Magazines, Newspapers Brace for Exigent Postal Rate Hike

Could add $300m in costs to an already-challenged industry

Magazines, newspapers and direct marketers are girding for the possibility that the U.S. Postal Service will pass an exigent rate increase on top of the annual postal rate that is capped by the consumer price index.

The increase, made possible by a 2006 law that gives the postal service the option to raise rates in case of extreme circumstances like a terrorist attack, could be as high as 10 percent across the board.

It couldn't come at a worse time for the media and marketing industries that depend on mail service.

"We're finally getting our footing back since the 2009 recession," said Mary Berner, president and CEO of the Association for Magazine Media (MPA). Magazines, for example, spend $3 billion annually on postage. A 10 percent increase would add $300 million to an industry that is already challenged. Some magazines could go out of business, Berner warned. Others could cut back on mail delivery and redouble digital efforts. 

But lobbyists are running out of time to convince the post office not to jack up the rates. The Postal Board of Governors is scheduled to meet behind closed doors on Sept. 5. Given that the USPS is bleeding billions of dollars each year, lobbyists fear a rate increase seems almost inevitable.

To fight the increase, the mailing industry brought back together the Affordable Mail Alliance, a coalition of more than 50 organizations, including the MPA, the Direct Marketing Association and the National Newspaper Association. Three years ago, the group fought against the first exigent rate increase and won, challenging it in court in a case that now lies dormant.

In a letter this week to the Postal Board of Governors, the group argued that a rate increase would be self-defeating and could lessen the pressure on Congress to enact much-needed postal reform. The group also asked the Board of Governors for a personal meeting.

"Rather than raise postage rates and risk loss of mail volume from your commercial customers who provide or generate approximately 90 percent of your revenues, we believe that the more prudent approach is to continue to support, and in our case vigorously advocate for, meaningful and comprehensive legislative reform from Congress, while you pursue your program to make operational improvements within the Postal Service itself," the group wrote.

Legislation to streamline postal operations and its infrastructure was finally beginning to move in Congress just before August recess. In the House, the oversight and government reform committee passed The Postal Reform, which could make it to the floor in the fall. On the Senate side, Sens. Tom Carper (D-Del.) and Tom Coburn (R-Okla.), the chairman and ranking member of the homeland security and government affairs committee, respectively, also introduced a postal reform bill.

"Right now, the [postal service] can't rationalize their business. We're supportive of five-day delivery, consolidation of facilities and reduction in the cost of benefits," said Berner. "This exigent increase is a distraction, and it won't help the postal system. We need to focus on legislation that gives the postal service the tools they need."

If the board of governors passes the increase (and all expectations are that they will), the Postal Regulatory Commission will have 90 days to pass it. And if that happens, the mailing industry will be forced to litigate, again.

"That diverts time and resources away from coming up with a long-term solution," Berner said.