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DCO DIGITAL CONVERSION ORGANIZATION
Assisting the Digital Upgrade of Small Market, Minority-Owned and Public Television Stations and Cable Systems
515 Madison Avenue Suite 2306 New York, NY 10022- 212-752-5566 Fax 212-754-2110
email: digitalconversionfund@email.com Website: digitalconversionfund.8k.com
PRESS RELEASE For Immediate Release
DIGITAL CONVERSION ORGANIZATION ESTABLISHED TO AID UPGRADING OF TV STATION AND CABLE SYSTEMS TECHNICAL FACILITIES
LITIGATION RECOVERY TRUST FORMS NEW ORGANIZATION TO HELP DIGITAL UPGRADE IN US
The DIGITAL CONVERSION ORGANIZATION (DCO) is being established to facilitate the digital conversion of the nation’s television stations as mandated by the Federal Communications Commission. A main focus of the DCO will be to generate financing facilities and other support programs to assist the small market, minority owned and/or public television stations and cable systems to be able to accommodate the new high definition video transmission standard.
The DCO is designed to help close the digital divide that will likely occur where US broadcasters and cable owners lack the resources to upgrade their transmission facilities to switch from their analog equipment. Currently, no dedicated programs exist to supply loans or grants or other support mechanisms to facilitate the change over.
Most small market, minority owned and public television stations lack the necessary financial resources to fund the conversion of their technical plants to the digital standard. In fact, in New York City, the local public station has announced that its recently converted transmission equipment was destroyed in the September 11 terrorist attack at the World Trade Center, and currently lacks funding to replace these losses.
The DCO has been founded by Litigation Recovery Trust (LRT), a New York based law claims organization, which is currently prosecuting a series of actions against Comsat Corporation and its parent, Lockheed Martin Corporation. In a number of its proceedings, some of which have been prosecuted for over the past six years, LRT is seeking FCC sanctions requiring Comsat to turn over all proceeds it has and will receive as a result of the privatization of the INTELSAT and Inmarsat international satellite organizations. LRT maintains that Comsat’s past conduct, which has included criminal convictions for fraud and obstruction of justice and involvement for over a decade in the dissemination of pornography in hotels throughout the United States, must be sanctioned through the requested divestiture of assets.
Additionally, LRT is seeking the divestiture of all of Comsat’s international communications assets, which were purchased without proper grants of authority by the FCC.
The total proceeds from the sale of these various Comsat assets is projected to generate between $1.75 and .75 billion to be utilized for the funding purposes set forth by the DCO. The turn over of the proceeds of these assets would also constitute a partial repayment for the revenues realized by Comsat from its Congressionally established monopoly over satellite transponder sales. Comsat has never offered to compensate the United States for its billions of dollars of income realized from its transponder sales monopoly over the past 30 years.
Previously, FCC staff has supported the purposes and objectives outlined in the DCO plan. Currently, LRT is seeking to encourage the wide scale involvement of television and cable industry organizations to support its regulatory actions against Comsat, which are presently before the FCC.
Additionally, DCO is in the process of organizing an all industry executive committee to set appropriate procedures and systems to assist with the administration and funding process.
For additional information: Contact All Industry Organizing Committee, Digital Conversion Organization , 515 Madison Avenue, New York, NY 10022.
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OPEN LETTER TO THE FCC AND THE BROADCASTING AND CABLE INDUSTRIES
LITIGATION RECOVERY TRUST
515 MADISON AVENUE SUITE 2306 NEW YORK, NEW YORK 10022-5403
212-752-5566Fax: 212-754-2110 Email: litigationrecovtrust@email.com Web: www.litigationrecoverytrust.8k.com
Via Email mpowell@fcc.gov
Chairman Michael Powell
Federal Communications Commission
445 12th Street SW
Washington, DC 20554
Re: Digital Conversion Fund
Dear Chairman Powell:
Litigation Recovery Trust (“LRT”) read with interest the terms of your recent “Proposal for Voluntary Industry Actions to Speed the Digital Television Transition” (“Voluntary Industry Actions Proposal”), which was forwarded to Senator Ernest Hollings and Representative Billy Tauzin on April 4.
