USPS Plans Rate Hike For Magazines

It's not getting any easier for print publications to be, well, print publications. Tuesday brought another ominous development, in the form of a proposal from the U.S. Postal Service for a dramatic new increase in postal rates.

The potential increase compounds a number of negative trends, including rising costs for ink and paper, just as some magazine publishers were seeing signs of hope for a tentative recovery.

The rate hike, which could take effect at the beginning of next year if approved by the Postal Regulatory Commission, would include an 8% bump for magazines; it would also affect catalogs, mailers, where the rate is set to rise 5%. Postal rates would also go up for first-class stamps, from $0.44 to $0.46.

The proposed rate hike requires permission from the five-person Postal Regulatory Commission, which the USPS is asking to waive a rule limiting postal price increases to the rate of inflation.

In response, magazine publishers and industry organizations --including Conde Nast, Time Inc., Bonnier Corp., American Business Media -- the Magazine Publishers of America and the Direct Marketing Association, have joined forces to create the Affordable Mail Alliance, which describes itself as "an unprecedented coalition of postal customers," petitioning the PRC to block the rate increase.



Among other targets, the AMA is taking aim at alleged inefficiency in the USPS. Jerry Cerasale, senior vice president, government affairs and spokesperson for the Affordable Mail Alliance, stated: "Rather than gouging its customers with 10 times the rate permissible by law, USPS should be eliminating its costs; inflation in postal costs was over 6% in 2009," compared to an overall inflation rate of -0.4% (a rare instance of deflation resulting from the steep economic downturn).

For example, the AMA noted that the wages of postal workers are higher than comparable positions in the private sector. However, lowering postal wages will be a daunting challenge, given the strength of the postal workers' union.

The USPS is in the midst of a mounting financial crisis -- with annual deficits of $5.4 billion in 2007, $2.3 billion in 2008, and $3.8 billion in 2009, as the number of pieces of mail delivered fell from 212 billion to 180 billion over the same period.

In 2010, the number of pieces delivered is projected to fall to 170 billion, while the deficit will jump to $7 billion. Over the next decade, the USPS is projecting total losses of $238 billion unless it gets a number of concessions from Congress, the PRC and unions.

Magazine publishers are also facing projected price increases of up to 10% for paper and ink in 2010.

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