The U.S. Postal Service is bleeding red ink and closing facilities across the country, including northwest Ohio. The service needs to keep all the loyal -- and lucrative -- customers it has.
One such customer is the newspaper industry: The Blade and other papers pay the Postal Service about $500 million a year to deliver advertising material to nonsubscribers. Newspapers also rely on the service to get their product to customers outside their circulation areas.
So why is the Postal Service sabotaging this relationship by cutting a sweetheart deal with a competitor for much less money? The deal threatens the revenue newspapers receive from advertising inserts in their Sunday editions -- and thus the industry's tenuous financial health.
The Postal Regulatory Commission, which oversees the Postal Service, voted Friday to cut the rates the service charges Valassis Communications Inc., a big direct-mail marketing company based in suburban Detroit, for new mass mailings. By giving Valassis a discount of as much as 34 percent, the service predicts it will make $15 million in profit over three years. But several similar agreements negotiated by the post office have lost money for the service.
The newspaper industry plans to challenge the decision in court. If it stands, the deal will enable Valassis to use its reverse subsidy by the post office to cut its own prices and try to lure large national retail advertisers away from Sunday papers. In return, many newspapers likely will have to switch to private providers that charge less than the Postal Service -- but may be less reliable -- to deliver ad fliers. Both the service and the newspaper industry will lose.
The Blade makes no secret of its self-interest in this matter. A loss of revenue from Sunday advertisements would inevitably affect the resources available to our editorial product every day, and also could affect employment levels.
But there's an issue of public policy as well, when the Postal Service favors a single national company to the detriment of thousands of local businesses -- and the communities they serve. Postal Regulatory Commission members ignored the panel's public representative, who argued that the Valassis deal "is designed to manipulate prices and to alter the balance of market forces."
The Postal Service won't improve its own finances, operations, or business case by weakening a key revenue provider -- especially in a way that impairs that industry's ability to compete in the private marketplace.
The Blade has argued repeatedly, and will continue to argue, that this country needs a strong, efficient Postal Service. The service faces too many external threats already. It doesn't need to weaken itself further with self-inflicted wounds.