U.S. Postal Service in CrisisBeginning of the End?

Newspaper Target Marketing Coalition New Orleans

March 7, 2012

USPS Challenges

• Volume – Declining Steadily

• Price – Rising but Capped

• Universal Service Obligation

• Labor Costs

• Pre-Fund Retiree Health Benefits

• Debt Ceiling – Maxed Out / $15 Billion

Volume by Mail Type

50%44%

4% 2%

2011 – 168 b PiecesStandard First ClassPeriodicals Shipping

57%37%

4% 2%

2016 – 144 b Pieces

Standard First ClassPeriodicals Shipping

Revenue by Mail Type

27%

49%

3%16%

5%

2011 Actual - $66 b

Standard First ClassPeriodicals ShippingOther

31%

41%

3%

20%

6%

2016 Projected – $62b

Standard First ClassPeriodicals ShippingOther

USPS Incurring Unsustainable Losses

USPS Strategic Plan $20 Billion Savings by 2015

• Legislative InitiativesEliminate Pre-Funding of Retiree Health Benefits

Eliminate Saturday Delivery Refund Overpayments to Federal Retirement System

• Operational InitiativesRetail: Closing Down Post Offices Network: Close and Realign Sortation and Transportation FacilitiesService Standards: Change Overnight Delivery of FCM/PeriodicalsReducing Workforce by 155,000 Employees Manage Own Healthcare Outside the Federal Government

What Does Congress Think?

Legislative ProposalsU.S. House of Representatives (H.R. 2309)

Turn USPS over to a Control Board Commission for Post Office Closings Eliminate Saturday Delivery Increase Rates (CPI & 5%) for “Underwater” Products (e.g. Periodicals)

U.S. Senate (S. 1789)

Provide USPS with RHB / Pension Relief Eliminate Saturday Delivery (after 2 years and a GAO study) Non-Postal Products (E-Commerce?) NSAs can Lose Money to Retain or Grow Volume

What Does Future Look Like for Newspapers ?

1. Periodicals Higher Rates/Poor Service

2. Standard Mail Continued Pressure on Rates New Promotions (Sat/H.D. Incentives/Mobile Barcodes) USPS Strays into Private Sector Competition (EDDM)

Opportunities for Newspapers

1. Distribution Revenue Delivery of Magazines 5-day Delivery (Newspapers Own the Weekends) Convince Congress to Open Up the Mailbox?

2. Convince USPS of a TMC Retention Strategy Data on TMCs in Alternative Delivery Creative Proposals or Price Adjustments Over Time