zone and Ace Hardware could be included.
Negotiated Service Agreements have become common in some parts of the Postal Service’s franchise, such as package services. But only one other NSA has been issued in the so-called market dominant mailstream, which includes Periodicals and Standard Mail. It was for a First-Class credit card mailer. This agreement would be USPS’ first attempt to engage in the advertising marketplace so directly against other competitors.
“NNA has traditionally supported USPS moves to improve advertising mail opportunities so long as all mailers have an equal footing,” NNA President Reed Anfinson, publisher of the Swift County Monitor-News, said. “Many newspapers use the direct mailstream to serve advertisers and readers, and we recognize its importance to the economy and to USPS’ financial base. But when it attempts to use its monopoly powers and its nationwide network to pick winners and losers in the advertising marketplace, it enters into competition with its own mailing customers.
“NNA increasingly finds USPS squaring off against newspaper customers. Cutting services, raising rates and, now, proposing to fund a competitive service to pull advertising out of the newspaper is beginning to alarm our industry. NNA will fight back forcefully to remind USPS as well as members of Congress that the Postal Service is not a private company but is in fact a government-sponsored enterprise that has to deal fairly with all.”
“USPS either fails to understand or care that many, many community newspapers mail their own TMC shoppers via Standard Mail. Until this proposal, they were eligible for the same prices as Valassis. The proposal disrupts that level playing field, and threatens to move business from full-price paying newspaper shoppers to discount-paying Valassis packages. It could also force these same publishers to look for non-mail delivery solutions to stay competitive,” said NNA Postal Chair Max Heath. “This is the most discriminatory, unfair idea that USPS has ever launched, and it should be stopped,” he said.
The commission must rule on whether the NSA meets the requirements of the Postal Accountability and Enhancement Act. Following NNA’s filing, it requested more information on the impact upon Valassis competitors, particularly upon small businesses. NNA and its members are working hard to provide that impact information.