In the Matter of the Petition by NATIONAL ASSOCIATION OF TRAILER OWNERS, INC. at 1359 Main Street, Sarasota, Florida for a hearing upon its application on for second-class entry of "THE R." P.O.D. Docket No. 1/144 September 4, 1959 William A. Duvall Hearing Examiner POST OFFICE DEPARTMENT, WASHINGTON 25, D.C.
On August 19, 1958, the National Association of Trailer Owners, Inc., 1359 Main Street, Sarasota, Florida, the Petitioner, filed application for second-class mail privileges (Joint Ex. A) 1/ for its publication The Mobilehome Owner. With the application there was submitted a copy of the August, 1958, issue of the publication. (Joint Ex. A-1). A supplemental application (Joint Ex. A-3) was filed in November, 1959, together with a copy of that month's issue of the publication (Joint Ex. A-2).
On February 11, 1959, the Director, Postal Services Division, Bureau of Operations, Post Office Department, the Respondent, advised the publisher that he proposed to deny the application on the following grounds:
"The law, Act of March 3, 1879, as amended (39 U.S. Code 224 and 226; Section 132.2, Postal Manual) prohibits the admission of publications designed primarily for advertising purposes. This includes those owned or controlled by individuals or business concerns and conducted as an auxiliary to and essentially for the advancement of the main business or calling of those who own or control them as stated in 132.226b, Postal Manual.
"The National Association of Trailer Owners, Inc. is a private enterprise organization with stockholders engaging in business enterprises for profit such as; catering to and providing services for the trailer industry generally; acting as adviser and general consultant to owners of trailers and of trailer parks; maintaining and operating for profit a trade information bureau for the collection and supplying of information as to the trailer industry; and conducting the business of bringing to the attention of the public through the press, magazines, pamphlets and by other means the characteristics, ability and other qualities tending to establish in the minds of the public the character and ability of the subscribers to its services, including men, women, corporations, co-partnerships, and all goods and wares manufactured and sold by subscribers. Since the profits of the corporation accrue to the benefit of the owners and stockholders, "The Mobilehome Owner" would appear to be a house organ issued for the advancement of the main business of the concern and, as such, would not appear to qualify for second-class mail privileges under Section 132.226b, Postal Manual."
The case came on for hearing before me on August 6, 1959. Both parties were represented by counsel who participated in examination and cross-examination of the witness and made oral argument at the conclusion of the taking of testimony. Briefs to the Hearing Examiner were waived and both parties specifically reserved the right, granted to them in the Rules of Practice, of appealing from this Initial Decision and filing exceptions and briefs with respect thereto.
At the hearing it was agreed that the sole issue in this case is whether the publication, the Mobilehome Owner, is designed primarily for advertising purposes.
The controlling statute, Section 226 of Title 39, United States Code, sets forth the conditions upon which publications shall be admitted to the second class of mail matter and then provides that:
"Nothing herein contained shall be so construed as to admit to the second class rate regular publications designed primarily for advertising purposes, or for free circulation, or for circulation at nominal rates."
The regulations of the Department on this subject are as follows (Section 132.226, Postal Manual):
"Advertising Publications. Publications designed primarily for advertising purposes may not qualify for second-class privileges. They include:
a. Those having advertising in excess of 75 percent in more than one-half of their issues during any 12-month period.
b. Those owned or controlled by individuals or business concerns and conducted as an auxiliary to and essentially for the advancement of the main business or calling of those who own or control them.
c. Those that consist principally of advertising and editorial write-ups of the advertisers.
d. Those that consist principally of advertising and that have only a token list of subscribers, the circulation being mainly free.
e. Those that have only a token list of subscribers and that print advertisements free for advertisers who pay for copies to be sent to a list of persons furnished by the advertisers.
f. Those published under a license from individuals or institutions and that feature other businesses of the licensor."
The National Association of Trailer Owners was incorporated under the laws of the State of Florida in September 1956. The purposes and authorized activities of the Petitioner as itemized in Joint Exhibit C are multitudinous, one of them being to "engage in the business of catering to and providing services for the trailer industry generally, and to aid and act in the best interests of the owners, manufacturers, wholesaler, retailers, suppliers to and dealers in trailers and mobile homes". Another activity authorized by the articles of incorporation is the publishing of magazines, newspapers and periodicals. In 1957, fifty-one per cent of the stock in the Petitioner was purchased by Mr. Ward H. Patton, Jr., whose holdings in the corporation have increased until he presently owns sixty-two and six-tenths per cent of the stock. The two principal activities of the Petitioner now are the publishing of a magazine and the operation of a service organization for mobile home owners.
