Max Media's Chairman Attacks Legislation to Accelerate the Digital Television Transition: 'Haste Makes Waste'

Max Media's Chairman Attacks Legislation to Accelerate the Digital Television Transition: 'Haste Makes Waste'

WASHINGTON, Oct. 31 /PRNewswire/ -- Last week, Congressman Eliot Engel (D- NY), a member of the House Energy and Commerce Committee, offered an amendment to Title I of House Budget Reconciliation bill, legislation which among other things seeks to accelerate the end of analog television broadcasting in America. The Engel amendment, with bi-partisan support, provides an additional $30 million earmarked for New York City to assist in its conversion from analog to digital TV broadcasting. Congressman Engle believes "New Yorkers should not wake up 'in the dark' on January 1, 2009 because there weren't sufficient funds to create a proper digital transition."

A. Eugene Loving, the Chairman and CEO of Max Media, LLC, responded to the Engel Amendment with complete dismay. "The sad truth is that the rest of America indeed will now wake up in the dark on January 1, 2009, if this legislation is passed. It is a mistake and it will have a terrible adverse impact on the public, which now relies on free and universally available television broadcasting service." An editorial by Mr. Loving appears today in the October 31, 2005 issue of Broadcasting and Cable Magazine. Mr. Loving gave the following further commentary on this legislation.

"The great confusion and missteps of rescue services and relief efforts in the wake of Hurricanes Katrina and Rita, even after the lessons of 9/11 had supposedly been learned, underscores the value of keeping things that work well, while fixing those that may be broken. While improvements in communications between and among first responders and supportive government agencies are critically important, they should not come at the expense of citizen safety in the cities and towns of this country.

Since 1934, Congress has successfully relied upon a system of free and universally available local broadcasting stations to provide essential news and information to the American public, especially in times of emergencies and natural disasters. That system has proven its worth time, and time, again. The evacuation of millions of people before the recent hurricanes struck -- and the resulting savings in human lives -- is largely due to television broadcasters who brought information to mass audiences quickly and efficiently. While the focus after Hurricane Katrina was on the several thousand citizens that remained in New Orleans, hundreds of thousands people followed the instructions broadcast over local television stations and safely evacuated the area.

If the Federal government had ordered all the analog television stations to turn off their transmitters a week before Hurricane Katrina, in order to accelerate the auction of spectrum, this timely evacuation would not have occurred to the degree it did. Based on the devastating experiences in Louisiana, Mississippi and Alabama, the cost of prematurely disrupting the nation's current local television transmission could be measurable in human lives numbering in the hundreds of thousands.

Moreover, television broadcasting proved its tremendous value to the local Gulf communities when analog broadcast signals brought critical information to virtually 100% of the homes, businesses, hospitals, police stations and fire departments in three affected states. WWL(TV) was able to stay on the air for the duration of Hurricane Katrina, broadcasting under its own power and providing critical information to anyone with a television receiver, without any mandate from the government. Their efforts were enhanced when, in the immediate aftermath of the hurricane, the National Association of Broadcasters and local partners distributed 1,300 battery-operated handheld TV sets to public-safety officials working in the area, thereby ensuring the reliable distribution of critical local information regarding rescue and supply efforts. Some citizens who stayed behind also had their own battery-operated receivers or generator power, which enabled them to share the information with neighbors.

Today, forces are at work in Washington which will prematurely destroy the very system that was most responsible for the orderly evacuation of the Gulf Coast communities. Legislation may force televisions stations to abandon prematurely their analog signals and broadcast only a digital signal. Monied interests -- especially those who stand to benefit from sales of WiFi and WiMax technology -- are pressing Congress to hasten the deadline for digital- only television broadcasting, which is currently to be determined on a market- by-market basis, after the substantial majority of the public have obtained digital television receivers in each market.