The report focuses on practical operational measures, which can be taken to speed the digital conversion of broadcast stations and cable TV systems. We note, however, that the proposal fails to address a most important matter, i.e. the financial resources required by stations and cable systems to fund digital upgrades.
LRT respectfully directs your attention to a proposal which it has had before the Commission since early 1996, designed to provide a new and needed source of funding to assist the digital conversion of small market, low power, minority owned and public television stations and cable systems, the majority of which lack any ready means to finance the upgrading of their transmission facilities.
The original LRT proposal called for the adoption of a Commission order directing that all proceeds received by Comsat Corporation (Comsat) from the privatization of Intelsat and Inmarsat be paid to the US Treasury and dedicated to a Digital Conversion Fund to provide loans or grants for the digital conversion of under-funded broadcasters and cable operators. Recently, based on certain events, LRT has amended its proposal to require that Lockheed Martin Corporation (Lockheed), as the current owner of Comsat, pay over all proceeds, which it receives from its sale of any and all Comsat assets, including the sale of its equity interests in Intelsat, Ltd. and Inmarsat Ventures, Ltd. and the sale of Comsat assets to Intelsat and Telenor, ASA. It is estimated that the proceeds from the Comsat asset sales will exceed billion.
As has been outlined in earlier LRT filings on this subject, its proposal is based on sound policy objectives. Further, it is consistent with the Commission’s delegated powers.
Comsat was founded by Congress in 1962 to lead the US and the world into the satellite age. To fund this unique undertaking, Congress provided Comsat a monopoly over the sale over Intelsat space capacity in the US. This monopoly, which operated as an indirect tax on major US carriers purchasing transponder circuits, returned literally billions of dollars to Comsat over a 30 year period. The company never paid or offered to pay any amount of these monopoly proceeds to the US Treasury, an action, which would certainly have been appropriate.
In light of the foregoing considerations, LRT submitted a proposal to the Commission in early 1996, which called for the adoption of an order requiring Comsat to divest all windfall proceeds received from the privatizations of Intelsat and Inmarsat. As outlined in the LRT filing, the ownership interests held by Comsat in the two international satellite organizations, which were largely purchased with revenues derived from the monopoly transponder sales, should properly be regarded as national assets. Accordingly, the proposed divesting of Comsat’s financial windfall created through the privatization of Intelsat and Inmarsat should be found to be a small return of the billions of dollars realized by Comsat through its transponder sales monopoly.
As the LRT proposal has remained before the Commission, events have occasioned a further amendment to its basic terms. On July 27, 2000, the Commission issued an order approving the merger of Lockheed and Comsat (In re Comsat Corporation, 14 FCC Rcd 2714 (1998)). Lockheed’s acquisition of Comsat was undertaken pursuant to special authority provided by Congress in the ORBIT Act, and came at a time when Comsat was experiencing severe financial reverses, reflected in continuing operating losses and its sale of all non core assets. In securing Congressional action approving the merger, Lockheed represented that it would invest resources- both financial and manpower- to stabilize and restore Comsat. These representations were clearly reflected in the Congressional Record.
As has now been made clear, Lockheed did not maintain its commitments to Congress. Indeed, within days of closing the merger on August 3, 2000, Lockheed sold one third of Comsat’s stock interest in Inmarsat to Telenor, ASA for million, in a transaction, which LRT maintains violated the ORBIT Act. This was followed within months by Lockheed’s sale of the Comsat Mobile Satellite division to Telenor, notwithstanding the fact that 79% of the stock of the acquiring company is owned by the Kingdom of Norway. The Commission approved this transaction, marking the first time that US communications licenses have been transferred to a company controlled by a foreign sovereign (In re Comsat Corporation ,FCC 01-369).
