Newspapers torn up over USPS, Valassis agreement

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Newspapers torn up over USPS, Valassis agreement
Newspapers torn up over USPS, Valassis agreement

Correction: The initial version of this story indicated a June 15 deadline for approval of the agreement. The June 15 date was not a deadline, but was aspirational on the part of the USPS. The story has been amended to reflect this.

Newspapers are up in arms over the agreement the U.S. Postal Services' (USPS) filed with Valassis Communications, Inc., which aims to spawn up to $107 million in new revenue for the USPS over the next three years, according to the postal service's official statement. The agreement was filed with the Postal Regulatory Commission (PRC) April 30 and is currently pending approval.

Valassis mails weekly with the USPS its saturation mail products under the brand name RedPlum,” says Valassis SVP and shared mail general manager Steve Mitzel. “If the PRC approves the NSA [negotiated service agreement], we would go to market with the new product as soon as we gain client interest.”

The Associated Press reported an expected USPS profit of $15 million; however this amount was not confirmed by the USPS.

“I don't know where the AP reporter got his numbers from,” says USPS senior PR representative Katina Fields.

Although the PRC did not approve the agreement by June 15 as the USPS had initially hoped, Mitzel says that the USPS's procedures are completely lawful.

“The laws regulating the USPS and postal reform give the USPS an ability to negotiate with private firms like Valassis in the terms of an NSA,” Mitzel says, adding that the NSA, once approved by the USPS, must also be approved by the PRC.

The Direct Marketing Association's SVP of government affairs Jerry Cerasale says that the agreement's predicted $107 million revenue is too feeble to cause waves.

“It's a small number, so it's a relatively controlled test case,” Cerasale says. “If this were a $10 billion operation, then I think it would be something to be much more concerned about.”

Despite the limited revenue anticipated by the USPS, Cerasale respects the newspapers' concern around losing advertising revenue.

“If the view is a shared mailer gets more and more business to participate in its product and deliver to houses in a geographical area, the newspapers could potentially lose a client, an advertiser, or they lose a potential advertiser,” he explains.

However, Cerasale says that the agreement could result in a win-win situation for both the USPS and the newspaper industry.

“Even though there is competition, there is the potential to increase the perceived value of paper advertisements too,” Cerasale says. “Marketers should increase the use of advertisements in any paper medium be that the mail or the newspaper.”

In the end, Cerasale views the agreement as a test in progress.

“With this being $100 million, you can look at it in more of an experimental view,” Cerasale says. “Let's look and see how it goes—how everyone is trying to act in their best interest.”

A request to the National Newspaper Association for comment was not returned in time for publication.

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