R.R. Donnelley Ready To Deliver When the Postal Service Doesn't

If Congress decides to allow private delivery of newspapers and magazines on Sundays, the nation’s largest printing company is ready to step in.

“We are looking at alternative delivery methods for content, for physical content,” Thomas J. Quinlan, CEO of R.R. Donnelley, told financial analysts this week. (SeekingAlpha has the complete transcript.) “With the platform that we've built . . . with the addition of [recently acquired competitor] Consolidated Graphics, we've got the ability to be in the majority of populated cities in the United States.”

Thomas J. Quinlan

Quinlan expressed interest in the recent proposal by influential Congressman Darrell Issa, R-CA, that would “permit periodicals, newspapers and unstamped mail to be placed in mailboxes on days when the Postal Service does not provide mail delivery.” Current law gives the U.S. Postal Service a monopoly on delivery to mailboxes.

Issa’s proposal, especially if coupled with curtailment of Saturday USPS delivery, “creates an opportunity for us,” Quinlan declared.

He indicated that Donnelley’s interest is as much about keeping its publishing customers in business (and perhaps gaining a competitive advantage over other printers) as it is about actually making money on the delivery service.

“It's all about our customers and how can we reduce their overall total cost, make them more efficient,” he said. The Postal Service’s recent price hikes and reductions in service are forcing Donnelley to think that way.

Just not sustainable
“Look what USPS is doing to the mailing industry. It's just not sustainable. There's significant cost increases that they've put through. They're shifting cost to the players in the mailing industry, Quinlan said. “All these things, these are costs for the mailing industry that, quite frankly, we and other people like us have to go ahead and mitigate to our customers because our customers can't go ahead and aren't going to take the additional cost and look for people like us to, again, go ahead and mitigate those.”

“You look at Ladies' Home Journal that was announced by Meredith earlier this week [would be shutting down]. I mean, 40 to 47 percent of their cost was related to postage. It was nothing to do with electronic content.”

Issa’s proposal is no slam dunk. It’s sure to face a full-court press from postal unions and front-line employees who fear it would cost jobs and undercut the Postal Service.

USPS's position on the proposal is not as clear. The agency doesn’t want to give up the mailbox monopoly. But if it really loses money on delivering periodicals, as it claims, then perhaps it would welcome the opportunity to lose some of that business to the private sector [though methinks the alternate-delivery services would cherry-pick the most efficient periodicals mail and leave the dregs to USPS].

For a few years during the early 1990s, two alternate delivery networks that used newspaper publishers to deliver monthly magazines to driveways and front doors grew rapidly. But USPS won the magazines back – and squashed the private services -- by introducing more rate incentives for efficient Periodicals class mailers.

Related articles:

• Postal Service Dragging Its Feet on Fixing Periodicals 
• 6 Challenges Facing the Commercial Printing Industry 
• Old Ladies' Journal Sent to the Home