Then, in December of last year, Lockheed announced its decision to terminate its Global Telecommunications subsidiary and its plan to liquidate substantially all remaining Comsat assets. At the same time, Lockheed revealed that it would be taking a $1.8 billion tax write-off as a result of its inability to operate its telecommunications business.
LRT views Lockheed’s failure to invest financial resources in Comsat and its precipitous actions in selling off Comsat assets and exiting the telecom business as a total denial of fundamental trust, and more accurately, a flagrant misrepresentation to the Congress and the Commission. Simply stated, Lockheed did not invest a single penny in an effort to restore Comsat. Rather, it pursued a plan to acquire the Comsat assets based on representations which proved to be untrue, and profit through the sale of these assets. This is a matter, which demands full and complete review and investigation by the Commission and the Congress.
In any event, as a result of Lockheed’s highly objectionable actions, LRT has amended its basic Digital Conversion Fund proposal to seek an order of the Commission requiring Lockheed to divest all proceeds which it receives from the sale of Comsat assets to be directed to the public purpose of assisting with the funding of digital conversion of broadcasters and cable operators in the US.
As has been noted in each of LRT’s filings on this subject, the Commission is fully empowered to order the proposed divestiture of proceeds from the sale of Comsat assets. As referenced above, this authority was provided in the Communications Satellite Act of 1962.
We respectfully ask that the LRT proposal be reviewed by the Commission as a proper supplement to the Proposals for Voluntary Industry Actions. Clearly, the segments of the broadcasting and cable industries- small market, minority, low power and public owners- targeted by the LRT proposal lack ready access to the funding necessary to convert to digital transmission facilities. Lockheed’s windfall proceeds generated from Intelsat/Inmarsat privatizations and the dissolution of Comsat can and should be dedicated to this critical public purpose.
The LRT proposal serves the public interest. Indeed, it is hard to see how any party could not favor and support this proposal. Comsat, which has for all practical purposes ceased to exist, certainly cannot be heard to object. Lockheed, the country’s largest defense contractor and a leading recipient of federal funds, should support the proposal, which in essence returns to the US Treasury a part of the monies generated by the operation of Comsat as funded through its Intelsat monopoly. By service of this letter upon the attorneys for Comsat/Lockheed, we request that the companies promptly submit statements to the Commission in full support of the LRT Digital Conversion Fund proposal.
Separately, LRT will bring this proposal to the attention of concerned industry representatives, as well as television station and cable system owners and operators to provide them the opportunity to register their support for the LRT proposal.
Given the pressing need for financing the upgrade of television broadcast and cable TV facilities, LRT respectfully requests the Commission to grant LRT’s long standing proposa,l and immediately order the divestiture by Lockheed of all proceeds received from the sales of Comsat assets and the establishment of the Digital Conversion Fund.
Sincerely,
William L. Whitely
Trustee
cc:
Commissioner Kathleen Q. Abernathy (kabernat@fcc.gov)
Commissioner Michael J. Copps (mcopps@fcc.gov)
Commissioner Kevin J. Martin (kjmweb@fcc.gov)
Senator Ernest Hollings
Senator John McCain (John_McCain@mccain.senate.gov)
Representative Billy Tauzin,
Representative John Dingell,
Representative Fred Upton,
Representative Edward Markey
Larry Secrest (counsel for Comsat/Lockheed) (fax: 202-719-7049)
George Kleinfeld (counsel for Telenor) (fax: 202-912-6000)
Info cc:
Public Broadcasting System,
Corporation for Public Broadcasting,
American Public Television,
America’s Public Television Stations,
Advanced Television Systems Committee,
Digital Broadcasting Alliance,
Public Television Facilities Program
National Association of Broadcasters,
Association of Local Television Stations,
Association of Maximum Service Telecasters and
National Association of Black Owned Broadcasters.
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