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Mexico To Launch Two New TV Channels

Free-to-air broadcasters will drive new content demand in territory

Nixing the duopoly of Televisa and TV Azteca over Mexico’s broadcast TV market, Mexico’s new trust-busting TV-telco watchdog, the Federal Telecommunications Institute (IFT), announced Friday it had authorized the launch of two new free-to-air broadcast networks in Mexico.

Exacerbated by yet more anti-trust rulings, the historic act of deregulation though largely factored in by the market, is a significant blow for Televisa. If they follow the pattern of most channel launches, in at least first-phase growth, the new channels will depend on acquisitions to fill grids and fire up ratings. Big content suppliers – Hollywood’s studios – and companies that have assiduously built up portfolios of original Mexican content – such as Alex Garcia’s AG Studio, which has produced a swathe of Mexican movies – may now have two new avid clients.

Setting out a roadmap for the bidding process, basic rules and requirements for licenses will be published next week, IFT commissioner Fernando Borjon Figueroa said Friday.

The license application period ends Jan. 25, 2015. It two winning terrestial broadcasters will be announced by March 25 next year. Their launch is set for the end of 2015.

In his inaugural address in December 2012, incoming Mexican president Enrique Pena Nieto (pictured) announced that the government would solicit bids for two new broadcast nets and open up Mexico’s TV and telco markets. Analysts wondered, however, whether he would follow through on his promises. They now have irrefutable proof.

Televisa and TV Azteca enjoy an about 95% TV broadcast market share. It will take years for competitors to work up brand consciousness and market share, justifying their competition for water-cooler content.

But the IFT has anticipated this road-bump, banning both both Televisa and arch telco rival America Movil, owned by Carlos Slim, 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 recognized Friday in a report to Mexico’s stock market regulator.

Earlier last week, the IFT had announced that both Televisa and the America Movil-controlled Internet/fixed line company Telmex, with an about 80% market share, and Telcel, its cell phone cousin which controls about 70% of the mobile sector, were “preponderant,” and therefore subject to governmental intervention creating and safeguarding competition.

Among regs to limit their abuse of a dominant position, Televisa is now forced to offer its transmissions grid at a fixed fee, and America Movil to share infrastructure, and suffer regulation of interconnections.

One large question going forward, however, is whether, or the extent to which, Televisa will now be able to compete with American Movil in Mexico’s telco sector, and American Movil in TV. Both want in to the other’s core business.

The IFT said it would decide within the next 60 days whether Carlos Slim can bid for one of the free-to-air licenses.

“We are pleased that the IFT is proceeding with the tender of new TV stations,” Televisa said in a statement Friday. “It’s an important event for competition. We hope the same applies for the telecommunications sector.”

For the meantime, the IFT has prohibited Televisa from taking stakes in “preponderant” telco companies, or occupy board seats on them.

Televisa shares closed 2.3% down in Friday trading; America Movil’s stock, that have lost 15% of value this year, was 1.6% off.

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