ARGENTINA: CLARIN GROUP SHARES CONCERNS ABOUT

C O N F I D E N T I A L BUENOS AIRES 001045 SIPDIS E.O. 12958: DECL: 07/28/2038 TAGS: KPAO ECON PREL PHUM KDEM AR SUBJECT: ARGENTINA: CLARIN GROUP SHARES CONCERNS ABOUT MEDIA LAW REF: A. BUENOS AIRES 01038 ¶B. BUENOS AIRES 00531 ¶C. BUENOS AIRES 00791 ¶D. BUENOS AIRES 00663 ¶E. BUENOS AIRES 00587 ¶F. BUENOS AIRES 00822 AND PREVIOUS Classified By: AMBASSADOR WAYNE FOR REASONS 1.4 (B) AND (D) ¶1. (C) ACCORDING TO ARGENTINE MEDIA REPORTS, THE GOA INTENDS TO SEND ITS PROPOSALS FOR REFORMING PRINT, RADIO, TV AND CABLE MEDIA TO CONGRESS IN AUGUST. MANY IN THE MEDIA REMAIN CONCERNED ABOUT THE BILL, BUT FEW, IF ANY, MORE THAN THE CLARIN MEDIA GROUP, ITS REPORTED TARGET. CLARIN GROUP EXECUTIVES JORGE RENDO AND MARTIN ETCHEVERS MET WITH AMBASSADOR WAYNE JULY 21 TO GIVE A STATUS REPORT AND SHARE CONCERNS ON THE PROPOSED NEW BROADCAST LAW. ALTHOUGH THE GOA IS PRESENTING LEGISLATIVE REFORM AS DEMOCRATIZATION OF THE MEDIA, THE TWO EXECUTIVES ARGUED THAT THE GOA'S INTENTIONS AND DRAFT ARTICLES NOW CIRCULATING POINTED TO A REINING-IN OF FREEDOM OF EXPRESSION AND EXPANDING THE GOVERNMENT"S DISCRETION TO INTERVENE IN PRESS COVERAGE. JUST DAYS AFTER VICE PRESIDENT COBOS'S DRAMATIC REJECTION OF THE GOA'S DRAFT EXPORT TAX LAW, THESE EXECUTIVES FELT THAT THE KIRCHNERS IN LARGE PART BLAME THE MEDIA FOR THAT POLITICAL FAILURE AND WERE RESOLVED TO FIND WAYS TO CONTAIN PRESS FREEDOMS. AMBASSADOR WAYNE SUGGESTED THE NEED TO ENSURE AS INFORMED A DEBATE AS POSSIBLE AND THAT THE U.S. EXPERIENCE IN MEDIA LAW COULD OFFER THE KIND OF EXPERTISE REQUIRED BY A DISCUSSION IN THE ARGENTINE CONGRESS AND PUBLIC. IN A SEPARATE 7/25 CONVERSATION, SENATE PRESIDENT PAMPURO SAID HE HOPED TO DISSUADE PRESIDENT KIRCHNER FROM SENDING THE BILL FORWARD IN AUGUST AS IT WOULD BE HARD TO RALLY A LEGISLATIVE MAJORITY TO PASS THE BILL (BUENOS AIRES 1038). END SUMMARY. ¶2. (C) JORGE RENDO, DIRECTOR OF INTERNATIONAL RELATIONS FOR CLARIN GROUP AND ONE OF CEO HECTOR MAGNETTO'S RIGHT HAND MEN, AND MARTIN ETCHEVERS, DEPUTY FOR INTERNATIONAL RELATIONS, MET WITH AMBASSADOR WAYNE JULY 21 TO PRESENT SEVERAL DEVELOPMENTS IN REGARDS TO THE PROPOSED NEW BROADCAST LAW. THEY BELIEVE THE GOA IS CONDUCTING A "DISINFORMATION" CAMPAIGN BY DESCRIBING THEIR MOVES TO REFORM LEGISLATION AS "DEMOCRATIZING" AND BASED ON A U.S. MODEL. THEY CITE THAT FOUR TO FIVE ARTICLES IN THE