Inside the Beltway : March 2010
Postal Service Plans for Future Financial Viability
Earlier this month, the U.S. Postal Service held a meeting focusing on how it intends to ensure a “viable Postal Service for America.” David Straus, ABM’s Washington counsel and postal expert, attended the meeting, along with other leaders in the industry, and reported back to ABM.
Postmaster General Jack Potter identified the six most important points in the Postal Service’s plan for the future, which include:
- Cutting future losses by $123 million with mail growth and cost reduction
- There must be a permanent fix of the retiree health care situation
- Delivery must be reduced to five days per week
- There will be increased public access but with fewer Postal Service brick and mortar facilities
- The Postal Service must have more workforce flexibility, without abandoning present employees
- If the Postal Service does not succeed in items 1-5, there will be more of a burden on pricing.
Ultimately, PMG Potter and his colleagues stressed that the Postal Service's survival as we know it in the face of volumes estimated to fall another 15% by 2020, and the change in the mail mix as First-Class mail drops 37% and advertising mail stays flat, depends upon a "balanced” approach to these areas.
ABM will continue to keep you updated on the Postal Service’s plans, as they will greatly impact ABM member publishers.
Likely Exigent Rate Increase for Periodicals in 2011
As some ABM members may have heard, Postmaster General Jack Potter made it clear at this month’s Postal Service meeting that his agency intends to seek an exigent postal rate increase to be effective early next year, in addition to whatever CPI-based increase may be permissible after that in May 2011.
Potter also indicated that the Postal Service must address money-losing classes, naming Periodicals specifically. He asked Congress to change the price cap law so that it applies to an average of all Market Dominant price increases, not individually to each class, which is a change that would allow the Postal Service to increase Periodicals rates more than average while complying with the cap. Absent such a change in law, which is doubtful in the near term, it is either possible or likely that the requested exigent increase will hit Periodicals harder than other classes, but certainly not by the 30% or so it would take to match revenues with costs in one fell swoop in accordance with the Postal Service's numbers.
While it is unknown when such an exigent increase would happen, ABM periodicals mailers may be faced with a three-fold problem: an exigent increase in early 2011; a possible addition to that increase to close the cost/revenue gap; and a CPI-based increase in May 2011 (assuming there's an increase in the CPI in 2010).
On the other hand, it is not at all certain that an exigent rate increase would be legal in early 2011 under the terms of the 2006 reform law, which limited its implementation to "extraordinary or exceptional circumstances." The debate has begun on whether the mail volume decline, coupled with the deep recession, present such circumstances, or whether Congress had in mind such circumstances as September 11 or an anthrax attack.
The Postal Service must apply to the Postal Regulatory Commission for permission to implement an exigent increase, and the outcome will be decided by the PRC. It is expected that the request will be filed early in the fall. However, irrespective of the PRC's decision, a court appeal is likely, especially since this will be the first time that the exigent rate increase provision will be invoked.
It is uncertain how big an increase will be implemented in early 2011, but one thing is certain: periodicals can expect to get hit hard.
ABM Sweeps into D.C. Monday for Second Annual Regional Program
The half-day Washington, D.C. program will feature a keynote address by Peter Goldstone, President of Hanley Wood, on “The Media Company of the Future,” and discussions topics will include reinventing the events model, managing expectations and total audience measurement. BPA Worldwide will follow the program with an afternoon session on digital media trends. Both sessions are FREE for ABM and BPA members. Click here for the latest agenda or to register.
Not in the D.C. area or can’t make the program in-person? ABM will be webcasting the event live. Click here to sign up now to watch from your desktop!
ABM Working to Fight Expanded Powers for the FTC
New financial regulatory reform provisions could affect publishers
As we reported last month, ABM has recently joined a new lobbying coalition to fight expanded powers for the Federal Trade Commission (FTC) within the newly proposed Consumer Financial Protection Agency. The FTC Reauthorization Coalition includes a number of different business, publisher and advertising groups and ABM will bring the b-to-b media voice to the table.
The coalition is fighting provisions in the House-passed Financial Regulatory Reform bill that would grant the FTC the equivalent of extraordinary legislative powers. Specific areas of interest involve allowing less transparent rulemaking by the FTC on a host of issues, including: advertisements; granting the FTC new enforcement powers to go after companies such as publishers for “aiding or abetting” a violation of the FTC Act; and giving the FTC the authority to seek penalties not only for actual violations of the FTC Act, but also to deter potential violations without potential violators having the opportunity to change a practice or behavior before onset of civil penalties.
ABM has already participated in meetings on the Hill with the FTC Reauthorization Coalition where the focus is on the Senate. While the House has passed its version of financial regulatory reform, the Senate has not. A new bipartisan draft of the legislation was unveiled last month and the coalition will continue to work to ensure that the expanded FTC provisions do not make it into the Senate bill.
ABM will keep you posted on this developing issue.
Rep. Rick Boucher to Keynote at ABM's 2010 Annual Conference
On Monday, May 3, during ABM’s Annual Conference in Charleston, SC, you’ll have the unique opportunity to hear from Rep. Rick Boucher (D-VA), chairman of the House Energy & Commerce Subcommittee on Communications, Technology and the Internet. As one of the foremost leaders on Capital Hill regarding digital issues, Rep. Boucher will discuss some of the issues facing ABM members, including database protection, behavioral advertising and net neutrality.
ABM’s Annual Conference, taking place this May 2-5, will deliver strategies on how to capitalize on the next generation of b-to-b media and information services, straight from industry leaders and visionaries. Click here to view the full conference agenda, which is packed with fresh faces and brand-new content.
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