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“Freedom of the press is limited to those who own one.” – A.J. Liebling

Ben Scott had better things to do than listen to a bunch of little magazines rant about their unreasonable postage bills. As the policy director of Free Press, a group that specialized in fighting media concentration, he and 10 co-workers in Washington were wrapped up in defending internet accessibility. But in late February 2007, Scott’s phone started buzzing with accusations from panicked publishers of small-circulation magazines. The United States Postal Service, they said, was hammering the last nail in the coffin of independent publishing.

Periodicals with circulations of fewer than 250,000 (some with much fewer—even in the hundreds) had just discovered that the rates they paid the USPS for postage were about to skyrocket, and they had only eight business days to dispute the proposed increase. While these independent publishers had expected the rates to rise, they believed it would be by about 12 percent, which had been the USPS’ own suggestion. However, during an arduous 10 months of hearings on postal rates in 2006, during which the small-magazine community was conspicuously absent, the stakes changed dramatically.

Instead of a simple markup, the entire rate system was overhauled, imposing a cost-based structure on a branch of government originally established to provide a public good, one that the Founding Fathers deemed vital to our democratic society. The Postal System was built on the premise of promoting the free flow of ideas by giving preferential treatment to their most common method of conveyance: the printed pages of periodicals.

Of particular concern to Free Press was the discovery that the biggest force behind the formula by which rates were to be increased was none other than Time Warner, the largest magazine publisher in the United States, which had been working overtime to influence the outcome of the hearings.

At the receiving end of Time Warner’s proposal was the Postal Regulatory (formerly Rate) Commission, the independent board of overseers responsible for holding the rate hearings. The new suggested rate system changed from a flat rate per pound, like a stamp for a first-class letter that costs the same no matter how far the letter travels within the United States, to a new piece-by-piece rate, like determining how much the stamp should cost based on how difficult it would be to deliver the letter. The new formula was so complex that most publishers could not initially give Scott exact numbers for their anticipated rate increases, but they knew enough to fear for their continued existence. When the dust settled and the facts came out, the average increase for all of Time Warner’s 127 titles was 10 percent; rate increases for most small-circulation magazines were two or three times that, and in some cases, more than five times as much.

Journals of opinion, the idea-laden niche that has hewed closest to the Founding Fathers’ conception of the kind of periodicals whose availability would benefit our fledgling democracy, collected rate-increase data among themselves as soon as they had hard figures. American Conservative, a biweekly magazine with a circulation of 13,000, faced an increase of 58 percent. Eagle Publishing, producer of Human Events, paid the USPS an additional $211,000 in 2007. Jack Fowler, publisher of National Review, was so incensed that he co-authored an editorial in The Los Angeles Times with Teresa Stack, president of The Nation, denouncing the rate hikes. Like National Review, its strange bedfellow The Nation faced an additional $500,000 on its 2007 postal bill. The New Republic and The New York Review of Books each faced increases in excess of 15 percent. Recently Alan Chin, general manager of The New Republic, said the extra postage costs forced them to tighten belts across the budget and seriously consider switching to lighter paper stock.

For Free Press and the coalition of small political magazines, the issue extended beyond paper and percentages, beyond the survival of a few dozen journals of opinion and even beyond the futures of several thousand small-circulation publications. What was most in danger of going bankrupt was the circulation of ideas, information and opinions, which the old preferential rates for periodicals intended to promote.

"It’s really the government’s historical role to have the postal service be the conduit of getting information to the public,” said Bob Cohen, retired director of the Office of Rate Analysis and Planning for the Postal Rate Commission, who consulted for Free Press after learning of the PRC’s 2007 proposal. According to Richard John, professor of history at the University of Illinois-Chicago and author of Spreading the News: The American Postal System from Franklin to Morse, in the early years of the Post Office, one could send a periodical to New Orleans, the most remote city on the postal route, for a penny. For a private letter, the postage could be as high as 50 cents. “These were massive subsidies and everybody knew it,” John said.

But as the nation expanded in ways inconceivable to its first Postmaster General, Ben Franklin, the Postal System sagged under the added weight. In 1970, Congress passed the Postal Reorganization Act to address what were viewed as gross inefficiencies and consequent deficits. The act converted the old government Post Office into the United States Postal Service, a government-owned corporation, the bulk of whose funding came from postage instead of Congressional funding. However, periodicals were still given special consideration.

