TESTIMONY
OF
LOUIS J. MILANI
ON BEHALF
ALLIANCE
OF NONPROFIT
AMERICAN
AND MAGAZINE
OF
BUSINESS
PUBLISHERS
MAILERS,
MEDIA,
OF AMERICA
Please send correspondence
document to:
about this
David M. Levy
Christopher Shenk
SIDLEY & AUSTIN
1722 Eye Street, N.W.
Washington, DC 20006
(202) 736-6000
dlevv@sidlev.com
Counsel for the Alliance of Nonpfofif
Mailers
May 22,200O
My name is Louis J. Milani.
Affairs and Strategic
Truman Avenue,
Marketing,
Yonkers,
include responsibility
distribution
Consumers
NY
Union, with offices at 101
10703-1057.
for operating
of Consumers
I am Senior Director-Business
expenses
914-378-2220.
My duties
such as paper, printing and
Union publications.
I joined Consumers
Union
45 years ago, and have held my present position for over 20 years,
Consumers
7
8
Mailers
9
Magazine
(“ANM”),
the
Publishers
Union is a member of the Alliance
Direct
Marketing
of America (“MPA”).
Association
of Nonprofit
(“DMA”),
and the
On behalf of Consumers
Union,
10
I serve on the board of directors of ANM, and on MPA’s Postal Committee.
11
This testimony, submitted
12
Media, describes
13
in Docket No. R2000-1 for nonprofit periodicals
14
Union.
how the rate increases
Consumers
15
on behalf of ANM, MPA and American
protection
proposed
by the Postal Service
mail will affect Consumers
Union is an independent
nonprofit
16
consumer
17
hensive
18
personal finance, health and nutrition, and other consumer
19
are tax exempt as an educational
20
the Internal Revenue Code, and we have been authorized
21
postal rates for many years.
source
organization.
reporting
about
organization
products
and services,
concerns.
Union tests products
to use nonprofit
in 50 state-of-the-art
at our 24-acre national testing and research center in Yonkers,
24
Our product
25
expert judgment
26
longer-term
ratings are based on lab tests, controlled
by our technical
of consumer
-2-
and research
products,
We
under Section 501 (c)(3) of
23
reliability
testing and
Since 1936, we have been a compre-
for unbiased
Consumers
22
Business
staff.
labs
New York.
use tests, and
To determine
we also conduct
the
an annual
1
survey of our subscribers.
The survey, with over 500,000 responses
2
year, has one of the largest respondent
3
States
4
hundreds
5
tronic gear.
6
services.
after the Census.
bases of any survey in the United
The survey
yields
of auto models, and of products
data on the reliability
such as appliances
our objectivity,
in our publications
Consumers
8
advertising
9
products off the shelf, and we accept no free samples.
10
company
11
not provide our subscriber
and elec-
Union accepts
from third parties.
use our reports or ratings for commercial
Consumers
12
of
Reader survey data also help us to report on other consumer
To preserve
7
each
no
We buy our tested
We do not let any
purposes,
and we do
list to other entities through sale or rental.
Union fulfills its educational
Our flagship
through
a
is Consumer Reports, which
13
variety of media.
14
appears
15
Reports is one of the ten largest circulating
magazines
16
States.
are Zillions (a bimonthly
17
consumer
18
Consumer Reports on Health and Consumer Reports Travel Letter.
13 times yearly.
Other Consumers
education
Consumer
With over 4 million paid subscribers,
Union
periodicals
in the United
periodical for children), and two monthly newsletters,
Consumers
19
publication
mission
Union
also
books and monographs.
disseminates
by
20
publishing
21
Buys for Your Home 2000, Best Travel Deals 2000, Complete Drug
22
Reference 2000, Guide to Baby Products, Home Computer Buying Guide,
23
House and Home Buying Guide 2000, How to Plan for a Secure Retire-
24
ment, Money Book, New Car Preview 2000, 7999 New Car Buying Guide,
25
Sport Utilify Special 2000, and Used Car Buying Guide 2000.
26
Union
also publishes
special
reports
-3-
Titles currently
information
in print include Best
Consumers
on public policy issues
affecting
1
consumers.
Several
dozen
2
http://www.consumersunion.oro/resources/oublications.htm
Consumers
titles
are
currently
Union also publishes
(www.consumerreports.org).
With 421,000
in
print.
See
(listing titles).
Consumer Reports Online
paid subscribers,
this is the
largest paid subscription
magazine
of magazine
increase, we will continue to market aggressively
production
on the World Wide Web. As the costs
the online edition.