DRAFT LAW ARE EXCLUSIVELY DEDICATED TO UNDERCUTTING THE CLARIN GROUP. THESE DRAFT ARTICLES ADDRESS CROSS-OWNERSHIP, BUT FURTHER, SEEK TO PROHIBIT THE SAME COMPANY FROM OWNING BOTH OPEN AIR AND CABLE CHANNELS -- A RESTRICTION THAT THEY SAID DOES NOT EXIST IN ANY DEMOCRACY IN THE WORLD. OTHER PROPOSED ELEMENTS OF THE LAW WOULD PLACE LIMITATIONS ON THE CABLE TELEVISION MARKET BASED ON SUBSCRIBERS, RATHER THAN THE USUAL PRACTICE OF AN ESTIMATED OVERALL MARKET BASIS. FOR EXAMPLE, THE PROPOSED LAW WOULD LIMIT CLARIN TO 35% OF ACTUAL SUBSCRIPTIONS, WHICH RENDO ESTIMATED WOULD CAUSE THE GROUP TO SELL ABOUT ONE MILLION CUSTOMERS OUT OF THE CURRENT THREE MILLION. THEY ASSERTED SHORT TERM DEADLINES FOR COMPLIANCE ARE BEING PROPOSED IN THE DRAFT LEGISLATION. ¶3. (C) THE GREATEST CONCERN EXPRESSED BY THE CLARIN EXECUTIVES WAS BASED ON FREEDOM OF EXPRESSION. THEY CLAIM THE NEW LAW WOULD OFFER WIDE DISCRETION, DENY AND GRANT LICENSES AND WOULD ESTABLISH A SYSTEM SIMILAR TO VENEZUELA'S, WHERE THE REJECTION TO RENEW THE RCTV LICENSE WAS AN ENTIRELY LEGAL ACT. ACTIONS TO DETERMINE WHETHER A MEDIA OUTLET WAS PROPERLY PROVIDING A PUBLIC SERVICE WOULD BE THE MAIN CRITERIA AND COULD BE TAKEN AT ANY TIME, AS THERE WOULD BE NO PROTECTION WITH RESPECT TO THE PERIOD A LICENSE WOULD REMAIN IN EFFECT. IF THE GOVERNMENT WERE TO FRAGMENT THE MEDIA INTO SMALLER OUTLETS, THE EFFECT WOULD BE TO INCREASE DEPENDENCE ON ALL-IMPORTANT GOVERNMENT FUNDING TO MEDIA VIA GOVERNMENT ADVERTISING, NOTING IN PARTICULAR THE SMALL SIZE OF THE ARGENTINE MARKET. INDEED, TODAY THERE ARE VERY FEW FINANCIALLY INDEPENDENT MEDIA THAT CAN OPERATE WITH LITTLE OR NO GOVERNMENT FUNDING (LA NACION, PERFIL, TELEFONICA/TELEFE AND CRONISTA). THEY CONTRAST THESE TO THE GOVERNMENT-SUPPORTED GROUPS OWNED BY DANIEL HADAD AND SERGIO SPOLSKIY. TELEVISION IS SMALL BY LATIN AMERICAN STANDARDS, WITH LESS TELEVISION PUBLICITY SOLD IN ARGENTINA THAN IN PERU, AND ONLY FOUR OPEN AIR CHANNELS NOW IN BUENOS AIRES. RENDO EMPHASIZED THAT THERE WAS NEVER BEFORE IN ARGENTINA AN ATTEMPT TO LEGISLATE CONTROL OVER THE MEDIA. ¶4. (C) AMBASSADOR WAYNE ASKED IF RENDO THOUGHT IT WAS POSSIBLE TO CREATE A FULL, REAL DEBATE ON THE ROLE OF THE MEDIA AND THE POSSIBILITIES PRESENTED UNDER THE DRAFT LEGISLATION. RENDO THOUGHT THIS WOULD BE POSSIBLE. HE OUTLINED TWO SCENARIOS. FIRST, CONGRESS COULD SERIOUSLY COUNTERBALANCE THE EXECUTIVE BRANCH