The Postal Regulatory Commission has approved a plan to give one of the country's biggest direct mailers a lower price for additional circulars it puts in the mail, handing newspapers the latest challenge to their traditional business.
The plan means the U.S. Postal Service will give Valassis Communications a discount on new mail volume as long as the company sends at least one million additional pieces in the next 12 months.
That could make it easier for Valassis to win business away from newspapers, which still earn significant revenue by distributing flyers and coupons in their Sunday editions.
The Newspaper Association of America said it was "stunned" that the commission approved a deal it called "anti-competitive and damaging."
"The Postal Service should focus on cutting costs and getting the mail delivered on time -- and not on using special rates to confer a significant and unwarranted advantage on one competitor at the expense of an entire industry," said Caroline Little, president-CEO at the newspaper association, in a statement.
A Postal Service spokesman said the commission's ruling would help the mail service without hurting newspapers. "Given our financial situation, continued e-diversion, and increased competition from alternative delivery services, this is one example of how the Postal Service is pursuing innovations and new products to increase the value of mail and retain our business customers," he said in an email.
The deal is limited to ads for durable and semi-durable goods by retailers with physical stores in at least 30 states where Valassis already operates. "This agreement does not include the carriage of advertising from regional and local advertisers," the spokesman said.
The commission itself, a federal agency that oversees the Postal Service, said it was hard to tell how much impact the deal, called a Negotiated Service Agreement, would have on newspapers. "The use of newspapers has been in decline since the genesis of the digital era," the commission said on its website. "The Commission is not able to identify how this NSA may or may not alter this trend."
The newspaper association said it plans to challenge the deal in court.