Magazine postage bills take it on the chin
Here is some analysis of the cuts provided by Michael Fox, Senior Vice-President of Rogers Media and the Chair of the Magazines Canada's postal committee:
On Nov. 1, 2005, small magazines will face an increase of 7% or more in their postal costs. For high-circulation magazines, the increase will be 35%.
For example, for a 200,000-circulation magazine, PAP now pays 61.66% of postage. As of Nov. 1, that is cut to 50.33% -- a shift of more than 11 percentage points from PAP to the publisher. The publisher's share goes from 38.3% to 49.7% -- which works out to a 30% postage cost increase for the magazine.
There's more bad news to come. Based on current activity levels, PAP will have another huge gap in the next fiscal year. Heritage will need to slash PAP percentages further, effective April 1, 2006, in order to cover a gap for 2006-07 estimated at $8.3 million.
Simply put, the cumulative impact of postage rate increases by Canada Post Corp. (CPC) has devoured all the funds allocated for PAP while the program continues to fund roughly the same volume (212 million copies for 1,200 periodicals).
In May 2005, Magazines Canada leaders had told the government that an additional $7 million in PAP funding was required for the current government fiscal year that ends March 2006 in order to continue the PAP subsidy at the percentage level it has traditionally maintained (averaging 62% of postage costs). Since then, there has been no news and no consultation with the industry -- so the severity of the cuts is a shock.