One of the primary reasons why some Congressional leaders appear persuaded to hasten the digital television transition deadline is the promise of revenues for the Federal treasury. The merits of spectrum auctions are legion when the auctions are a success, but here is no guarantee that these auctions will mirror the successes of the past. History has proven that timing is critical in such auctions. And timing is equally critical for the digital transition. A recent report commissioned by Intel Corporation highlighted the government revenue that could be gained by auction of that spectrum, but it completely failed to consider any of the real costs to the American public of such a proposal.

To borrow a popular admonition, haste makes waste. The many public interest benefits of broadcast digital television are only meaningful when digital television receiver penetration is high enough to attract advertisers. Otherwise, it is impossible to sustain the economic survival of free and universally-available local broadcast television system, which served the Gulf coast so well. This is a system invented and built by private enterprise during the last 57 years, yet Congress is seriously considering turning it all off at once, before the public has had a fair chance to transition.

It is true that an accelerated deadline for the swap to digital-only broadcasting would make spectrum available for other uses, but at what expense to the public? Today's free over-the-air analog broadcast television is this nation's mass commutations system, available to rich and poor alike. Displaced audiences in the millions nationwide are sure to result. A premature deadline for the digital conversion will leave American homes that rely on their current TV receivers looking at a blank screen. Government intervention through bureaucracy and subsidization to make converter boxes available simply will not ensure a smooth and rapid transition unless the audience understands the proposal plus obtains and hooks up the boxes first, before analog is turned off. Even this plan does not cover the multiple sets in a household, but merely one TV.

Federal government policy put television broadcasters at the forefront of the digital television transition by requiring them to build and operate digital transmission facilities according to a government-mandated construction schedule long before the audiences with digital television receivers were even in place. However, it has gone greatly un-noticed by Congress and the public-at-large that the transition to digital television broadcasting has already been quite costly for broadcasters. Broadcasters have stepped up to the plate. But, consumers must buy new television sets or receiver boxes to receive digital broadcast signals, which has been slow to occur due in large part to costs, the sluggishness of manufacturers, and the need for effective consumer education.

Make no mistake, a hastened and premature end of a fair and measured digital transition means losing vital television audiences for television stations, whether that loss is temporary and transitional, or permanent in nature. That loss of audience translates directly into lost revenues, and threatens the economic survival of stations serving the smallest communities. The impact will be most harsh in smaller communities where the needs for universally available broadcasting are the greatest.

Indeed, the costs for this digital conversion have been highest for the television stations serving smaller and rural communities. In these communities, the costs of digital conversion are the highest per-capita in the industry. Moreover, in absolute terms, the costs of conversion in a smaller community such as Traverse City, Michigan are the same as in a major market such as Philadelphia, yet the amount of total revenue in Traverse City to sustain such costs is dramatically less. Ironically, spectrum for alternative uses sought by the proponents of an accelerated digital conversion is already in relative abundance in these smaller communities.

In the end, it is folly to jeopardize the well-established strengths of the local broadcast television system, especially in smaller communities, for the speculative economic gains of accelerating yet another spectrum auction. Like real estate, the value of spectrum has historically appreciated over time, as demand for spectrum grows with the development of competing technologies. By staying the course and riding out the digital transition originally envisioned by Congress, Federal auction revenues will be maximized and the negative external costs to the public of losing vital television service can be completely avoided. Ultimately, if the government decides to undertake responsibility for the dissemination of digital converter boxes at taxpayer expense, the deadline for cessation of analog broadcasting should not occur before the vast majority of American homes who do not have subscription television can receive digital television broadcasts."

Max Media LLC ("Max") is a Virginia limited liability company formed in 1998 to acquire and make minority investments in media and new media properties. Max Media is currently invested in broadcast television stations serving Butte, Billings, Bozeman, Great Falls, Missoula, and Kalispell, Montana; Bowling Green, Kentucky; Portland, Maine; Traverse City, Michigan; and Tyler, Texas.

Source: Max Media LLC

CONTACT: Ms. Debbi Haddaway of Max Media LLC, +1-757-437-9800, fax:
+1-757-437-0034

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