 |
|
|
 Business News | June 2007 
Mexico Ruling Could Shake TV
 John Lyons - Wall Street Journal
Mexico City - Mexico's Supreme Court overturned a key provision of a law designed to preserve the dominance of the nation's two television giants, Grupo Televisa SAB and TV Azteca SAB, marking a new willingness by Mexico's government to check the power of corporate dynasties.
In issuing the ruling, justices expressed concern that the media duopoly had stifled competition to the detriment of the national interest, suggesting that the Mexican judiciary may become more proactive in seeking to foster competition in industries historically controlled by one or two players. The ruling must be ratified in a second vote, expected as soon as this week.
That should send an encouraging signal to local and international companies that have long sought to break into Mexico's television market - including General Electric Co.'s NBC unit, the owner of the U.S. Spanish-language broadcaster Telemundo. A bid by Telemundo to start a third Mexican TV network has languished for years.
Many of Mexico's major industries - from beer and bread to telecommunications and television - are controlled by just a few players that rose to power through cozy government relationships during Mexico's seven decades of single-party rule. Transition to democracy has done little to change a situation that economists say stifles investment, job creation and economic growth.
During Thursday's arguments, Justice Genaro Gongora said the law "discriminated" against potential rivals to the broadcasters' monopoly and said the court's ruling was necessary to prevent "a breakdown of Mexico's democracy."
After it was passed last year, the television law - dubbed the "Televisa Law" because it was drafted by Televisa lawyers - protects the companies from competitors as the industry goes digital, essentially granting huge swaths of digital bandwidth in perpetuity to the broadcasters free of charge, while exempting them from a strict bidding process and regulations facing potential new competitors.
The law was passed just before last year's presidential and congressional elections, and lawmakers from several parties later complained that the broadcasters had threatened the parties with negative coverage of their campaigns unless they passed the bill. The broadcasters denied that.
Company officials defend the law as an attempt to modernize Mexico's regulation for the industry, using U.S. regulations as a model. Before the law, the government could hand out TV licenses to allies without an open bidding process, says Javier Tejado, a Televisa executive who helped shape the legislation last year.
Opponents of the law "have tried to get everyone confused," Mr. Tejado said. "Overturning clauses will be a big loss for the viewing public and for future new entrants." TV Azteca declined to comment.
The broadcasters are taking to the air to make their point. Sergio Sarmiento, a leading Mexican journalist on TV Azteca's payroll, has been on the radio and television lately to suggest that Mexico might go the way of Hugo Chavez's Venezuela, where the government recently closed a private broadcaster, if the law doesn't remain intact. Meanwhile, the stations have aired news hour pieces attacking the law's chief critics.
The court has taken unprecedented steps to make its own process public, which legal experts say is an important step in the maturation of a once-hermetic institution that was remade in the 1990s as the country was moving toward democracy. For example, the court has widely circulated draft opinions that shed light on the evolution of its thinking.
The court ruled 8-1 on Thursday that a provision automatically renewing the concessions granted to Televisa and TV Azteca is unconstitutional. The court is set to rule as early as next week on other aspects of the law. The court is also likely to rule that the president has an unchallenged right to name members of Mexico's telecommunications and television regulator, Cofetel - a body widely seen as in the pocket of Televisa and the country's virtual telephone monopoly, Telefonos de Mexico SAB. That move might open the way for the appointment of new regulators that may be more likely to encourage competition.
Write to John Lyons at john.lyons@wsj.com |
| |
|
Vallarta Weddings
Tell a Friend
Site Map
Print this Page
Email Us