Sunday, March 11, 2018

Game Over: Postage Rate Hikes Would Shut Down ESPN Magazine

A plan to increase publishers' postage rates drastically over the next five years would cause ESPN The Magazine to cease publication, an ESPN official indicated Friday.

If the Postal Regulatory Commission follows through with its plan "to increase our postage rates 40% over the next 5 years then ESPN will not produce a paper Periodical mailed through the USPS," Dennis Farley, the magazine's distribution director, said in a statement filed with the PRC.

"The content will be delivered via the many other means we now use to deliver our content," Farley added, in emphasizing that ESPN would continue as a popular cable network and web site.

In theory, Farley's statement left open the possibility of using other means to deliver the magazine to its 2 million paying subscribers. But that "other means" doesn't exist for a printed magazine, and digital magazines have mostly failed to catch on with consumers.

The PRC, claiming it has the power to override the inflation-based cap on most postage rates, put forth a plan in December to bail out the U.S. Postal Service with a series of rate increases. The Periodicals class, on which the USPS supposedly loses money, would be hit especially hard.

More than 100 organizations have filed comments with the PRC opposing the plan. Among those was the nation's largest magazine publisher, Meredith Corporation, which recently projected that the rate hikes would force it to stop publishing some titles and reduce the number of magazines it mails by 32%.

Ironically, even under the Postal Service's questionable accounting, ESPN The Magazine is probably a profitable customer for the USPS. The fortnightly is dropshipped entirely on pallets to 175 postal facilities, Farley said, with 83% of the copies in carrier-route bundles.

The Postal Service does well with such efficient mailers while tending to undercharge inefficient Periodicals mailers.


Anonymous said...

The question of whether periodicals should pay higher postage rates is best answered by comparing their rates to standard mailpieces (catalogs). Periodicals enjoy significantly lower rates for mailpieces of similar size, weight, and destination entry. It's difficult to make an argument for why the USPS should subsidize one class of mail and not another.

And some of the 'inefficient Periodicals mailers' act that way because of perverse USPS incentives. For instance, why does only the advertising portion of a Periodical receive a drop ship discount that makes it economical to drop ship at and SCF or DDU? Periodicals mailers with low or no advertising, even if they have the volume to drop ship, don't because they would end up paying more postage so they local enter their mail (while the rest of the industry gains the 'efficiencies' of dropship and the associated postage savings).

Anonymous said...

Ask UPS and Fedex what they would charge and you will see that USPS rates are outrageously low,simple and obvious truth. Would anyone like to transport my letter from New York to California for 50 cents? NO because only a fool would do something like that.

Anonymous said...

Print magazines and newspapers are continuing to decline as more people use digital options. As subscriptions drop, so does ad revenue, pushing subscriptions prices higher. It is a vicious cycle. Those that still want hard copy will have to pay more. As in most products, there is a price point where customers decide it is no longer worth it.

Anonymous said...

I'm not surprised that such a significant increase would result in substantial reductions in mailed pieces. A couple of thoughts: 50 cents does not mail a heavy magazine across the country; that kind of postage rate reflects long-established worksharing--comail--where the publisher is paying the cost of delivering the publication to a postal facility close to the ultimate destination.

FedEx and UPS might become competitive in this arena if they could deliver to mailboxes--which are restricted by law to the USPS, even though the business owner or homeowner pays to provide the mailbox.

As a publisher it's sad to see the magazine industry face yet another potentially debilitating challenge. If only we had a chance to provide feedback on the FSS before it was deployed--oh, yeah, I think we did and the Postal Service didn't listen.

Anonymous said...

We already subsidize amazon, and now espn wants us to subsidize them also. Lets just cut salaries 30%, so we can subsidize all periodicals.

Anonymous said...

How come every year when UPS and FEDEX raise their rates nobody complains, but when the postal service does it, all hell breaks loose?

Anonymous said...

"It's difficult to make an argument for why the USPS should subsidize one class of mail and not another. " That's not what's happening. Bulk mailing is treated differently that 2nd class. 2nd class gets preferential treatment. It's sent out as soon as possible. Bulk "junk" mail is delayed sometimes a couple weeks or more. 2nd class mail is forwarded or returned as appropriate which costs a ton to handle. Bulk mail that can't be delivered to an address is wasted.

Anonymous said...

With current USPS utilization there is no difference in service times between Standard and Periodical mail, particularly when dropshipped to the SCF level (which is the case for the majority of mailings, except for the aforementioned periodicals without advertising). If the same size mailpieces, entered at the same facility and receiving the same service, pay different postage rates it's a subsidy.

Anonymous said...

It would help ESPN Magazines argument if the publication wasn't 40% larger than a standard 2nd class subscription magazine, like Time, Game Informer, Hot Rod, or Guns and Ammo.