Publishers Descend on Capitol Hill, Rallying for Postal Reform - Statistical Data Included

Furious over an additional hike in periodical postal rates set for July, publishers are struggling to break through Congressional indifference and to get a longer-term restructuring of the Postal Service enacted.

* The U.S. Postal Services' decision to drop a second rate increase this year on magazine publishers has sent the industry into a lobbying frenzy. In the days after the May 8 announcement that periodical postage was increasing another 2.6 percent beginning in July, a band of executives--including Gruner+Jahr USA CEO Daniel Brewster, Hearst Magazines president Cathleen Black and National Geographic Society CEO John Fahey--headed off to Washington to confront postal executives. Their mission: to convey displeasure with the increase and to try to head off a new rate case that the Postal Service may announce as soon as June.

Ultimately, publishers are looking longer-term and hope to get Congress to enact a full-scale restructuring of the Postal Service. "I think it's time, long overdue time, for some forward thinking here," says Magazine Publishers of America executive vice president and chief Washington lobbyist James Cregan. "We can't go on this way--not we as an industry nor the institution of the post office."

Publishers are, of course, furious about the 2.6 percent boost, which they claim will cost them upwards of $50 million. That comes on top of a 9.9 percent increase in January--a jump that the industry fought long and hard to keep under 10 percent. The interim increase, however, puts the total for the year at 12.5 percent and shows that the magazine publishers' much heralded $10 million lobbying and public relations blitz, which began in 2000, has not been as successful as they would have liked.

"It's tough to get the message across," says Terry Adamson, executive vice president of the National Geographic Society and a member of the MPA's government affairs committee. "[Rates] do keep going up as if the messages that are being conveyed are not heard."

While Adamson says the MPA has had some success, a number of the group's members are quietly wondering if they have enough Republican firepower on their high-priced lobbying team, now that both houses of Congress and the White House are in Republican hands.

Says one D.C. lobbyist who has watched the lobbying on this issue, "You figure with a Republican Congress and President, they'd get in a better position Republican-wise. The problem is, MPA's operation is not sophisticated enough to tell the difference between setting up meetings and getting things done."

The MPA says it is quite happy with its current crop of lobbyists led by Bruce Heiman of Preston Gates Ellis & Rovelas Meeds, but the trade association does realize that postal reform is a difficult sell.

This latest round of lobbying includes MPA president Nina Link hosting an event (along with the book industry) on Capitol Hill, where members of Congress could pose for a picture reading a book or magazine. The pictures were then made into posters and given to schools and libraries in an effort to promote literacy. More than 100 members of Congress stopped by to sit for a photo, giving Link some much needed visibility. Although the focus was on reading, Link made sure the members of Congress knew how she felt about the latest rate hike. "That was absolutely part of our message," Link says, noting that she is currently "obsessed" with postal rates.

The next day Link took some of the top executives in the magazine industry to plead with the Postal Service not to raise rates again this summer. The group met with deputy Postmaster General John Nolan--one of the candidates to become the next Postmaster General. Right now, according to industry buzz, Jack Potter, the Postal Service's current chief operating officer, is thought to be the leading candidate. (The MPA is also trying to put together a major coalition of mailers, including the Direct Marketing Association, the Association of American Publishers and the Alliance of Nonprofits Mailers.)

Meanwhile, American Business Media is visiting Republican Rep. Dan Burton of Indiana, who is chairman of the House Committee on Government Reform, to lobby against the rate hikes. The association has also met with Thad Cochran, the senior senator from Mississippi, whose committee in the Senate is responsible for the post office, and Mitchell E. Daniels, the director of Office Management and Budget in the Bush administration. "We're being very direct," says ABM president and CEO Gordon Hughes. The association is also mounting a grassroots letter campaign directed at every member of the House, says Hughes.

Publishers are demanding that the Postal Service institute a hiring freeze and eliminate some of the 790,000 full-time positions by attrition. They also want the Postal Service to close as many as 100 underutilized processing plants, which could produce a savings of as much as $3 billion to $4 billion, according to the MPA.

But both the Postal Service and key members of Congress think that such goals are unrealistic. Perhaps the biggest challenge for magazine publishers is simply getting past the fact that most people's eyes glaze over when you mention postal rates. And that includes members of Congress and the Bush Administration, who will all need to get together if any meaningful postal reform is to be enacted.

That reaction is well known to Rep. John McHugh, a New York Republican who has been working to reform the Postal Service for over five years, and is working on a new bill that should be ready in a few weeks. "We've never reached the critical mass that is necessary in Washington to move Congress forward," says McHugh, who has twice failed to pass a reform bill out of the House Government Reform Committee. "Although it's very inside baseball, to the companies involved it can mean fiscal life and death," he says.

McHugh says his bill will be similar to his previous efforts: It would give the Postal Service more flexibility to change product prices, overhaul the rate-setting procedure, and place a cap on the amount prices can be increased-and give the Postal Service the ability to negotiate discounted bulk mail contracts. This year McHugh says he has more hope that a reform bill can be passed. He has been working closely with Democratic Rep. Danny Davis of Illinois to give the bill a bipartisan sheen, and the two have the backing of committee Chairman Burton.

Burton, speaking to a group of magazine executives in early May at the American Business Media Conference, conceded that passing postal reform will not be easy. First he noted that the issue is not even on the radar screens of 90 to 95 percent of the 535 members of Congress. Then there is the problem of getting postal employees and their powerful unions on board. "We have 800,000 postal employees. That's 800,000 families," Burton said. "Now you find me a Congressman who has a bunch of those people in his district who is going to bite the bullet .... You can't do it. It's politically impossible."

The Postal Service and its Board of Governors are also asking for reform. The Governors have said the Postal Service is facing a revenue shortfall of at least $2 billion this year-the May increase was designed to cover a $975 million shortfall. "We foresee rapidly rising rates and reduced service if legislative reform is not enacted promptly," the nine Governors wrote to McHugh in March. But the Governors, according to McHugh, have been largely absent from reform debates in the past.

McHugh also predicts a lobbying bonanza once his bill is introduced. The most difficult opponents for the magazine publishers include organized labor (four unions represent postal workers); private delivery services like Fed Ex and United Parcel Service, which worry that postal reform would put them at a competitive disadvantage; and powerful daily newspapers that worry that changes in postal pricing would encourage their big Sunday advertisers to mail their materials instead of including them in the newspaper.

The MPA's Link is undeterred. "We need to be patient and persevere, and we need to stay with this over the next two or three years as we try to help as part of a coalition," says Link. "We're in it for the long haul. It's going to be fits and starts and three steps forward and two back, and long-term reform is the endgame."

COPYRIGHT 2001 Copyright by Media Central Inc., A PRIMEDIA Company. All rights reserved.
COPYRIGHT 2003 Gale Group