Mip TV: Grupo Radio Centro Loses New Mexican TV Channel License

Forfeit, for non-payment of its license fee, could well spark a new broadcast network auction for the vacated bandwidth

CANNES – One of the most flamboyant new attendees at Mip TV, which kicks off Monday, should have been Mexico’s Grupo Centro Radio, which, with Cadena Tres, won one of Mexico’s two new free-to-air broadcast network licenses in a historic act of Mexican TV deregulation aimed at breaking the Televisa-Azteca broadcasting duopoly.

Dream on. Centro Radio has now lost the license it won in a May’s government auction. Both license winners, Grupo Centro Radio and Cadena Tres, were given a month to pay their bids for 20-year licenses, awarded March 11. In a filing on Friday to the Mexican Stock Exchange, Radio Centro confirmed that it “did not make the payment stemming from the awarding of an over-the-air broadcast license.” It committed to cover the bid security deposit “through previously contemplated liquidity operations.”

The auction does not contemplate an extension of the payment deadline. Following Centro Radio’s filing, Mexico’s telco regulator, the Federal Telecommunications Institute (IFT), declared that Radio Centro has lost its license and would claim Radio Centro’s deposit. IFT said it will now study how to adjudicate the bandwidth freed up by Radio Centro’s nonpayment. An IFT spokeswoman suggested earlier this week that, in the case of nonpayment, the IFT would probably hold another auction for the outstanding license.

Grupo Centro’s backdown deflates expectations raised by a broadcast TV overhaul put forward by president Enrique Pena Nieto’s administration and approved by the government in 2013 designed to break the duopoly exercised over Mexico’s broadcast network sector by the Televisa Group and TV Azteca , which enjoy a combined around-96% broadcast market share.

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.

Offering to ante up 3 billion pesos ($197.7 million) vs. the $116.9 million of Cadena Tres, the other broadcast franchise winner, Radio Centro was considered by some analysts to have bid too high. Radio Centro had just 177 million pesos ($11.7 million) in cash as of Dec. 31.

The fact that only two companies bid for Mexico’s new licenses suggests a certain market skepticism about the possibities of new entrants running up significant market share when faced by most probably deeper-pocketed incumbents.

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