• by Erik Sass , October 4, 2010

Magazine publishers got a rare piece of good news: The United States Postal Service will not be raising its rate for mailing periodicals by 8%, as originally proposed.

The hoped-for rate hike was one of several proposed emergency increases rejected by the Postal Regulatory Commission. The USPS also requested to raise catalog rates 5.1%, standard mail parcels 23%, and first-class mail stamps from $0.44 to $0.46.

The PRC said the emergency rate hikes were not warranted because the USPS failed to demonstrate that current and projected shortfalls are direct results of the recession. (According to PRC rules, emergency rate increases are allowed in extraordinary circumstances.)

The PRC said that the USPS "has failed both to quantify the impact of the recession on its finances and to show how its rate request relates to the resulting loss of mail volume." Indeed, PRC believes that the USPS "cash-flow problem is not a result of the recession and would have occurred whether or not the recession took place."

A rate hike for periodicals would have forced magazine publishers to either assume the extras costs or pass them along to subscribers -- neither of which would help the general financial health of an industry suffering steep declines in advertising revenue.

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 -- created the Affordable Mail Alliance petitioning the PRC to block the rate increase.

The USPS remains 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. 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.