Postal monopoly should not be allowed to pick winners, losers in the free market

Sep 19, 2012

The newspaper business—from the largest daily to the smallest of weekly publications—has sounded full-throated opposition this past month about a plan by the U.S. Postal Service that would essentially pick winners and losers in the field of direct mail advertising.

Under pressure to get its financial house in order, USPS management seeks to entice advertising out of newspapers so that ads can be placed instead with Post Service’s favored stakeholder, Valassis Inc.

Valassis, a giant national advertising placement entity—bought direct mail company ADVO in 2006 and is seeking to dominate the marketplace.

Meanwhile, the apparent goal of a struggling USPS is to create more advertising mail. For newspapers that count on this same advertising to pay reporters and cover the local news, this new venture between these two heavyweights is beyond alarming.

Many think it will push some newspapers—already made fragile by the economy and the Internet—over the edge. If that happens, it is the communities across our country that will feel the most long-term harm.

People have a love-hate relationship with advertising, whether in the newspaper or in the mail. When advertising helps them find deals or shop smartly, they love it. When it doesn’t happen to scratch the shopping itch, they may not like it so much. But most people understand advertising drives the economy and brings other intangible benefits like paying the bills for news coverage that keeps communities informed.

On every level, advertising is highly competitive. Locally, regionally and nationally, newspapers compete with a growing field of advertising media, from Internet to television and door hangers to direct mailers.

But now, the Postal Service wants to pick winners and losers in this crowded market. It is providing postage rebates to Valassis of more than 30 percent if Valassis can divert more advertising inserts into direct mail from newspapers.

Not everyone can play. The discounts can be offered by Valassis only to large national retailers. Newspapers cannot get the same discount for their own mail because they can’t sign a single national postage contract (as the direct mail company did) with USPS. Neither can a small clothing or bookstore or a hairdresser or auto parts shop.

We—the newspaper and the small businesses we serve—are all local. However, this deal is only for the really big guys.

So what’s wrong with this picture?

The problem is the USPS is not a business. It is owned by Uncle Sam. It exists to serve all.

A government−authorized monopoly like the Postal Service should not be allowed to pick winners and losers in the free market system. It should certainly not be competing directly against and undercutting its own stakeholders—all of us.

It should deliver the mail that exists, promptly and affordably. That is its mandate.

Now it appears that one of USPS’s primary goals is to carry even more advertising, as the Internet saps away paper letters and bills.

Does America need a federally-owned and operated advertising service?

This community newspaper and many, many others across the nation, answer with an emphatic no! When it comes to advertising—our financial lifeblood—the Examiner-Enterprise and the National Newspaper Association will continue to plead our case to federal lawmakers for a fair and level playing field.