Consumers
8
9
We pay postage
Union is a major customer of the Postal Service.
on approximately
200 million pieces of mail per year:
10
roughly 70 million pieces of Periodical mail, 120 million pieces of Standard
11
A mail, and ten million pieces of First Class mail.
12
is our largest expense,
13
annual
14
increases our expenses by about $2 million.
budget.
representing
On average,
Consumers
15
increase
has performed
in postal rates
increasing
amounts
of
in recent years, We presort Consumer Reports to the highest
16
worksharing
17
possible level: 80-85% is presorted
18
coded and presorted
19
breakage,
20
our Standard
21
our periodicals
22
discounts
23
too low to cover the trucking costs,)
24
about $30 million of our $147 million
each one-penny
Union
After salaries, postage
to maximum
by carrier route; the remainder
extent possible.
To minimize
is barbundle
we palletize Consumer Reports as well. We barcode and truck
A mail for entry at multiple destinations.
for entry at multiple
for publications
destinations:
(We do not truck
the destination
with less than ten percent advertising
Despite the size and sophistication
25
our postage expenses
have continually
26
Rate increases for nonprofit periodicals
-4-
outpaced
entry
matter are
of our mailing operations,
inflation in recent years,
mail have been especially
trouble-
1
some
Docket No. R97-1 increased the cost of nonprofit postage for
our periodical
publications
little or no advertising,
sponding
by ten percent.
Our nonprofit educational
tions, which accept no paid advertising
publica-
and rely solely on subscriptions
for funding, began paying higher rates than for-profit
cations with a high percentage
Confronted
9
with
the resulting rates were higher than even the corre-
commercial periodical rates.
and donations
For nonprofit publications
of advertising
content.
with this anomaly,
10
Commission
11
to pay the lower of commercial
12
welcome,
13
publications
14
Consumers
15
rates.
the Postal Service
agreed in Docket No. MC99-3 to allow nonprofit
or nonprofit
rates.
little or no advertising.
Union has entered
Since
most of our periodical
and the
periodicals
While this relief was
it still failed to restore any nonprofit rate differential
with
publi-
for nonprofit
MC99-3
took
effect,
mail at commercial
In tandem with the present case, the Postal Service has tried
16
17
to rectify this anomaly
by proposing
18
preference
19
ers Union and the three sponsors
20
legislation.
21
reduction
22
Reform Act was enacted
23
periodical
rates
24
enactment
of this legislative
25
increase
in the annual
postage
26
nonprofit
publications.
While
legislation
that would restore a rate
of five percent for the nonprofit periodical
A discount
for nonprofit
of this testimony
of five percent
strongly
Consumsupport this
does not provide the same rate
mail that prevailed
when the Revenue
in 1993, however.
proposed
subclass.
by the Postal
Furthermore,
Service,
which
Forgone
the nonprofit
assume
the
reform, would still produce an 11.5 percent
bill paid by Consumers
this increase
-5-
would
Union
for its
be less than
the
1
increases of 15 percent or more facing the average commercial
2
it is still higher than the rate of inflation since Docket No. R97-1.
If the legislation
even worse.
education
fails to pass in time, the result would
and advocacy.
Some projects may be cut in scope, with fewer
Other products may be scrapped
7
For these reasons,
8
Postal Service, with the support of nonprofit
9
cap nonprofit
Commission
be
CU could be forced to reduce its product testing, consumer
products tested.
10
periodical,
entirely.
I support the legislation
proposed
and commercial
rates at levels below commercial
rates.
by the
mailers, to
But I also ask the
to take the following steps.
First, carefully scrutinize the costs that the Postal Service is
11
12
proposing
to attribute to periodicals
and Standard
13
Postal Service to its burden of showing that the proposed
14
are a realistic likelihood.
Second, in setting the coverage
15
16
for periodical
mail as a whole, I respectfully
17
nize the educational
18
remain one of our society’s most important
19
cational, scientific and cultural matter.
20
this vital role only if publishers
21
readers can afford to read them.
value of periodicals
(A) mail, and hold the
cost increases
ratio over attributable
ask the Commission
publications.
information
But periodicals
to recog-
Periodicals
highways
costs
still
for edu-
will continue to play
can afford to publish them, and potential
CERTIFICATE
I hereby
document
OF SERVICE
certify that I have this day served the foregoing
on all participants
of record in this proceeding
with section 12 of the Rules of Practice.
May 22,200O
in accordance