Periodicals Postal Rate Hikes Confirmed

Periodicals Postal Rate Hikes Confirmed
Increase to take effect May 12.
By Joanna Pettas
http://www.foliomag.com/2008/periodicals-postal-rate-hikes-confirmed

The Postal Regulatory Commission has determined that the postal rate hike for Periodicals proposed last month-the first mandated to be tied to the Consumer Price Index-does not violate the new postal law and will go into effect on May 12.

Periodicals rates will increase on average about 2.72 percent according to the Postal Service, though David Straus, ABM Washington Counsel, estimates an increase of nearly 2.9 percent for almost all Periodicals, the difference being that a limited number of out-of-county pieces and in-county qualified publications now receive a discount.

According to the postal service, "Interested persons were given the opportunity to comment on the notice adjustment. Most of the comments focus on planned increases for specific rate categories or products. None claims that the planned increase for any class violates the price cap."

Under the Postal Accountability and Enhancement Act, the Postal Service may "bank" the difference between the CPI cap and the implemented price changes, which means that the .18 percent difference between the rate hike and the 2.9 percent CPI can be added to the CPI for rate hikes within the next five years.

Also under the new law, the Postal Service has extensive flexibility to vary rates within classes as long as the class average is CPI-limited. However, Straus says that the increases within the Periodicals class this time, at least, are very nearly across the board, with extremely small variations among different publications.

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The Economist Seeks Termination of Printing Agreement with Quebecor World
Publisher looking to end contract, but says it is open to new arrangement.
By Jason Fell
http://www.foliomag.com/2008/economist-seeks-termination-printing-agreement-quebecor-world

The Economist is looking to terminate its contract with commercial printer Quebecor World, but says it is open to discussing how to continue the relationship, according to a statement filed jointly by the companies. Quebecor World filed for bankruptcy protection earlier this year.

According to a court filing, The Economist wants to terminate its print agreement at the expiration of the initial term in September. The printing agreement would continue to be valid until then.

The Economist argues that it is being harmed by some of the automatic legal protection that the printer has received under its bankruptcy agreement. According to the filing, the magazine "is not seeking to enforce a monetary claim against the debtors of their estates. The Economist merely seeks to exercise its contractual right to terminate the printing agreement."

"We understand and respect the decision taken by The Economist and we will continue to provide them with the top quality product and service they expect," Quebecor World Magazine Group president Doron Grosman said in the joint statement. "We will also work with them in the coming months to prolong and extend our mutually beneficial partnership."

A Quebecor spokesperson could not immediately be reached for further comment.

In the court filing, The Economist does not say why it is seeking a termination of the printing agreement. A spokesperson for The Economist declined to comment.

Quebecor World, one of the world's largest printers, announced its bankruptcy filing in January and its entering into a $1 billion financing deal with Credit Suisse and Morgan Stanley to help finance the company's operating needs. Earlier this week, the ailing printer said that, under bankruptcy protection, it would delay the release and filing of its 2007 financial statements until the end of April.

Magazines feeling postal pinch

Magazines feeling postal pinch
High-circulation periodicals enjoy discounted rates, while smaller publications get hit with steep rate hikes.
By Teresa Stack and Jack Fowler,
TERESA STACK is president of the Nation.
JACK FOWLER is publisher of the National Review.
http://www.latimes.com/news/printedition/opinion/la-oe-stack28may28,1,5257005.story?ctrack=2&cset=true


THE COST OF getting magazines into your mailbox will shoot up July 15. How much? It depends.

Magazine publishers are facing a radical postage rate restructuring that favors those with large circulations and transfers costs to small- and mid-circulation publications.

Past increases to periodical postage were applied fairly equally across all publications. But this time, things are drastically different - and potentially damaging to the diversity of voices that our founders strove to foster when they created the national postal system.

Our respective magazines - the Nation and the National Review - sit on opposite ends of the political spectrum and disagree on nearly every issue. But we concur on this: These proposed postal rate hikes are deeply unfair.

It is not simply that we want to avoid a massive increase in our mailing costs, though that is a factor. More important to us is that we believe in a vibrant marketplace of ideas (where we each think our ideas will prevail). We are not afraid of intellectual competition; we welcome it.

For this latest round of rate hikes, the U.S. Postal Service proposed a 12% increase that would have affected magazines more or less equitably. Then, in an unprecedented move, that plan was rejected by the Postal Regulatory Commission, the body responsible for setting rates. Instead, it approved a complicated pricing system based on a proposal by Time Warner Inc., the largest magazine publisher in the country. Rather than base rates on total weight and total number of pieces mailed, the new, complex formula is full of incentives that take into account packaging, shape, distance traveled and more.

It adds up to this: discounts for some periodicals; as far as we can see, mostly the huge-circulation titles associated with firms like Time Warner. At smaller magazines like ours, rates will go up 15% to 25%. Research by McGraw-Hill Cos. concludes that the rate increases for some small-circulation publications could hit 30%.

Time Warner and the Postal Regulatory Commission say this scheme rewards efficiency. But the rates appear to have been adopted with little research into their effect on publishers and with no meaningful public input.

How will small magazines that operate on the economic margins - yet have an outsized effect on public discourse - accommodate $500,000 (in the case of the Nation and the National Review) in additional postage expense? Will we be forced to cut back on reporting, raise our prices, reduce our staffs or our number of pages to stay afloat? For some titles, the change may prove fatal. It certainly will make it more difficult to start a new magazine, and publishing will be less competitive as a result.

Time Warner and the postal commission seem to have little understanding of the crucial role the Postal Service has played in establishing an open marketplace of ideas. It has always been a central policy of the Postal Service to use its pricing mechanism to encourage smaller publications and competition.

Since the time of James Madison and the founders in the 1790s, it has been understood that low rates for small publications make it possible to have the rich, open and diverse media that a self-governing people require. This is what is at stake today. And because so much of the material online originates in print magazines, these postal rates could have the unintended effect of shrinking the digital marketplace of ideas as well.

We urge the relevant congressional committees to hold a hearing to investigate this coming crisis before it is too late. The last 215 years of postal policy were instrumental in the creation of the extraordinary free press we have in the U.S. today. We should not begin to overturn this magnificent tradition.