Washington, D.C.—The U.S. Postal Service's proposed deal with commercial mailing company Valassis Communications, offering a steep postage discount in return for increased mail volume, has encountered criticism from the newspaper industry and charges that the deal is unfair.
The USPS is proposing to cut Valassis' postage rates by up to 34% in exchange for more business from the Livonia, Mich.-based company, which mailed more than 3 billion pieces last year on behalf of advertisers. The USPS has estimated that increased volume from Valassis would net it an additional $15 million over three years, despite the discount.
However, newspapers are charging that the deal would harm their Sunday inserts efforts, since the USPS discount would allow Valassis to lower its rates. According to the Newspaper Association of America, the proposed deal could cost its members $1 billion in lost revenue as customers migrate to mailed advertisements.