Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, May 23, 1993 TAG: 9305210109
SECTION: BUSINESS PAGE: F-3 EDITION: METRO
SOURCE: BILL McALLISTER THE WASHINGTON POST
DATELINE: LENGTH: Medium
But the Minnesota network also has gone commercial, selling merchandise to raise money: $34 Mickey Mouse ties, $22.99 Beatles "Yellow Submarine" boxer shorts, $15 "Northern Exposure" coffee mugs and $49.50 Betty Boop watches.
All those items and more tumble from "Wireless" - a trendy, 42-page mail-order catalog published in nine editions each year by MPR's burgeoning St. Paul-based for-profit subsidiary. For years, MPR mailed out millions of catalogs at nonprofit rates. Last year the 40 million catalogs it mailed reaped $94.6 million in sales and earned the subsidiary an $8.4 million profit.
MPR's knack for turning a profit has made it a rapidly growing communications conglomerate, the focus of a multimillion-dollar dispute over the cheap postage rates that U.S. taxpayers and postal customers have subsidized for years. The rates are typically 5 to 7 cents a letter below those charged bulk-rate mailers who receive large discounts for presorting and bundling a minimum of 250 letters.
Nonprofit rates - which do not include first-class letters - are supposed to be restricted to charitable or educational mailings by nonprofit organizations, such as church publications or university catalogs. But so much other nonprofit mail is flooding the Postal Service that agency officials say it has gotten out of hand.
Nowhere is the controversy surrounding nonprofit rates more sharply focused than in a proceeding that postal inspectors have filed against MPR. They have accused the Minnesota network of cheating the Postal Service of $3.1 million by mailing millions of for-profit mail-order catalogs at nonprofit rates. MPR spokeswoman Ginger Sisco said the network had done nothing wrong and that critics are confounded by "the entrepreneurial way we do things."
Even without the fight over its catalogs, MPR's days of cheap mail would be in jeopardy. Because of the federal budget crisis, nearly 400,000 nonprofit organizations-from the Sierra Club to the National Rifle Association-seem certain to face higher postage bills and new restrictions on what they can mail at a discount.
For budget reasons, the Clinton administration has proposed cutting the taxpayer subsidy for congressionally mandated rates that began in 1951.
Postmaster General Marvin T. Runyon, citing the ballooning of questionable mail, has gone further. He has urged Congress to abolish cheap postage for all but absentee voters overseas and the blind, a fraction of the groups now authorized to use the cheap rates. Many such organizations may be worthy of public support, Runyon said, but "it's really not our position to be the social conscience of the country."
Nonprofit organizations are furious over Runyon's proposal, accusing him of taking "draconian" steps that would ruin their industry and keep the large bulk-rate private mailers-37 percent of the Postal Service's mail volume-happy.
After ignoring repeated warnings of nonprofit abuses, Congress has begun to take the idea seriously. House and Senate leaders have called Runyon's plan too extreme, but promise to overhaul the current system.
Among changes expected by all sides: higher rates for nonprofit groups, strict limits on what they can mail and "eligibility reform." Rep. William L. Clay, D-Mo., chairman of the House Post Office and Civil Service Committee, has proposed a phase-in of higher rates over six years and barring nonprofit organizations, like MPR, from using their nonprofit status for commercial purposes. Clay's committee is scheduled to vote on the proposal Wednesday.
R. Neal Denton, executive director of the Alliance of Nonprofit Mailers, said there is no way that Congress will make up the revenue that Runyon says the Postal Service needs to cover nonprofit mail costs: $1 billion. Mailers also agree it is unlikely that Congress will direct the Postal Service to make up the difference by charging other mailers, as it has for the past three years. "For a lot of nonprofits it will represent dramatic changes in their ways of doing business," Denton said.
"They're going to scream," said of the nonprofit groups. Stevens, ranking Republican on the Governmental Affairs subcommittee overseeing the Postal Service, said he expects groups from Boy Scouts to veterans to rally against his proposal to block the organizations from using cheap mailings for membership drives.
Groups from the American Legion, the nation's largest veterans group, to OMB Watch, a liberal group that monitors government regulations, have begun to complain. The legion has declared that threatened changes amount to "a death sentence" for nonprofit publications. OMB Watch executive director Gary D. Bass said a Runyon proposal to limit commercial advertising in nonprofit publications would chill free speech rights. "It's very troubling," Bass said.
by CNB