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Argentina cries for reform

Move may threaten big media to sell assets

BUENOS AIRES — Argentina’s government is planning to pay off an “old debt to democracy” by reforming its broadcasting law to allow more competition.

But the move is not likely to go through without considerable opposition as it threatens to force big media groups like publicly traded Grupo Clarin and Spain’s Telefonica to sell assets.

The legislation was drafted during the 1976-83 military dictatorship, Argentine President Cristina Fernandez de Kirchner said March 1 at the opening of the legislative year.

The bill, which will go to Congress later this year, calls for decentralizing the industry, including by halving the number of licenses to 12 and restricting how many can be held in a geographic zone. Telephone operators will be eligible for licenses for the first time, allowing them to offer triple-play services. Telefonica reportedly is mulling a triple-play partnership with satcaster DirecTV.

Gabriel Mariotto, who drafted the reform bill as head of federal broadcasting regulator Comfer, has said he wants a greater number of voices in the media and not a business dominated by ratings. The broadcasting spectrum, he said, will be divided among NGOs, the state and the private sector, each with a third.

Grupo Clarin, Grupo Uno and Telefonica may have to offload assets if the initiative is approved, given that each has between 12 and 25 licenses.

“The best situation for Grupo Clarin is that the current legislation continues,” says Mariano Kruskevich, a media analyst Grupo SBS in Buenos Aires.

If the bill gains approval as is, things will be “worse” for media congloms, he says.

A sell-off of assets could leave regions without new players to pick up the slack, such as by offering pay TV services and broadband connections.

Kruskevich expects heated opposition to the bill, suggesting there still is room for public input about the bill and for these to have an impact on the final reform.

However, Gerardo Morales, head of the opposition Radical Civic Union party, says the bill will give the government greater control over the media. This will make Argentina worse than Venezuela in treatment of the media, he said, pointing to Hugo Chavez revoking the broadcasting license of private network RCTV in 2007 because it opposed the leader, apparently for supporting a coup.

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