Membership fees in the Association are $10.00 for the first year and $7.50 for renewals. In return for these fees members receive a year's subscription to the Association's publication here under consideration, and all other literature of the Association. They receive $1,000 personal accident insurance coverage which increases each year to a maximum of $1,500; free travel routing maps and routing schedules; mail forwarding service; use of the Association's post office box; payment by the Association of rewards in the events of certain thefts; payment of a certain amount of money for attorneys fees if the member is involved in an automobile accident; and a membership decalcomania. Mr. Patton stated that an important, although intangible, benefit received by the members is the satisfaction of belonging to an organization composed of people of common interests.
Mr. Patton stated that he recognized when he acquired control of the Petitioner that the business of the Association, i.e., deriving revenues from the sale of memberships, wasn't working out very well. He therefore directed most of his attention and effort to the publishing of the magazine. The masthead of the November, 1958, issue indicates that there are five members of the staff of the publication. Mr. Patton stated that he is the only staff member who devotes any time to the affairs of the Association, and that only five to ten percent of his time is so spent. Revenues from the two activities - the Association and the magazine - at the time of the hearing were about five percent and ninety-five percent, respectively. The income from publishing the magazine is increasing while the income from the sale of membership in the Association is remaining static or decreasing.
There is an organization entitled the Mobilehome Dealers National Association. The evidence of record indicates that this organization, as the name implies, is an association of persons and concerns engaged in the manufacture and sale of mobile homes and equipment therefor. This organization formerly published a magazine which furthered the interests of its members, or, as stated by Mr. Patton, it helped "more people move in to mobile homes".
As already indicated, the affairs of the Petitioner as they related to the sale of memberships in the Association were not financially rewarding, while at some time during this period it occurred to the Mobilehome Dealers National Association that it should not be in the publishing business. The reason for this decision by the latter organization does not appear in the record. Whatever the reason may have been, the Mobilehome Dealers National Association sold its magazine to the Petitioner, and this appears to have been a stroke of extremely good fortune for the Petitioner. Petitioner acquired the circulation of the former publication and it acquired the opportunity of keeping the advertising contracts which had been in existence between the publication of the Mobilehome Dealers Association and its members and others. The extent of the value of this purchase to the Petitioner is reflected in Mr. Patton's statement that "it put us in business".
Prior to this time, the Petitioner had been printing only a sufficient number of copies of its publication to supply its members. As of the period immediately preceding the hearing, approximately 25,000 copies of the Mobilehome Owner were being printed each month, whereas there were only sixteen or seventeen members of the Petitioner Association.
Concerning the publishing business generally Mr. Patton stated that it is a rule of thumb in the trade that in order to succeed a publication must average approximately 60 per cent advertising to 40 per cent editorial matter. Mr. Patton stated that, while in one issue of the Mobilehome Owner approximately 61 per cent of the content was made up of advertising matter, the contents of the publication usually contained somewhat less of advertising matter and a bit more of editorial matter than is called for by the stated formula.
As regards the contents of the two issues of the publication received in evidence at the hearing, it is seen upon examination that the lead article consists of late news releases telling of events, innovations, industry activities and personnel and miscellaneous information relating to Mobilehome living and Mobilehome merchandising. There follow certain articles of one or two pages to a maximum of six pages in length. In the August, 1958, issue there are five such articles, and in the November, 1958, issue these articles are seven in number. Next, there are certain regular features such as The Owner Speaks - a kind of letters-to-the-editor type of copy -, Need Any Tips On, and Yours for the Asking.
On page 7 of the August issue and on page 5 of the November issue is a one-column article entitled This Month With NATO which emphasizes the service features of the Petitioner organization. On page 42 of the August issue is a full-page advertisement and solicitation of membership in NATO and a similar solicitation and advertisement, although different in format, appears on page 47 of the November issue. The remainder of these issues of the publication is made up of advertisements of manufacturers of mobilehomes, manufacturers of accessories for mobilehomes, a lending institution which offers to finance the purchase of mobilehomes, an insurance company which offers insurance for mobilehomes, and advertisements of mobilehome parks. The outside back cover of each issue consists of an advertisement of the Mobilehome Dealers National Association. The advertisements of the manufacturers of mobile homes and their accessories constitute by far the great bulk of the advertising matter contained in the publication.
