In the Matter of the Petition by

POOL PUBLICATIONS, INC.

for a hearing upon its application on for second-class
entry of "SWIMMING POOL WEEKLY."

P.O.D. Docket No. 1/143

William A. Duvall Hearing Examiner

POST OFFICE DEPARTMENT, WASHINGTON 25, D.C.

INITIAL DECISION OF HEARING EXAMINER

Pool Publications, Inc., the Petitioner in this proceeding, applied on March 2, 1959, for second-class mail privileges for its publication "Swimming Pool Weekly." (Joint Exhibit A)

The Director of the Postal Services Division, Bureau of Operations, Post Office Department, the Respondent, advised the Petitioner by letter dated March 26, 1959, that he proposed to deny the Petitioner's application. (Joint Exhibit B) The reasons for the proposed denial were stated in the letter of notice.

In August, a hearing was held at which the Petitioner was represented by Mr. John E. Broderick, who is Vice-President, General Manager and part owner of the corporation. The Director was represented by counsel. After the hearing, the Petitioner retained counsel and briefs were submitted on September 11, 1959, by counsel for both parties.

At the hearing, it was agreed that four issues are presented by the pleadings in this case, as follows:

First, does the publication have a legitimate list of subscribers?

Second, is the publication owned or controlled by individuals or business concerns or a business concern and conducted as an auxiliary to and essentially for the advancement of the main business or calling of the owner or owners?

Third, does the publication consist principally of advertising and editorial write-ups of the advertisers?

Fourth, and last, is the publication circulated principally to others than a list of subscribers, thereby making the publication one that is designed primarily for free circulation.

Additional exhibits received in evidence at the hearing are:

Joint Exhibit C - A folder containing copies of the weekly publication from December 15, 1958, through August 3, 1959.

Petitioner's Exhibit 1 - A circular letter soliciting subscriptions for the publication, accompanied by a postage prepaid postal card addressed to the publication for use by persons who want to enter a subscription.

Petitioner's Exhibit 2 - A sample statement billing persons to whom the publication has been sent. The subscription rate is shown as $5.00 per year, but the recipient is advised that this is a special rate which is to terminate July 1, 1959.

Petitioner's Exhibit 3 - A copy of the July 13, 1959, issue of Advertising Age.

With respect to the first issue, Mr. Broderick testified that "seven hundred and eighty-six persons have actually sent us their check for $5." (Tr. 11) There being no evidence to the contrary, the first issue is resolved in favor of the Petitioner. (See Section 132.225, Postal Manual; Myrick v. United States , 219 F. 1, 4)

No individual connected with the Petitioner owns any part or has any interest in any business which is advertised in the publication, except that there is in each issue a small amount of subscription solicitation for "Swimming Pool Digest," another publication published by the Petitioner. Conversely, except as above noted, no advertiser in "Swimming Pool Weekly" owns any part or has any interest in the Petitioner-corporation. (Tr. 19, 20) The second issue is resolved in favor of the Petitioner since there is no other evidence of record on this issue.

Among publications "designed primarily for advertising purposes" the Department, in Section 132.226c of the Postal Manual, has included "Those that consist principally of advertising and editorial write-ups of the advertisers." The Respondent alleged that the Petitioner's publication violates this regulation. Mr. Broderick testified that "*** if they [the advertisers] develop new products, that is news. It is not editorial. It can be tied in with the actual appearance of the ad; however, it is not always the case. We run many articles throughout that paper, sir, that there are no advertisers solicited in the same issue." (Tr. 41)

On cross-examination Respondent's counsel called attention to three instances in which narrative matter about a product appeared in the same issue with an advertisement of that product or by the manufacturer of that product. No testimony on this point was offered by the Respondent. I have reviewed, at random, twelve of the issues of the publication and I find that there are some issues with no editorial matter related to advertisers or their products; there are some issues in which there is one such instance; and in some issues there were two of the described instances.

The publication has increased in size from eight pages in its December 29, 1958, issue to twelve pages in its issue for August 3, 1959. In a publication of such size in which the infraction of the regulation occurs once or twice, I do not believe it would be accurate to say that the publication consists "principally" of advertising and editorial write-ups of the advertisers. If there were more infractions than my examination of the publication has indicated it was incumbent upon the Respondent to establish that fact, and this was not done. Concerning the third issue, I find in favor of the Petitioner.

The controlling statute, Section 226 of Title 39, United States Code, denies second-class mail entry to publications that are designed primarily "for free circulation."

