The Postal Rate Commission on Nov. 13 reduced by a third to half the magazine rate hikes sought by the U.S. Postal Service but direct marketers got much less relief from rate hikes and catalog marketers saw some rates for sending catalogs through the mail increase from what the Postal Service had recommended. The changes are all expected to take effect early next year. For big consumer magazines, the news was good, if expected.
The Postal Service had originally requested rate increases of 14.2% for most major magazines, and 15.2% for titles from non-profit groups. The rate commission instead approved 9.9% for most magazines, holding the non profit increase to 7.2%. The Postal Service had earlier acknowledged that it failed to reflect some automation savings in the magazine rates and Congress had approved legislation changing the process for setting non-profit magazines rates.
"We are relieved," said Jim Cregan, exec VP of the Magazine Publishers of America. "I can't say we are happy with a 9.9% increase, but we are very relieved.'' For some publishers, the postal rate increases had been a catalyst for ad rate increase requests. Mr. Cregan said some publishers had budgeted for the higher increases while others had expected the lower increase. "They were all over the lot. Some were quite optimistic and some were pessimistic." The rate commission also cut the Postal Service request for trade publication rates. The Postal Service had requested a 15.1% increase, but got an 11.4% hike.
Direct marketers also saw their rates cut but not as greatly, and those that send out heavy catalogs could have to pay more. The Postal Service had sought a 9.4% increase in postage for so-called "standard mail" a widely used mail classification by direct marketers. It got 8.8%. However the rate commission took the unusual step of revising upwards some catalog rates above what the Postal Service requested. The Postal Service had sought a 3.2% increase in the rate for selective catalogs but got a 4.6% for some catalogs. It also increased the rates for local department store catalog mail from the 7.8% to 9.1%. In the biggest increase, it increased the rate for bound printed matter from the 17.5% sought by the postal service to 17.6%
"They really didn't provide a reduction for regular rate mailers like they should have,'' said Jerry Cerasales, exec VP of the Direct Marketing Association. He said the drop to 8.8% is "not that big a drop." "That is not going to help to keep that mail in the system. Inflation has been 4.7% and this is almost double, not a good sign for the future as our members start to look elsewhere. The hit on catalogs is pretty high. Catalogs are looking at some significant rate increases that are unfortunate."
David Todd, counsel for the Mail Order Association of America, a group of large catalog marketers, said the exact increase could very significantly by catalog company depending on how catalogs are mailed.
Copyright November 2000, Crain Communications Inc.