(C) ARGENTINE MEDIA MAGNATE ON MEDIA LAW, AND THE

C O N F I D E N T I A L BUENOS AIRES 001362

SIPDIS

EEB/CIP FOR ANNE JILLSON
DEPARTMENT FOR FCC
USDOC FOR 4322/ITA/MAC/OLAC/PEACHER

E.O. 12958: DECL: 09/30/2018
TAGS: PGOV ECON ECPS PREL KPAO KMDR EINT AR
SUBJECT: (C) ARGENTINE MEDIA MAGNATE ON MEDIA LAW, AND THE
LAW OF THE ARGENTINE MEDIA JUNGLE

REF: A. BUENOS AIRES 1358

B. BUENOS AIRES 822

Classified By: Economic Officer Ian Sheridan, reasons 1.4 (b. and d.)


1. (C) Summary. Jose Aranda, Vice Chairman of the media
conglomerate Clarin Group, told Charge that the GOA's attempt
to promote a new Media Law (ref B) was likely on hold for
several months, given GOA's more pressing priorities and a
weakened position in the GOA Congress. He cited Clarin's
"solid" business success in the many areas it operates -
newspaper, TV, cable, internet, and radio - and how it has
strongly positioned itself in the internet era. Aranda
recounted how successive governments have sought, without
success, to limit the media group's power over the years. He
also described some of the unique Argentine media realities,
relating to newspaper vs. TV advertising revenues, the
over-concentrated open air television market, and the
proliferation of non-licensed radio stations. End summary.

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Background on Clarin Group and Jose Aranda
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2. (U) Grupo Clarin is the largest and most prominent media
conglomerate in Argentina, and the market leader in most of
the media segments in which it operates. Through companies
it controls and joint ventures, Grupo Clarin owns the largest
circulation Spanish language paper in the world, Argentina's
top-rated open air and cable television networks, cable
television distributors, the country's second biggest radio
station in terms of morning traffic audience, internet,
printing, publishing, broadcasting and programming.


3. (SBU) Jose Aranda, a major stockholder, worked hand in
hand with Clarin CEO Hector Magnetto to transform Clarin from
a popular newspaper to the all-encompassing media
conglomerate it is today. Aranda, an accountant by training,
possesses a business and societal vision that transcends the
governments that have come and gone in Argentina. He
provides rich insight into politics and business here. Ref A
describes Aranda's offer to work with the U.S. Embassy to
continue to promote the U.S. digital norm for Argentina, for
which he says there is still a fighting chance.

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Media Law - the scare is over
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4. (C) Aranda said that, due largely to the GOA's weakened
post-farm crisis position and the many more important
priorities it faces in the coming months, it was his strong
impression that there will be no serious GOA push on a new
Media Law (ref B),at least this year. (Given the fact that
the summer vacation here runs from around Christmas to early
March, any such GOA push on a new Media Law would be delayed
until at least this time.) He said that a new law was "not
possible," given the weakened position of the GOA vis-a-vis
the Congress at this time, to have any "serious debate" on
this law. (Clarin CEO Hector Magnetto characterized this
point recently to the Ambassador as "they can't move it as
Congress won't pass it.") Aranda said that Argentina's press
had been "united" on the problems it would have faced by the
GOA's proposed changes to the media law, and at a time when
the GOA was clearly moving to muzzle the media. He pointed
out that the GOA has already assessed that it is not in its
interest to have a media predisposed to helping out the
opposition, especially looking to 2009 elections. He also
cited the other important bills and issues that the GOA needs
to work with on Congress in the shorter term: the 2009 budget
bill, "superpowers" budget authority, Paris Club, and
"holdouts." (Embassy note: he might also have added the
upcoming debates on increased retirement costs and still
far-from-settled Aerolineas Argentinas issues.) He joked
that although COMFER head Gabriel Mariotto is still going
around the country seemingly drumming up support for the new
law, he is doing so in the "far-off provinces," such as
Tierra del Fuego and elsewhere, and the GOA likely knows that
there is no chance this year for any action on this bill.

