PRC OK’s Valassis deal with USPS

Sep 11, 2012

By Tonda F. Rush
WASHINGTON—Direct mail company Valassis Inc. got the green light from the Postal Regulatory Commission in August for its contract with the U.S. Postal Service that will give it deep postage discounts if it develops a weekend insert package in competition with newspapers.
The PRC voted 4 -1 against the newspaper industry’s united opposition to the contract, which the National Newspaper Association and the Newspaper Association of America labeled harmful to the marketplace.
In a press statement, the PRC said, “The commission understands that both newspapers and the Postal Service are experiencing declining revenues as new technologies based on the Internet gain popularity. Today’s decision affirms that fair competition between these two important institutions is consistent with the law.”
The PRC’s opinion said, “Newspapers have a de facto monopoly on the weekend advertising of national retailers of durable and semi-durable goods. Naturally, they would like to retain that business. The Postal Service has long been in the market for distribution of such advertising, but it has not competed effectively. The newspapers have provided no explanation demonstrating why they would be precluded from competing effectively by adjusting their advertising rates and/or negotiating different rates for delivery.”
NNA President Reed Anfinson, publisher of the Swift County Monitor-News in Benson, MN, said the association was deeply disappointed in the PRC’s analysis.
“The commission begins with the presumption that having a federal enterprise competing head-on with the newspaper industry is a good thing, but it does not explain how any business can be on a level playing field when competing with its own government.
“The mailing contract with Valassis is an unfair deal in which the principal result is to drive down the advertiser’s prices and not necessarily to bring any new mail volume to the Postal Service. What the commission does not explain is why this goal is in the best interest of either newspapers or the Postal Service. Nor does it take seriously the arguments raised by many that this deal will force more newspapers out of the mail and create a net loss for the Postal Service after the deal kicks in.
“What the commission does clearly explain is that it does not think there is a problem with the Postal Service’s draining revenues from news-gathering organizations. Somehow it seems to believe the centuries-old mailing category for Periodicals created by Congress is able to equal out the harm from contracts like this one. It is a puzzling analysis,” he said, adding that the NNA board of directors would explore all avenues for reversing the decision.
“We know that in thousands of communities around this nation that newspapers remain the most vigorous watchdog of government as well as the primary source of community news. The Founding Fathers recognized that the post office needed to work in a partnership with newspapers to provide citizens with the news fundamental to their ability to make informed decisions. Despite the Internet, TV and radio, newspapers still play this essential role. However, it appears the Postal Service is abandoning this founding principle to compete with rather than support newspapers.”
NNA represents approximately 2,400 members. Its community newspapers include weekly and small daily newspapers that rely heavily upon the mail for distribution to readers.

Newspapers Talk Back to the PRC: the Valassis deal is a bad idea.