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Appeals Court Upholds Netflix Disc-Mailer Rate

9 Apr, 2014 By: Erik Gruenwedel

A U.S. Court of Appeals in Washington, D.C. has upheld a previous ruling mandating the U.S. Postal Service charge customers the same rate to deliver first-class disc mailers.

The April 8 decision affirms a previous court ruling ordering the Postal Regulatory Commission — the agency overseeing the U.S. Postal Service — to charge other by-mail rental services the same first-class rate given to Netflix.

Leveling the playing field allows “GameFly (or other DVD mailer) to use either service at the same cost,” Circuit Judge Karen LeCraft Henderson wrote in the decision.

Online video game rental service GameFly in 2011 sued the Postal Commission alleging the postal service gave preferential treatment (hand sorting) to Netflix and its by-mail disc mailers.

Netflix, which is transitioning from by-mail disc rental service to subscription streaming, at one time was the postal service’s largest individual customer — generating more than $500 million in annual revenue.

Netflix ended the most recent fiscal period with 6.9 million disc subscribers.

GameFly, which alleged the unequal treatment forced it to pay more to ensure its rental discs weren’t damaged by the postal service’s automated sorting machines, won on appeal. The postal service challenged the appeal.


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