AND PASS A LAW THAT WAS JUST AND PROTECTS FREEDOM OF EXPRESSION. THE OTHER SCENARIO IS THAT THE KIRCHNERS PRESSURE A CONGRESS THAT WANTS TO RECONCILE WITH THE EXECUTIVE, WHICH COULD RESULT IN A BAD LEGISLATIVE OUTCOME ON THE MEDIA FRONT. HE ASSERTED THAT PRESIDENT CRISTINA FERNANDEZ DE KIRCHNER'S (CFK) BRIEF OPENING UP TO THE MEDIA WAS COMPLETELY REVERSED AND THAT GOVERNMENT MEDIA SPENDING WAS POLITICIZED. HE ACKNOWLEDGED THAT THE NET EFFECT OF THE KIRCHNERS' SO-CALLED "WAR ON CLARIN" (REFTELS) DID NOT PERSUADE THE PUBLIC, AND THAT IN FACT, THE CLARIN GROUP'S RATINGS HAD INCREASED. ¶5. (C) PROPOSED LIMITS ON THE NUMBER OF LICENSES, RENDO EXPLAINED, IN ADDITION TO AFFECTING CLARIN, WOULD ALSO IMPACT MEDIA HOLDING GROUPS SUCH AS CIE OF MEXICO, DANIEL HADAD'S GROUP, AND TELEFONICA. INTERNATIONAL TELEVISION SIGNALS WOULD BE SUBJECT TO NEW REGISTRATION REQUIREMENTS AND TO ADDITIONAL TAXES NOW PAID BY DOMESTIC SIGNALS, WHICH INCLUDE RIGHTS AND A FEE TO THE COMMUNICATIONS COMMISSION, COMFER, AMOUNTING TO APPROXIMATELY 10 PERCENT OF PROFITS OR BUSINESS. ALSO UNDER CONSIDERATION WOULD BE A LIMITATION ON NON-LOCAL CONTENT. ANOTHER MAJOR FLAW WITH CURRENT DRAFT LEGISLATION IS THAT IT FAILS TO ADDRESS IMMINENT CHANGES IN THE TECHNOLOGY OF COMMUNICATIONS, SUCH AS THE ADVENT OF DIGITAL TELEVISION, TRIPLE PLAY CONVERGENCE, OR EVEN INTERNET. ¶6. (C) RENDO ASKED IF THE EMBASSY COULD IDENTIFY U.S. EXPERTS ON THESE MEDIA ISSUES WHO WOULD BE AVAILABLE FOR INTERVIEWS AND TO PARTICIPATE IN DEBATES ON THE MERITS OF THE PROPOSED LAW. THE AMBASSADOR AND ACTING PAO SAID WE COULD TRY TO IDENTIFY SOME POTENTIAL EXPERTS. COMMENT -------------- ¶7. (C) IF BROADCAST LAW IS TO BE REFORMED AND SUBMITTED TO CONGRESS PER CFK'S ORDERS, AS COMFER HEAD MARIOTTO ANNOUNCED SEVERAL DAYS AGO, THE QUALITY OF THE CONGRESSIONAL AND PUBLIC DEBATE ON THE PROPOSAL WILL BE IMPORTANT. POST WILL WORK TO SEEK FAIR TREATMENT OF U.S.-BASED MEDIA OPERATING IN ARGENTINA AS THE COURSE OF THE LEGISLATIVE PROCESS CONTINUES. AN EFFECTIVE CONTRIBUTION IS TO BRING THE U.S. EXPERIENCE FULLY TO BEAR, THROUGH THE RICH ARRAY OF EXPERTS HAVING DEALT IN THESE MATTERS, INCLUDING LAWYERS, TELECOMS ADVISORS AND SPECIALISTS, AND ACADEMICS. POST HAS CONTACTED WASHINGTON TO REQUEST SUPPORT IN PROVIDING THE EXPERTISE THAT WILL ENSURE THE GOA AND LEGISLATORS ARE EXPOSED TO THE FULL BREADTH OF THE DEBATE IN THE U.S. WAYNE