May 11 (Bloomberg) -- Time Warner Inc., publisher of more than 20 U.S. magazines including Sports Illustrated and People, said it supports the Postal Service’s proposal to eliminate Saturday mail delivery to save money.
The newsweekly Time would have to change editorial, production and delivery cycles to accommodate the change, said Jim O’Brien, vice president of distribution and regulatory affairs at the company’s Time Inc. periodical division.
“We rely on the Postal Service to deliver our magazines, our direct mail and our bills,” O’Brien said today in a telephone interview. “It’s a critical component of our supply chain. We need a healthy Postal Service.”
The U.S. Postal Service, which lost $1.6 billion last fiscal quarter, is making the case to customers, Congress and regulators about “the reality going forward” that mail volume will continue to decline as consumers switch to electronic communication, Postmaster General John Potter said.
“It’s very important that the Postal Service is getting its big mailers behind them,” said David P. Hendel, a partner with Husch Blackwell Sanders LLP in Washington who represents postal suppliers and isn’t involved in the Saturday delivery debate. “If they support it, you have to think they’ve studied it and come to the conclusion that out of some bad options, this is one of the best ones.”
Meeting With Time
Potter met with Time Inc. Chairman and Chief Executive Officer Ann S. Moore about the need to cut delivery to five days a week from six. Time Warner is the biggest publisher to declare its support for the proposal, said Joanne Veto, a Postal Service spokeswoman.
“They came in and expressed some concerns,” Potter said today in an interview at Bloomberg’s Washington office. “I explained the economics and they quickly came around.”
The Postal Service has said eliminating one delivery day would save $3 billion a year. The Washington-based agency has said it may lose $7 billion this year and a cumulative $238 billion by 2020 as mail volume and revenue decline.
The agency is required by law to deliver to about 150 million addresses six days a week, and will need Congress to approve a cutback in service. Its regulator, the Postal Regulatory Commission, is reviewing the proposal and will issue a non-binding opinion.
Mail volume dropped 6.3 percent in the six months ended March 31, Postal Service Chief Financial Officer Joseph Corbett said last week. The agency cut work hours 7.5 percent in the period.
The National Newspaper Association, which represents small newspapers that use the mail to deliver their publications, doesn’t share Time Warner’s position.
“We are opposed to it,” Tonda Rush, public policy director for the Columbia, Missouri-based association, said in a telephone interview. “Or at least we think it should be a last resort measure and certainly not at the top of the list before other cuts are explored.”
“A lot of newspapers around the country have Saturday issues in the mail,” she said. “If they arrive in the mailbox on Monday, they’re no longer a newspaper, they’re a history book.”
Rita Cohen, a senior vice president with the Magazine Publishers of America, didn’t respond to a telephone call seeking comment. The New York-based association represents about 225 U.S. and 50 international publishing companies, according to its website.
In addition to magazines, New York-based Time Warner owns the Warner Bros. film studio, the HBO pay-television network and the television channels once controlled by Ted Turner including CNN and TBS.
Bloomberg LP, the parent of Bloomberg News, publishes the magazines Bloomberg Businessweek and Bloomberg Markets.
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