Postal Nightmare

It has become stunningly expensive to send a magazine or newspaper through the U.S. mails. After a series of rate increases calculated to make each class of mail pay for itself, publications today pay about 100% more for their second-class postage than they did in 1971. By next year, if current Postal Service schedules hold, the increase could mount to 175%.

Now, in a nightmarish great leap forward, Seymour Wenner, the chief administrative law judge for the rate-making Postal Rate Commission, has come up with a decision that would pile an even huger increase on top of all the others. His announced formula, which touched off alarm bells throughout the world of print journalism last week, is to cut first-class rates from a dime to 8 1/2-c- and make up for the lost income in part by raising second-class rates yet another 122%. Added to increases already in effect or planned, Wenner's scheme would boost second-class rates to five times what they were in 1971. Furthermore, there is the likelihood of still another 33% increase 100 days after the Wenner proposal is resolved.

To survive, publications would need not simply loyal but also rich readers. TIME'S $18 annual subscription price, for instance, which even now reflects galloping paper, production and labor costs, could double and possibly triple. Reason: as prices rise, some subscribers would drop off, and prices would then have to rise again to cover editorial costs and other overhead expenses. Newsweek would perhaps have to make a similar leap, as would such other weeklies as Saturday Review, The New Yorker, New York magazine and SPORTS ILLUSTRATED. Even monthlies, such as Harper's and Reader's Digest, would have to hit their subscribers with drastic price increases. Religious, labor and farm publications would also be severely hurt.

Limited Audience. Reacting last week to the Wenner decision, Emory Cunningham, the Birmingham publisher of Progressive Farmer warned that subscriptions would doubtless have to jump from $7 to $25. Said he: "The only farmers who will be able to subscribe will be the quite well-off ones."

In all, rates for local mailing of newspapers would shoot up 250%; books and records, 96%; third-class bulk advertising, 35%; and fourth-class parcel post, 67%. The inevitable result, say Wenner's critics: use of the mails would drop, Postal Service revenues would fall, and the entire system would be in a deeper hole than it is now with its $800 million annual deficit. The individual first-class user might save a few dollars a year. But, claims Coleman Hoyt, distribution manager of the Reader's Digest, the saving would be cancelled by increases for other classes of mail used by the same person. "In the long run," says Hoyt, "the people pay for everything."

The decision, reached after 20 months of hearings, is by no means final. As administrative law judge, Wenner conducts the initial hearings in the Postal Rate Commission's cases. His decision must be approved or modified by the full rate commission, a five-member independent body, then go to the U.S. Postal Service's seven-member board of governors, which has final say.

There were signs last week that the ruling faced bumpy sledding in the Postal Service itself. Postmaster General Benjamin F. Bailar, angrily denouncing Wenner's decision as "ominous for the Postal Service" and charging that it ignored the long hearings, said that the proposed rate increases would "cost us considerable volume." Other Postal Service officials speculated that the Wenner approach could eventually lead to higher first-class rates.

Even if Wenner's decision is overturned, mail subscription prices may still go up sharply during the next two years. A bill passed and signed into law a year ago would have extended the deadline for already-scheduled postal increases from July 1976 to July 1979. So far, the Administration has not requested and Congress has not approved funding to space out these increases.

In the publishers' view, the most frightening aspect of the Wenner ruling is that it establishes an extreme threat, which even if fended off will make previously contemplated increases that once seemed staggering look almost "moderate." Wenner's decision, whether it stands or not, may assure that whatever rates finally emerge will be far higher than anyone had anticipated.

Wenner, 62, a Harvard-trained lawyer and veteran hearing examiner, was recently upgraded to chief administrative law judge of the Postal Rate Commission. He has been steeped in the rituals of rate making since 1971, the year after Congress set up the Postal Service as a replacement for the much criticized old Post Office Department and gave it a mandate to run the mails on a businesslike basis. From the start, though, Wenner, as part of the autonomous Postal Rate Commission's bureaucracy, has been at odds with the Postal Service. He claims it has not done what a court told it to do two years ago, namely to set formulas for determining rates. In his ruling, Wenner sought to fill that void, in effect telling the Postal Service, "If you don't, I will."

Real Costs. As Wenner saw it in his 194-page decision, the current rate structure puts too much of a burden on first-class mail users. Some 2-c- of every 10-c- spent on first-class postage, Wenner calculates, subsidizes other classes. Thus the Postal Service becomes a "tax collection agency, collecting money from first-class mailers to distribute to other favored classes." His solution: cut the current first-class rate and make up for it by presenting the other classes with a bill of $900 million a year. The magazine and newspaper share of that bill--$200 million--would amount to only about 2% of the Postal Service's budget and thus would do relatively little to help it, but the rate increases would devastate publishers. Moreover, many publishers argue that what they pay in postage covers the real costs that they generate. Time Inc. and others, for example, presort and bag magazines by zip code, thus saving the Postal Service millions in handling costs.

Beyond that argument, there is the historical issue posed by Postal Service rate practices. Prohibitive and therefore restrictive rates were never intended by the founding fathers when they set up the postal system. Its mission, they felt, was not to make money but to facilitate the diffusion of information throughout the young republic. That nation-building charter, said George Washington, was to bind "these people to us with a chain that can never be broken." Since then Congress has reaffirmed the principle as a national purpose.

Magazine executives assume that the largest publishing companies, like Time Inc. and McGraw-Hill, would probably be able to survive postal increases, even on the scale proposed by Wenner. Their circulation, advertising revenue and earnings would all decline sharply, with some inevitable effects on editorial quality. Smaller publications would die by the hundreds, and the founding of new magazines would become more hazardous than it is today.

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