As Congress gets back to work this month, it should immediately take action to stop an ill-advised decision by the Postal Regulatory Commission that will harm newspapers like The Olympian, all across America.
The commission recently approved a deal negotiated by the U.S. Postal Service that gives discounted rates of up to 36 percent to one mass distributor, Valassis Communications Inc., a company located in Livonia, Mich.
This deal, called a negotiated service agreement (NSA), gives Valassis alone an unfair advantage in the marketplace for preprinted advertising from certain national advertisers.
To be clear, The Olympian has a financial stake in this fight. Along with hundreds of other newspapers, state and national press associations and many members of Congress, we have opposed this NSA.
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Why? Because it gives a competitor the edge in attracting a critical source of revenue that supports The Olympian’s ability to gather and distribute news and information to the South Sound community.
Newspapers are prepared to compete fairly for national preprint advertising, and are confident that advertisers recognize the value of community journalism in newspapers that people ask for and pay to receive.
But the NSA will tip the scales to a company in Livonia, Mich., that does not care about the South Sound community or provide it with any community journalism.
The advertising at stake is mostly inserted into our Sunday newspaper, and the revenue from these preprints supports our writers, editors, photographers, columnists, pressmen, front-office staff and everyone else who contributes to producing a great newspaper.
These kinds of cut-rate deals are allowed under postal law. But Congress has stated clearly that no NSA should cause harm in the marketplace, and that is happening now.
The NSA with Valassis will not save the USPS from its financial problems. The Postal Service projects it will lose $14 billion this year. They estimate this NSA will generate $15 million in new revenue. That’s about a thousandth of its deficit.
Even the chairwoman of the Postal Regulatory Commission, Ruth Goldway, is not optimistic about how the NSA will achieve anything positive. Reflecting on the past eight NSAs entered into by the Postal Service between 2007 and 2011, during which it lost a total of $20.9 million, she said the USPS record with NSAs is “not very good.”
The Postal Service has many financial issues to address, to be sure. The Internet has reduced revenue from stamp sales and the USPS remains burdened with union contracts appropriate for another era. The post office is struggling to acknowledge how the recession has changed its market and is slow to restructure its business as the private sector has done.
Its biggest problem may well be a 2006 law requiring the USPS to set aside profits to fund employee retiree health benefits for 75 years into the future. That’s a burden no private corporation or any other government agency has to carry.
But the sweetheart deal does nothing to tackle the core issues facing the Postal Service. As every private-sector business has discovered, the USPS cannot dig out of a $14 billion hole by dropping its prices.
And the Postal Service should not be allowed to harm community newspapers, which are already battered by a deep and lingering economic recession.
This is an undeniably self-serving opinion. But we believe that a robust local newspaper better serves its community than a direct-mail distributor in Livonia, Mich.
Ruth Goldway's name was corrected Sept. 16, 2012.