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7D | A Mexican Standoff?

On 7D, nothing will happen

On 7D, nothing will happen

Argentine media group Clarín announces a stay of execution.

It says it will not be required to comply with the 2009 Ley dos Medios until all appeals have been exhausted.

As soon as [the court] extended the stay in the case challenging the constitutionality of certain provisions of the media law, Clarín issued the following statement:

The Grupo Clarín has just been informed that the injunction has been extended until a definitive ruling on the constitutionality of provisions of the Media Law  has been arrived at.

As it has throughout the process,  Grupo Clarín will follow the law, respecting the Constitution, the law, and the findings of the courts.

Eric Nepomuceno of Brazil’s Observatório da Imprensa summarizes the case, below.

As it happens, and contrary to the image of a deeply polarized debate, there is internal disagreement among shareholders in the Clarín group over compliance — I will translate that, too. But first,

Clarín dates back to the 1940s, but achieved its current power and influence under the last mllitary dictatorship (1976-1983). It enthusiastically supported the genocidal regime and was awarded joint custody, along with the conservative La Nación, of Papel Prensa, Argentina’s only producer of newsprint and magazine paper.

This was the basis of an expansion that made Clarín the veritable octopus it is today, with tentacles extending into all aspects of communications — and always as a voice of opposition to the current government.

The Argentine government made itself clear: It will wait until midnight on 7 December for the 21 media groups affected by the new Media Law to present their “compliance plans.”

That is to say: tell us what you mean to do to bring your holdings into compliance with the limits on TV, radio and print vehicles as defined by the 2009 legislation. Today, the stay afforded the Clarín monopoly will expire. As of December 12, most of these media groups — 14 — had submitted their compliance plans.

These groups decided to accept the new legislation and its “anti-monopoly clause,” which prevents certain concession-holders from accumulating TV and radio concessions.

This so-called “media convergence” allows certain conglomerates to dominate the communications sector of a given national market.

The Clarín group is the most sensitive to the new rules and continues to resist, hoping to obtain a new injunction to further delay the effects of the media law. Clarín controls 250 radio and TV stations – nearly ten times the ceiling set by the new law — and has shown itself willing to fight to the bitter end.

This hope will expire at midnight on 7D. In the meanti8me, Clarín owners will do all they can to continue the tug of war with the government.


The companies that have already presented their compliance plans will have to wait. The government has 120 days, starting on 7 December, to approve or to request alterations in the plans presented. Once the government has its final say, the companies will have another 180 days to implement their plans.

During this implementation phase, the distribution of licenses will be considered. Licenses will be auctioned together with capital assets — equipment, buildings. Finally, the licenses will be awarded to their new owners.

During these intermediary stages, current concessionaires will be obliged to guarantee continuity of operations and maintenance of the workforce. That is to say, they must continue to broadcast without laying off a single employee.

It may be possble for current concessionaires to keep their current licenses, provided they create new, completely independent corporations for this purpose.

Clarín has not commented on the latter possibility.

Some of the media groups who presented compliance plans opted for this alternative.

At the same time, the government is locked in conflict with the judges who are to consider the extension of the injunction obtained by Clarín.

The government has accused, and not without reaons, one of the members of the court of first instance of having traveled to Miami with all expenses paid by Clarin. The criticism led Clarín to open fire on Cristina Kirchner for trying to exert undue influence on the judiciary.

The dilemma now is what will happen if Claŕin presents no compliance plan. The goverment says that “groups not complying voluntarily will be viewed as outlawed.” At that point, the government will notify Clarín and suspend its licenses, which will then be auctioned off. Diversity of Opinion Clarín dates back to the 1940s, but achievede its current influence and power under the last dictatorship (1976-1983).

It enthusiastically supported the genocidal regime and was awarded joint custody, along with the conservation La Nación, of Papel Prensa, Argentina’s only producer of newsprint and glossy magazine paper.

This was the basis of an expansion that made it the veritable octopus it is today, with tentacles extending into all aspects of communications — and always as a voice of opposition to the current government. Faced with a threat to its influence, Clarín and other similar media oligopolies accuses the government of an assault on freedom of expression. This is pure bunk. An assault on freedom of expression is the control of all modes of media — radio, TV, cable, newspapers, magazines — and engaging in all sorts of despicable behavior in order to crush its competition. The 2009 bill, passed by a substantial majority in the Congress, including votes by the opposition, marks the end of this monopoly. It guarantees diversity of opinion. It opens the media up to sectors of society whose point of view has not been addressed in the past. In other words, it achieves what all monopolies like Claŕin hate most.

Infography Anyone?

I wish someone would produce a set of pie-charts — or, who knows, one of those four-quadrant bubble charts  — illustrating the dynamic of the media sector.

Oh, wait. G1 — Globo — has produced something along those lines.


Click to zoom.

Nice job, although it tells us nothing about the effects on private-sector media.  For example: If the market in question was Mexico, what would be the effect of reining in the 75% market share of Televisa? Would it not be an injection of healthy competition? The same logic applies to the alarming thought of Murdoch storming the L.A. Times and Chicago Tribune.

The infographic indicates that Clarín is most vulnerable to the “taking” of its cable TV concession, with market share reduced from 58.6% to the canonical 35% — one-third private sector, one-third government sector, one-third independent public sector. The latter is dismissed by opponents as a mere extension of government control. Is Argentina capable of supporting nonaligned public media? Interesting question.

Shareholders Hedge


In another breaking development — and I confess I am behind the curve on this story — a major partner of Clarín is said to favor compliance.

“Of the 21 media groups affected, only one has not announced its acceptance of the Media Law. Now we can say that 21 and a half have agreed.”That statement was made on December 5 by  AFSCA — the Argentine FCC — commissioner, Martín Sabbatella. On the same day, Fintech Advisory, which controls 40% of Clarín’s Cablevisión operqation, announced that it means to comply with the law, and has proposed to AFSCA a sell-off of 60% of its shares in the company.

The investment fund, led by Mexican investor David Martínez, wants Clarín to sell its subscription cable TV operation as a step toward compliance with the law, which limits concessionaires to 35% market share and 24 licenses. Clarin currently holds 240 licenses and controls 41% of radio, 38% of open to air TV and 59% of cable TV.

Martínez decided to consult the agency as a preliminary step in developing a proposal to Cablevisión shareholders. It is not a compliance plan, however: Only Clarín can issue such a plan. With the selloff, the group would be left without one of its most profitable assets, but could continue to offer its journalism and content on the open to air Channel 13 and the cable TV Todo Noticias and Metro, as well as on its radio stations.

Sabbatella praised the shareholder’s proposal : “It seems like a sensible solution on the part of a company that wants to comply with the law and avoid outlaw status.”


Finally, there appears to be some truth to the tale that judges assigned to the case were favored with free air travel by Clarín.

But more on that later.