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Dallas, Texas Requires Lottery Assignments to Black Modular Newsracks
In June 2007, the Dallas City Council unanimously approved an ordinance to require newspapers distributed in the downtown Dallas central business district to be placed in modular black newsracks that hold up to eight publications each. Newspapers, which will pay a $179 annual fee to use the racks and to cover charges for rent, maintenance, and administration, must enter a lottery to determine which publications are included in the racks for a five-year period. Newspaper publishers have expressed concern that the lottery system and other features of the new ordinance could present problems for consumers, including daily publications being underrepresented in relation to other publications, such as monthly magazines. Beginning October 2009, publications outside the central business district will be required to purchase standard black metal newsracks and to pay a $65 annual administrative fee.
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Rates
PRC Issues New Postal Rate Setting Rules
On Oct. 29, the Postal Regulatory Commission (PRC) issued a final rule on a new postal rate making system for our nation’s postal system in accordance with a the Postal Accountability and Enhancement Act, which was passed by Congress and signed into law in December 2006. Under the rules, the U.S. Postal Service can adjust postal rates annually for First-Class, periodicals and standard mail as long as rate changes for a class of mail stay below a price cap that will be pegged to the Consumer Price Index. The Postal Service will have greater pricing flexibility for competitive services such as parcels and priority mail that are also offered by private sector competitors, UPS and Federal Express.
The new system is likely to result in smaller, but more frequent, rate adjustments for mailers. Mailers hope that the new system will provide more predictability in assessing annual postal costs. According to a recent survey, the daily newspaper industry spends nearly $1 billion on postage with nearly $800 million spent annually on Standard Mail for the delivery of newspapers’ Total Market Coverage products to non-subscribers, subscriber solicitations and solo direct mail campaigns.
The final rules have been improved in several important ways from the rules originally proposed. In response to comments from NAA, the Commission modified the rules it proposed in ways that will achieve greater transparency and fairness. In particular, the Commission will specifically conduct a prior review and allow public comment on both general rate changes and proposed negotiated service agreements, which are special contract rates between USPS and individual mailers. The Commission also established safeguards against NSAs that are unfair or cause unreasonable harm to the marketplace. The PRC rejected requests by USPS and large volume mailers that would have reduced oversight of new NSAs.
The PRC’s rule on the new system was completed eight months ahead of a statutory deadline established by Congress.
USPS Will Use New Rules to Change Postage Rates
On November 15, 2007, the U.S. Postal Service Board of Governors announced it will use new rules established by the Postal Regulatory Commission (PRC) to change postal rates in the future. Under the new rules, USPS can adjust rates for each market dominant class of mail - First-Class, Periodicals and Standard Mail – so long as the increase for each class of mail does not exceed the Consumer Price Index (CPI). The Postal Service can adjust rates at different levels within the class of mail.
The comprehensive postal reform law provided the USPS Board of Governors with an opportunity to file one final rate case with the PRC using regulations that have been in place since 1971. A rate case under the old law usually takes 10-11 months. Postmaster General Potter said that by using the new rate setting system, USPS can move forward now to offer contract rates and volume discounts for its competitive products (parcels/priority mail). Postal observers believe USPS will propose new rates on market dominant products – mentioned above – in January or February, with the expectation that the rate changes will go into effect in April or May.
The Postal Regulatory Commission is in the process of designing a new postal rate making system to implement the Postal Accountability and Enhancement Act, which was passed by Congress and signed into law in December 2006. NAA has been actively engaged in the commission’s process for implementing the new law. The PRC is expected to release new rules for a modern rate making system by late Fall 2007.
NAA will continue to be active in these proceedings and will remain vigilant in its opposition to proposed Negotiated Service Agreements or other classification proposals that could provide newspapers’ advertising mail competitors with a market advantage.
Delivery
In 2008, The U.S. Postal Service is expected to launch automation equipment for processing and sorting flat-sized mail such as catalogues, magazines, newspapers and newspapers’ Total Market Coverage products (including both pre-printed inserts and the wrapper). This automation system is known as the Flats Sequencing System (FSS).
USPS has stated that it will force as much flats mail as possible to central processing facilities, called Sectional Center Facilities (SCF), for FSS processing. This includes TMC mail sent at “high-density” rates. USPS management has said that “saturation” mail – service typically used by newspapers’ saturation advertising mail competitors (and also by newspaper TMC programs on some routes where subscriber penetration is low) – will not be required to go to these SCF facilities, but will continue to be entered into local delivery units or post offices.
NAA is concerned that if the Postal Service forces newspapers to send its editorial and advertising insert TMC packages to central facilities for FSS processing our member newspapers will not be able to achieve the critical time delivery demand of our readers and advertisers. Furthermore, by allowing newspapers’ saturation advertising mail competitors to continue to enter their products locally at delivery units, they will be given a service and price advantage that would cause competitive harm to newspapers. NAA is attempting to work with USPS management on a remedy that will avoid a major problem for both newspapers and the postal service.
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Featured Issue
Independent Contractor White Paper
The newspaper industry has a long tradition of obtaining services through independent contractors. Most newspapers' distribution systems utilize independent contractor distributors and carriers. Many newsrooms obtain higher quality local and specialized coverage through the use of independent contractor stringers and free lance writers. New advertising customers sometimes are solicited by independent contractor advertising salespersons.
Changing demands on newspapers and heightened government attention to the potential abuse of independent contractors status have forced newspapers to exercise additional care in structuring their use of independent contractors. Many newspapers are re-evaluating their use of independent contractors to make sure that the benefits of such status outweigh the disadvantages. NAA has provided a White Paper (NAA members only. Please log in to access it) to raise the awareness of its members of the legal issues primarily challenging the independent relationship between newspaper and contracted distributor.
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