Public Policy and Funding the News

A Project of the USC Annenberg Center on Communication Leadership & Policy

Postal Rates

mail boxesLong before the United States was founded, the Postal Service was subsidizing the news business. It was in good measure the free-mailing privileges conferred by many postmasters that allowed a robust network of colonial newspapers to emerge. George Washington wanted all newspapers, in fact, to have 100 percent subsidized mailing costs. The Postal Act of 1792 rejected the idea of a total subsidy, but it codified highly subsidized and extremely low rates.

What brought a halt to publishers’ receiving 75 percent discounts on their mailed news products was the financial crisis that engulfed the Postal Service in the late 1960s. Congress eventually decided to turn the post office into a quasi-private enterprise, to reduce the level of government support and to get out of the ratemaking business.Thus was the Postal Regulatory Commission created in 1970, charged with ensuring that periodicals, along with all other classes of mail, cover the “direct and indirect postal costs attributable to that class or type.” Over the next four decades that principle would eat deeper and deeper into the historical subsidies enjoyed by news publishers. In one recent round of rate increases, small news magazines were particularly hard-hit. Former publisher Victor Navasky said The Nation’s mailing costs shot up $500,000 in a single year – and came at a time when the magazine was already losing more than $300,000 a year.

Legal notices have been especially important to weekly and other community newspapers. Their trade association, the National Newspaper Association, estimated in 2000 that public notices accounted for 5 percent to 10 percent of all community newspaper revenue.

Today, publishers’ discounts for their printed news products are down to 11 percent – less than one-sixth of the level four decades earlier. Almost all of this benefit today goes to magazines. Meanwhile, newspapers’ total market-coverage advertising products are charged at rates that exceed postal service costs by $300 million. With the Postal Service facing a 2010 deficit estimated at $7 billion, prospects appear high that newspaper and news magazines will continue to experience increasingly higher rates.