• by Erik Sass  @eriksass1, August 23, 2012

The Newspaper Association of America unloaded with both barrels on the U.S. Postal Regulatory Commission’s decision to strike a deal with Valassis Direct Mail, giving the latter cheaper postal delivery (“special contract rate”) in a new negotiated services agreement.

The NAA says the “sweetheart deal” will give Valassis, one of the world’s largest direct marketing outfits, an unfair advantage over newspapers and other postal customers.

NAA Chairman James M. Moroney III, the CEO and publisher of The Dallas Morning News, stated: “NAA believes this decision is contrary to law, and will challenge it immediately and vigorously in the U.S. Court of Appeals for the District of Columbia Circuit.”

The NAA has already registered its vehement disapproval of the “anti-competitive” agreement with U.S. Postmaster General Patrick R. Donahoe, urging him to cancel the deal immediately.

Another blast came from Caroline H. Little, NAA president and CEO, who noted that “the Public Representative appointed by the Commission itself to represent the views of the general public” judged the deal to be “a lose-lose proposition for both the newspaper industry and the Postal Service.”

The argument pits two financially strapped behemoths, the newspaper business and the U.S. Postal Service, against each other at a time when neither can afford to give up much ground.

Earlier this month, the USPS revealed that it posted a $5.2 billion loss in the second quarter of 2012 -- up from a $3.1 billion loss in the second quarter of 2011. It also failed to make a scheduled payment to its $5.5 employee retiree fund and warned that it will probably fail to make a second scheduled payment in September.

Its woes have resulted from a steep decline in the number of pieces of mail delivered, from a peak of 213 billion in 2006 to just 177 billion in 2011. The total volume of standard (marketing) mail delivered every year has tumbled from 103 billion in 2006 to 84 billion pieces in 2011. First-class mail volume has fallen from 98 billion pieces to 73 billion pieces over the same period.

The newspaper industry has suffered an equally vertiginous decline, with total advertising revenues tumbling 52% from $49.4 billion in 2005 to $23.9 billion in 2011. In the first quarter of 2012 total ad revenues fell 6.9% from $5.56 billion to $5.18 billion.