Publishers Working to Head Off Double-Digit Periodicals Rate Hike

Circulation Management, Dec, 1999

Consumer and B-to-B publishers are working to head off the possibility of a 12- to 15-percent hike in periodicals postage rates by January 2001. Periodicals saw an average hike of 4.6 percent in January of this year.

Consumer publishers attending the recent American Magazine Conference reacted strongly to leaked news that the postal management committee that formulates USPS rate case proposals intends to recommend a 12- to 15-percent periodicals increase. Cathleen Black, Hearst Magazines president and newly elected chair of the Magazine Publishers Association board of directors, said that publishers should resolve that such a hike will not go through.

Confronted with publishers' ire, Postmaster General William J. Henderson, a speaker at AMC, promised to fight to keep the expected rate hike below 10 percent, saying that he "doesn't want to take magazines out of the mail." The idea that publishers, if hit with large increases, might cooperate to move magazines out of the Postal Service and into alternate delivery channels, such as UPS, was raised during the meeting.

An actual proposal will not be made public until the Postal Service files the case with the Board of Governors sometime during the first quarter of 2000. Henderson indicated that he will attempt to head off a double-digit increase proposal by presenting evidence that automation, new bundling rules and other work-saving measures have reduced periodical costs during the past year. A double-digit rate proposal would be based on traditional periodicals costing calculations.

New MPA president Nina Link says she believes that Henderson left the conference with "a deep sense" of how important this issue is to publishers, and that he is on their side. However, she adds that USPS operational and financial people working on the rate case are "highly conservative," and may well push to have magazines "bear the brunt" of fiscal challenges created by trends such as the shift from first class mail to email.

Although the MPA and the American Business Press traditionally end up on opposite sides of the fence during postal rate cases because of the different interests of small- versus larger-circulation publications, they are currently united in their determination to fight big rate hikes. Both groups are pushing for a rate case filing delay to provide time to gather data and work up a case to support a lower increase based on work-saving cost reductions.

"We're doing everything we can to provide the Postal Service with theories to see how it can be done," says ABP attorney David Strauss, citing as two examples the potential for increased automation and the possibility of eliminating air transportation for some magazines. "We're going to be very active and public in Washington," adds Link. "The more time we can buy, the more opportunity to get the numbers down."