Postal commission OKs 'junk mail' discount plan

[August 24, 2012]  WASHINGTON (AP) -- The government body that oversees the U.S. Postal Service has approved a plan that gives one of the nation's largest direct marketers a postage discount on advertising flyers known as "junk mail."

The three-year deal approved by the Postal Regulatory Commission on Thursday is intended to boost use of the mail system by Valassis Communications Inc., which sends mass coupon mailings to homes under its RedPlum ad bundles.

The commission said the plan should add $4.7 million to $15.3 million in net benefit to Postal Service coffers over the course of the deal.

Many of the nation's newspapers opposed the plan, which gives a rate cut to their biggest competitor. The Newspaper Association of America said that for a meager benefit, about $1 billion in annual newspaper industry ad revenue would be put at risk because it would lure big advertisers away from its Sunday newspapers.

The NAA said it would appeal the decision.

"NAA believes this decision is contrary to law, and will challenge it immediately and vigorously," said NAA Chairman James Moroney, the publisher of The Dallas Morning News.

The commission dismissed the newspapers' damage estimate, saying in its order that "newspapers' claims of harm, while no doubt earnest, do not lend themselves to reasonable quantification."

Commission Chairman Ruth Goldway said in a statement that while the commission was "sympathetic" to the claims of market disruption, the policies of a postal reform law passed in 2006 "do not shield newspapers from the consequences of fair competition."

Livonia, Mich.-based Valassis applauded the decision, saying it was a "validation of this innovative proposal."

Valassis shares, which had closed down 25 cents at $24.75 on Thursday, rose 16 cents in after-hours trading to $24.91.

The dispute had put two traditional industries, buffeted by the Internet, on a collision course.

Use of the Postal Service is declining as more people turn to email, Facebook and Twitter to communicate. At the same time, print newspaper subscriptions and advertising have been falling due to a shift of readers to online outlets of news.

[Associated Press]

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