Two new free-to-air national digital TV channels are set to break the duopoly of Televisa and Azteca TV, which together have ruled over the Mexican TV market for decades.
In a historic move, Mexico’s reform-minded telco regulator Federal Telecommunications Institute (IFT) has awarded broadcasting licenses to Grupo Radio Centro and Cadena Tres, the only two companies to bid for the awards after a third, Centro de Informacion Nacional de Estudios Tepeyac, pulled out in February, the same month its owner Mario Vazquez Rana died.
Grupo Radio Centro bid 3 billion pesos ($197.7 million) and Cadena Tres $116.9 million for the 20-year concessions, but each company will have to invest as much as $650 million to build its infrastructure, per analysts who project that they could capture between 5% and 12.5% of the market over the next five years.
The networks, which will launch in 2016, come as part of a broadcast TV overhaul put forward by President Enrique Pena Nieto’s administration and approved by the government in 2013.
The newcomers will be vying for a piece of the robust $1.5 billion Mexican ad market, which has grown an average of 3% per year. Market leader Televisa captures 65% to 70% of the ad market at present. However, the free-to-air business represents only 32% of Televisa’s consolidated revenues, per analysts, with its Sky/Cable unit and telecom generating 44% of earnings in 2013, and licensing and syndication 8%.
The new channels will likely depend on acquisitions to fill their programming grids and grow ratings, which could be a boon for content providers, both local and international. Hollywood will be the obvious winner of this landscape shift as demand for high volume, low cost content will rise.
Televisa and TV Azteca jointly have an estimated 95% TV broadcast market share. To safeguard new competition, the IFT has banned current networks from bidding for exclusive Mexican rights to programming with “unique characteristics that in the past have delivered high audiences,” such as World Cup soccer matches. Televisa is now forced to offer its transmissions grid at a fixed fee.
Founded in 1946, Grupo Radio Centro is a Mexico City-based radio owner and operator of 12 radio stations in Mexico City and a station each in Guadalajara, Monterrey and Ciudad Juarez as well as one in Los Angeles.
Owned by Grupo Empresarial Angeles, Cadena Tres started out as an independent TV network serving Mexico City and its outskirts before expanding its national reach via cable systems.
Televisa shares dipped 1.7% in Friday trading. Azteca stock, which has been declining in recent months, was down 2.09%. Both networks declined to comment on the new concessions.