No sooner had the cash-strapped US Postal Service agreed to provide Valassis with a discounted rate in exchange for the direct-mail company’s promise to post more materials, than the cash-strapped American newspaper industry cried foul.
The August moves began when the Postal Regulatory Commission approved a three-year negotiated service agreement that would reportedly grant Valassis rate discounts of up to 34% so that it can, in turn, offer more favorable ad rates to sellers of durable goods. In return, Valassis promised to produce a larger volume of mail, with penalties in place if it does not. The USPS expects to make an estimated $15 million during that time from Valassis’ additional mailings.
The Newspaper Association of America immediately threatened legal action, calling the “sweetheart deal” “anticompetitive,” and no wonder. The types of companies Valassis is angling for – e.g., The Home Depot and department stores – are currently the lifeblood of newspaper advertising now that classifieds have been made redundant by free sites such as Craigslist.