The Petitioner's method of achieving circulation and his view as to the definition of a subscriber are revealed in the following colloquy:

A I will reiterate that entire list. Seven hundred eighty-six paid subscribers that have actually sent their checks. Two thousand eight hundred and eighteen firms billed sixty-five days past due. I have a specimen of the bill with me that we sent. Four hundred and fifty paid bulk subscriptions. That is a total of four thousand, fifty-four. Now we just added to our list as of this date, August 5th, one thousand, one hundred and ninety-one firms to our list. These are brand new names of firms and people that we have discovered that are in this industry, and we have sent them our newspaper. Now we have three hundred and seventy-nine advertisers, potential advertisers and advertising agencies who receive this newspaper absolutely free, and that is common practice in the advertising and publishing business as far as my knowledge. That gives us a grand total of five thousand, six hundred twenty-four. And we have had that many printed every Monday.

Q I am a little bit curious about these eleven hundred and ninety-one firms who have been added, and from what you say I gather that you send them the publication without their having ordered it and then you bill it. Is that the procedure?

A Well, sir, here's exactly how we have had to do it.

Q Are these eleven hundred and ninety-one copies that are sent out similar in nature and purpose to the copies of Volume No. 1 which was sent out more or less as an announcement of the fact that you were in business?

A No, sir. They are not. We just add them right on to our regular print. We received a copy of the newspaper just as it appears in the hands of any other paid subscriber or a person who had been subscribing to us from the very beginning. If we get a new name -- for instance, if you told me today that you were considering entering the swimming pool business, I would add your name to my list, and I would send you Swimming Pool Weekly because I think it would do you some good. I think it would help you in your business, and if you want to pay me $5 for it, that is your prerogative. I can't extract it from you, but I can ask you for it. I cannot extract it from him forcibly, but I can certainly ask him for it as a businessman. If he likes my product after having sampled it, after having seen it for four weeks or five weeks or four months -- if you really like it and you feel that it is doing you some good.

Q How long would you continue to mail that publication to me if I wouldn't send you the $5 for the subscription?

A Well, sir, I am really not a qualified publisher. Advertising is basically my business, and I just apply my advertising knowledge to these publications here, but from what I have heard and understood during the past year, most of the major publications use various methods of procuring paid subscribers. They will run a cross sectional study of the country. They will pick five or ten thousand people. They will send them their magazines or their newspapers for three or four issues. Then they will stop, and they wait. That is when the circulation really comes in because the person receiving it thinks they are getting it for nothing. When it stops coming to them they realize that maybe I should pay for this, and they send their checks in. This method is used by publications all over the country, and I am certain that every man in this room has been exposed to those tactics. I have been exposed to it by Life magazine and Newsweek magazine. I don't see anything wrong with it. (Tr. 12-13; 14-15)

In addition to this testimony, Mr. Broderick stated that on June 1, 1959, his company mailed 3,600 statements [Pet. Ex. 27] to persons who had been receiving the publication. The statement is a regular form of statement used by the Petitioner, but on the bottom half of it the recipient is advised that "If you do not wish to continue receiving SWIMMING POOL WEEKLY, please so indicate and return complete statement to sender." Four hundred persons returned the statement indicating that they did not wish to continue to receive the publication. The Petitioner regards all of the remaining 3,200 persons, some of whom have remitted five dollars, as subscribers and continues to send them the publication. (Tr. 28-29) It is my opinion that it is unrealistic to assume that all of the 3,600 people intend that their silence be construed as the placing of a subscription. It is not unlikely that an appreciable number of them just disregarded the entire notice. Note has been taken, also, of the large headline on page 1 of the issue of April 27, 1959, that "WEEKLY CIRCULATION JUMPS TO 7000 WITH THIS ISSUE]"

When these figures and the other computations by the Petitioner are compared with the figure of 786 paid subscribers, plus 450 bulk subscribers, it becomes obvious that the publication is not "circulated principally to a list of subscribers" as required by the statute and by the regulation issued pursuant thereto which is published as a portion of Section 132.227 of the Postal Manual. This issue is resolved in favor of the Respondent.

Upon the basis of the foregoing findings of fact I conclude as a matter of law that the publication Swimming Pool Weekly does not conform to the requirements of Section 226 of Title 39, United States Code, which publications must meet in order to be eligible for entry into the mails as mail matter of the second-class.

The application of Pool Publications, Inc. for entry into the mails as second-class matter of the publication Swimming Pool Weekly is denied.

The evidence in this proceeding indicates that, as suggested by Mr. Broderick, the present application is premature. This decision, if affirmed, constitutes no bar to the Petitioner's filing another application at such time as he believes his publication to be in conformity with the applicable law and regulations.

/s/