The Act required that all classes of mail cover much more of their costs than before, but in periodicals’ case, the new rates were phased in slowly. When even those measures proved too financially harsh, Congress intervened in 1976 and amended the Act, once again establishing preferential rates that recognized periodicals’ “educational, cultural, scientific and informational value.” The high costs small magazines accrued were softened somewhat by large publishers who could afford to do some of the Postal Service’s work for them.

The PRC, which oversaw the system, did its best—or so it thought—to protect the public interest, as well as the interests of small-circulation journals of ideas and opinion. As recently as 2005, the Commission stated, “The nature of periodicals’ content poses important policy issues that must be weighed against the economic efficiency associated with a particular rate structure.” That declaration rejected a Time Warner complaint that only one year later would re-emerge as the backbone for the new 2007 rate system.

For more than 20 years, Time Warner, whose total postage bill was in excess of $200 million last year, made concerted efforts to restructure the periodical postal system, hiring experts away from the USPS and retaining high-priced Washington lawyers to keep track of and influence postal rates. “For a long time, Time Warner was focused on getting the Postal Service to operate more efficiently,” claimed Brian O’Leary, who worked for Time Warner’s distribution arm from 1983 to 1995. Yet Time grew frustrated with the Postal Service’s languid response to suggested improvements, all of which would have had the happy consequence of providing lower rates for the company’s magazines. “In our opinion, they were taking baby steps,” said Jim O’Brien, Time Warner’s vice president of distribution and postal services. By 1995, Time gave up on encouraging efficiency and refocused on the rate system. “Over the past 10 to 15 years, it’s been, ‘I can’t change the Postal Service, so I’m going to defend my interests,’” said O’Leary. Time Warner increasingly resented the fact that under flat rates, what it saw as its more efficient use of the Postal Service, in effect, subsidized the many thousands of smaller publications. In the 1995 rate case, Time Warner stood by the USPS when it suggested (unsuccessfully) that periodical-class mail be divided into two subclasses, one of which would receive a 14 percent decrease in postal rates and the other a 17 percent increase. Guess into which category most of Time Warner’s titles would have fallen.

The complaint filed in 2004 by Time Warner, along with other major publishing houses—which the PRC rejected—promoted a transition to a “cost-based” rate system, essentially charging individual mailers for the services rendered, the most costly of which is transporting periodicals by sacks.

Sacks are relatively inefficient to move mail, much more time consuming for the Postal Service than pallets—wheeled skids on which much larger volumes of bundled mail can be transported. For many small- and medium-sized publications, pallets are not a viable option. At the printing plants, subscription copies are grouped according to ZIP code, and smaller magazines generally don’t have enough volume in any mailing area to fill a pallet. So they must use sacks, the smallest containers offered by USPS. Even People, Time’s biggest seller, would find it impossible to avoid sacks when shipping to 79754, the ZIP code for Loving County, Texas, population 58.

Time Warner, which had years before identified an alarming trend in periodical-class mail that saw costs rising to almost 200 percent above inflation, spent years developing an argument that the use of sacks was to blame for the spike. To Time, the answer seemed simple: Charge higher rates for sack use and give discounts for mailing on pallets. Small magazines with no hope of making the pallet weight requirements on their own could simply band together with other publications and “co-mail” (share pallets). This is a neat solution in theory, but usually unworkable in the real world of small-magazine production. Nevertheless, Time posited that this rate system would naturally encourage mailers to move away from sacks, saving the Postal Service vast amounts of resources. This round, the PRC agreed.

Even Time Warner was taken aback. Halstein Stralberg, co-creator of Time’s rate proposal, said, “There was a new chairman at the commission and there was a totally new environment, and they adopted it, to my surprise.”

And to the surprise of all publishers of small periodicals. One of the smallest—and hardest hit—is The Progressive Populist (circulation 19,000). This biweekly, edited and printed by two brothers, Art and Jim Cullen, represents one of the least efficient periodicals around. First, it is produced as a tabloid newspaper. This size and its flimsy (but inexpensive) newsprint exempt The Progressive Populist from machinated mail systems used by co-mailers. Second, its biweekly production cycle makes it almost impossible to co-mail the papers, as few other publications run on the same schedule. Third, the combination of small circulation with broad national distribution makes it impossible to stay out of inefficient sacks.

