Yesterday, the Postal Regulatory Commission, the body that oversees the U.S. Postal Service, approved a plan that gives Valassis a huge postage discount on its Red Plum ad bundles and threatens newspaper insert advertising nationwide.
The Newspaper Association of America (NAA) issued a press release stating it was stunned by the PRC decision to approve an anti-competitive and damaging negotiated services agreement (or special contract rate).
"NAA believes this decision is contrary to law, and will challenge it immediately and vigorously in the U.S. Court of Appeals for the District of Columbia Circuit," said NAA Chairman James M. Moroney III, CEO and publisher of The Dallas Morning News.
The three-year deal approved by the PRC hands Valassis a 22 percent to 36 percent discount on "new" advertising mail pieces beyond what it mails now. The discounts would apply to qualifying mail that includes advertising inserts from national retailers of durable and semi durable goods. These ad inserts are currently delivered through newspapers' free-standing insert programs.
The proposal is an attempt to bolster the staggering losses experienced by the USPS in recent years. The PRC claims the NSA should add $4.7 million to $15.3 million in net benefit to Postal Service coffers over the course of the deal.
CNPA joined the Newspaper Association of America, the National Newspaper Association and several other state press associations in opposing the proposal that could result in the loss of millions of dollars in advertising insert revenues.
CNPA sent letters signed by CNPA President Cynthia Schur and CNPA Executive Director Tom Newton to the Postmaster General and members of California's Congressional delegation expressing the association's opposition to the proposal.