Let us now examine in more detail the portions of the magazine which make up the "editorial" contents. Of the twelve narrative articles in both issues fully half of them extol in a general way the joys and benefits of living or working in mobile homes. I refer to "Your Heart and the Mobilehome", "Estes Park", "Florida's West Coast", "Why I Brought a Travel Trailer", "Tennessee Ernie Ford Goes Mobile" and "Ultra Modern Living". The feature "Need Any Tips On" appearing in both issues consists in large part of information, including trade names and prices, of various accessories for mobile homes. The feature "Yours For the Asking" appearing in each issue consists of two columns of paragraphs of descriptions of products or services of interest to mobilehome owners. Each paragraph is preceded by a number. At the bottom of the columns is a box containing the address of the Mobilehome Owner and a number corresponding with each numbered paragraph above the box. The reader is invited to encircle the number of the item about which he wishes to have some literature or booklets, and the reader is told that the publisher will see that the desired information is received. The feature "The Owner Speaks" is made up largely of endorsements of the Petitioner Association. Finally, in each issue there is an alphabetically arranged index of advertisers, with the number of the page on which each concern's advertisement appears opposite the advertiser's name. The reader is asked whether he has seen something in the magazine he wants to buy. If so, he checks the item listed in the index of advertisers, sends it to the Petitioner, and the latter states that "Your 'where to buy' information will be forwarded to you promptly".
That what has been said thus far is accurately representative of the publication is borne out by the testimony of the publisher in the following series of questions and answers (Tr. 18, 19).
Q. "Mr. Patton, the articles that are written in your magazine, either feature articles, editorials or stories, will you describe how they relate to this population who dwell in the mobile homes or are they not connected in any way with the people in mobile homes?
A. All the articles and stories, they all relate in some way to mobile home living.
Q. Now what is the source of your advertising?
A. Our advertising is from companies who wish to sell their products to either people who are already living in mobile homes or potential buyers.
Q. Generally speaking, then, your advertising is limited to people in the mobile home field, either manufacturer, dealer, purchaser, customers, or the mobile home dweller; is that correct?
A. The advertising that we carry is by mobile home manufacturers or suppliers."
The record in this case does not convince me that this publication is designed primarily for the purposes of advertising the National Association of Trailer Owners, although that is quite obviously one of the purposes of the magazine. It is true, as stated by Mr. Patton, that that Association would not survive were it not for the publication, but this fact is not determinative of the purposes for which the Mobilehome Owner is designed. This record is clearly convincing, however, that the publication is designed primarily for the purpose of advertising manufacturers of mobilehomes and mobilehome equipment and accessories. The Mobilehome Owner took over the circulation and advertising contracts of the Mobilehome Dealers National Association and the former, instead of the latter, is now "helping more people move into Mobile homes". In short, the publication of the Petitioner has become the medium through which the Mobilehome Dealers National Association members conduct their advertising campaigns. The Petitioner receives substantial financial support from the Mobilehome Dealers National Association by reason of the fact that the latter takes the entire outside back cover of the publication for its advertisement. It is true that Mr. Patton stated that he would be delighted if the magazine could obtain a more diversified list of advertisers. Publications must be granted or denied second-class entry, however, on the basis of what they are and not on the basis of what the publishers hope or believe they may become.
The so-called "editorial" matter in the magazine consists to a marked degree of propaganda pointing out - sometimes subtly and sometimes boldly - the advantages, comforts and benefits in general of mobilehome ownership. From the general promotional material the readers are led to the specific by the advertisements appearing in the magazine, by the offers of free literature about certain new products, and by the publisher's offer to supply information concerning items sold by persons and concerns who advertise in the magazine. Mr. Patton made one statement, perhaps inadvertently, which succinctly epitomizes the purposes for which the publication is designed. He said: "The purpose (of the Petitioner) is so that we can do something for the mobile homes industry and also so I can make some money for my family and my associates' families." (Tr. 18) Neither of these purposes is subject to any criticism whatsoever, but it is my conclusion that the means adopted to achieve these ends are at odds with the statute governing the entry of publications into the mails as second-class mail matter.
I find as a fact that the publication The Mobilehome Owner is designed primarily for advertising purposes.
In this connection there is pointed out the possibility that some additional light might have been shed on this question based on information contained in Joint Exhibits A and A-3. In Joint Exhibit A, it is indicated that out of a total number of subscriptions of 19,744, regular subscriptions accounted for 1,682, there were 10,611 copies sent to persons whose subscriptions were paid for by others and 6,597 copies were purchased in bulk by other than news agents or newsboys. Corresponding figures in Joint Exhibit A-3 are: 17,807; 5,065; 4,969 and 5,478. It undoubtedly would have been informative had these figures been explored.
I conclude as a matter of law that the publication The Mobilehome Owner 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 the National Association of Trailer Owners for entry into the mails as second-class matter of the publication The Mobilehome Owner is denied.
1/ By agreement of the parties, verifax copies of the originals of Joint Exhibits A, A-3, and B were received in evidence in lieu of the originals.