“We don’t get any real cost savings anywhere,” said Jim Cullen, sitting outside on a warm day in Austin, Texas, where he produces the 98 percent subscription-based Progressive Populist from his home. “You have to have something like 200 [thousand subscribers] to get a really good discount,” he speculated, running a hand through his long, gray beard.

Cullen had planned on an eight percent rate increase but, when the rules changes were announced, calculated that it would amount to 18 percent. To cover the extra expense, The Progressive Populist raised subscription prices to $37.50 from $32.50, to bring in an extra $9,500 annually. Unfortunately, the rate increase turned out to be even higher than Cullen had estimated. The Progressive Populist now pays 31 cents postage per issue, an increase of about 26 percent. Since the implementation, the periodical’s postage bill has increased by $14,500.

In the corporate world, The Progressive Populist would most likely be forced out of business. But should the same rules apply when the product is ideas and the conduit is a government-owned monopoly? To the current administration, the answer is yes, said Cullen. The president appoints the five commissioners that compose the Postal Regulatory Commission. Between the 2005 Time Warner complaint, when the PRC rejected the corporation’s proposed rate restructuring, and the 2006 rate hearings, when the PRC adopted the suggestions almost verbatim, two new commissioners joined the PRC. One of them, Dan G. Blair, replaced George Omas as chairman just one month before the end of the rate cases, a move that Bob Cohen described as “pretty unusual.”

The timing of the personnel switch coincided with another major change in the PRC. In December 2006, the president signed the Postal Accountability and Enhancement Act, which transferred rate-setting duties to the USPS and tied rate increases to the Consumer Price Index. That meant that the 2007 rate case would be the last time a major rate restructuring could occur. The PRC felt pressure to get costs as low as possible.

For 233 years, since the creation of the Postal System, mailing efficiency had never been the factor that determined whether periodicals like The Progressive Populist could continue to circulate their ideas. Even when Congress mandated in 1970 that the USPS make a bottom line, it provided protections for small-circulation periodicals. A well-organized lobbying effort, though, can effect change, even if it takes 13 years to do so.

Though most of Time Warner’s interactions with the PRC occurred in the courtroom rather than the dining room, Free Press considered Time Warner’s efforts to change the rate structure tantamount to “agency lobbying,” in Ben Scott’s words. “Big companies,” he said, “put on continuous pressure forever, or until they get what they want.” Meanwhile, smaller interests “can only get involved when there’s a crisis.”

As the magnitude of this crisis became evident, small publishers rushed to do what they did best: create a media storm. In addition to the joint editorial by management at The Nation and National Review, nearly 200 periodicals signed a letter to the Postal Board of Governors, NPR did a story on the rate hikes in July 2007 and entities from Huffingtonpost.com to The Boston Globe commented on the imbroglio.

On October 30, 2007, the House of Representatives Subcommittee on Federal Workforce, Postal Service and the District of Columbia conducted a hearing titled “Impact of Higher Postage on Mailers.” Eleanor Holmes Norton, Congresswoman for the District of Columbia, addressed the first panel of postal leaders. “It seems to me very important to encourage efficiencies of these periodicals,” she said, “but I wonder if you truly believe that the special circumstance of small publications...has been taken into account and if these rates are bearable.” Most members of the subcommittee appeared concerned, asking PRC chairman Dan Blair pointed questions. But at one point, Congressman Elijah Cummings brought the discussion back to reality by asking, “This is a done deal, isn’t it?”

Though the hearing took place several months after the deal was done, and though the Committee did not repeal the rates, Free Press and its small-circulation magazine allies considered it a qualified success. “Congress is very conscious of small periodicals now,” said Scott. “The majority of the discussion at the hearing was exclusively about how small journals of opinion would be impacted.”

Another result of the 2007 postal rate increase is the realization that corporations are not the only ones who can—and may need to—lobby. An organization called Magazines of Politics, Policy and Current Events has recently been created to represent small magazines’ interests and remind the Postal Service of its duty to aid the flow of ideas and information, not obstruct it. Though the fledgling group may not achieve its immediate goal of rolling back the 2007 postal rates, its existence serves as a reminder of the true price of letting corporations shape government policy: free speech.

 



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Columbia University Graduate School of Journalism
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