FAQs on Valassis Negotiated Service on Valassis Negotiated Service Agreement iWhat is a Negotiated Service Agreement? It is a customer‐specific contract authorized by law between the Postal Service and a mailing customer. USPS can enter into NSAs after a ...

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  • FAQsonValassisNegotiatedServiceAgreement

    iWhatisaNegotiatedServiceAgreement?

    ItisacustomerspecificcontractauthorizedbylawbetweenthePostalServiceandamailingcustomer.USPScanenterintoNSAsafterareviewbythePostalRegulatoryCommissioniftheproposalwouldimproveUSPSsfinancesormailoperations,butnotcauseunreasonableharmtothemarketplace.

    HowmanyoftheseNSAsdoesthePostalServicehave?

    Initscompetitivesidewhereitislargelyderegulatedtocompeteforsuchbusinessasparcelshippingithasdozens.InitsmarketdominantsideregulatedbythePRCtherearepresentlysixunderway.TheValassisNSAisthefirsttodirectlyenterintothelocaladvertisingmarketplace.

    WhydidthePRCapproveit?

    PRCsaysUSPSproveditwouldgainnewbusinessandthatnewspapersdidnotproveunreasonableharmtothemarketplace.PRCsanalysisofcompetitioninthemarketsaysUSPShascompetedpoorlyinattractingweekendinsertmailvolume.PRCechoesfederalantitrustcourtsinassertingitsobligationistoprotectcompetition,notcompetitors.Itviewednewspapersastryingtoprotectamonopoly.

    WhatdoestheNSAallowValassistodo?

    Receiveapostagerebateforcreatingnewsaturationsharedmailprogramsfordurableandsemidurablegoodsretailerswithretailoutletsin30ormorestates.TheprogramsmaybeopenedonlyinmarketswhereValassishashadforthepasttwoyearsandwillmaintainanexistingSaturationMailprogramatleastmonthlyitcannotshiftadvertisersfromexistingmailingtonewmailings.ItcannotextendintonewZIPcodesorcarrierroutes.Themailhastobeflatsizedmailwith310insertsatleast9of12monthsofeachcontractyear.Atleast85percentmustbedropshippedatlocaldeliveryunits.

    Isthepackagerequiredtobemailedonweekends?

    Thecontractdoesnotspecifyweekends.ButbecauseValassishasmidweekmailpackages,theexpectationisthatitwillaimforaweekendpackage.ThePRCandUSPSassumedthatintheiranalyses.

    Whencanitbegin?

    AsofAug.23,2012.Valassishas90daystobegin,oritcouldcancelwithin30days.

    Howlongdoesthecontractlast?

    Threeyears.

    HowmuchvolumemustValassismailtogetitsdiscounts?

    Itmustmailatleast1millionpieceswithin12months.Ifitfails,itwilloweUSPS$100,000.

    Thepostagediscountwillbeprovidedintheformofarebateattheendofeachcontractyear.Therebatescheduleworksasfollows:

    WeightPerPiece DDURate SCFRate

    4.5to6.5ounces 20%offpublishedratesatthetimeofmailing

    20%offpublishedratesatthetimeofmailing

    6.5to9ounces $0.172 $0.1859.0to11ounces $0.211 $0.229

  • Over11ounces 20%offpublishedratesatthetimeofmailing

    20%offpublishedratesatthetimeofmailing

    Cannewspapersororganizationsofnewspapersreceivesimilardiscounts?

    ThelawrequiressimilarlysituatedmailerstobeeligibleforanyNSAafteroneisapproved.ButbecauseoftherestrictivetermsoftheValassisNSA(forexample,asaturationmailingprogramhastohavebeenexistencefortwoyearsandmustcontinuewhilethenewNSAprogramisstarted),itislikelythatonlyValassiswillqualify.EvenValPak,anotherdirectmailer,saysitcouldnotqualify.Also,allNSAssofarhaveinvolvedoneverticallyintegratedcompany.NoassociationshaveaskedforNSAsyet.Inanyevent,thisNSAwassetupspecificallytotakeadvertisingfromnewspapers.USPSisnotlikelytosettermsthatallownewspaperstogetsimilardiscounts.

    WilltheNSAcausethePostalServicetolosenewspapermailbusiness?

    Thatiswhatmanynewspapershavesaid.ButPRCsaysnewspaperswillusethemostcosteffectivedistributionsystem,regardlessofireaboutthisNSA.AndUSPSdoesnotfearthelossofPeriodicalsmailednewspapers,whereitbelievesitlosesmoney(thoughNNAdisagreeswithitsmath.)ValassissaysnewspapersareleavingthemailanywayandtheirdeparturesarenoreasontodenythisNSA.PRCsaysittriedtoguesshowmuchmailwouldbelostbutnewspapersdidnotprovideenoughinformationtoenableittodoso.

    HowmuchmoneywillUSPSmakefromthisdeal?

    Itanticipates$4.7to$15.3millioninnetcontribution(theamountitearnsoverdirectcosts)overthelifeofthecontract.ButmostUSPSNSAsinthemarketdominantareashavenotmetexpectations.

    TowhomshouldIcomplainaboutthis?

    IfyoudidntparticipateinthecommentsgatheredbyNNAorothersduringthePRCproceeding,youwillwanttopayattentiontofurtherannouncements.Thisbattleisntover.Thereismoretocome.Fornow,youcanwriteyourmembersofCongress.Isthereaformletter?No.Pleasewriteinyourownwords.Thosearemosteffective.

    WhathasNNAdoesandwhatwillitdonext?

    NNAvigorouslyopposedthisNSAasithasopposedallUSPSproposalstotiltthelocaladvertisingmarkettowarddirectmail.NNAfiledoppositioninthePRCcaseandhasexpresseditsviewsdirectlytothePostalService.Itislikelythatlegislationwillberequiredtosettheplayingfieldrightagain.AlthoughgettinganypostallegislationpassedinthisCongressisextremelydifficult,NNAhasreceivedassurancesthatremedieswillbeseriouslyconsidered.Courtappealsarealsopossible.NewspaperAssociationofAmericahasalreadyfiledwiththeUSCourtofAppealsintheDistrictofColumbiaCircuit.

    2012 National Newspaper Association

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