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Clarin business going well
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5. (C) Aranda stressed the "solid" quality and quantity of
their business, and that "we are not dependent on the state,"
unlike many newspapers of "lesser profitability" which are
"co-opted" by the state. "We are able to reject state
advertising money, even at times when it could be needed,"
specifically to avoid "dependence" at certain other times.

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Clarin's positioning in the Internet era
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6. (C) Aranda said that about one-third of Clarin's newspaper
revenues come from placement of classified ads, one-third
from newspaper sales, and one-third from conventional
advertisements. He said that Argentina as a whole is
relatively "slow" in terms of getting news and advertising
revenue via the internet, but it is an important and growing
market. In that regard, he shared Clarin's real estate
internet strategy, and said that Clarin had bought the two
most prominent internet portals devoted to real estate to
capture this market, which he said is the most important
internet transition currently under way. He said that
Clarin, through its own portals, also controls several sites
for what he said were the top four areas of common
internet-based consumer business: real estate, automobile
sales, personal ads, and what he called "opportunities,"
i.e., other sales, trading, etc. When asked about GoA
intervention in this area of business, Aranda said the GOA
had not yet shown interest or capability to do so. He said
that a previous government largely failed to make successful
an education internet portal known as educ.ar.

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GOA attempts to beat Clarin over the years have failed
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7. (C) Aranda mentioned attempts by Argentine governments
(past and present) to stifle, control or otherwise weaken
Clarin. One stark example was former President Menem's
attempt to round up other media entities into a
pro-government group, "all in total violation of the law," to
"kill us." This and all other efforts had failed. Aranda
discussed the influence of government advertising that
controlled content, for example, at the low circulation
leftist newspaper Pagina 12 and online news source, Infobae.
Aranda also claimed that media magnate Sergio Spolsky has
talked openly of being almost entirely funded by government
resources for several of his news products, which include
weeklies Viente Tres, Siete Dias, two newspapers in La Plata,
BAEconomico, and more recently, the Buenos Aires Herald
(purchased mainly for its excellent printing machinery, not
its small and aging subscriber base). (Aranda did not
mention that Spolsky owns Newsweek Argentina.)

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Newspaper vs. TV advertising revenue, unique in the world
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8. (C) Aranda said that, unlike virtually anywhere else in
the world, it costs more money to place ads in newspapers
than television. He said that this peculiarity is a
consequence of the "total government control" of television
during the "Peronist and military years," which "completely
discredited" the television medium. In fact, each branch of
the military had its own "designated" TV station.
Newspapers, on the other hand, were seen as more
"professional," and commanded genuine advertising revenue.
Though much more advanced and free today, the television
industry has not yet developed sufficiently to fully outgrow
these former advertising conditions.

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Concentrated open air television market
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9. (C) Aranda explained that there are perhaps only three
profitable open-air TV stations in Argentina, citing Canal 13
(Clarin),Canal 11 (owned by Spain-based Telefonica) and


Canal 7 (state owned),out of five total in Greater Buenos
Aires. All the rest lose money. He explained that 80% of
market share (based on advertising revenue) goes to Channels
13 and 11, with about 45% to Clarin's channel alone, Canal

13.

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Radio stations not very profitable
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10. (C) Aranda said that "only about three" radio stations
are actually profitable here, citing Radio 10 (owned by local
media entrepreneur and Kirchner ally Daniel Hadad) with the
largest market share; Radio Mitre (Clarin); and the music
station "Rock and Pop." In citing reasons for their lack of
profitability, he mentioned the widespread phenomenon of
"radios truchas" (clandestine, off-the-books, unlicensed
radio stations) that are all over the Capital Federal area
and in the country. He said that the GOA's Federal Broadcast
Commission (COMFER, GOA's FCC equivalent) and the GOA lack
the will to stop them. These stations do not pay taxes, and
their expenses and employees are all off-the-books, making it
difficult for legitimate stations to compete. Aranda said
that there are many all over the country, run by or
sanctioned by "caudillos (local strongmen)," and had their
origin in the military dictatorship. He said that most have
limited range, and have historically acted as a form of
control by these caudillos. Aranda said that, according to
the law, a media company cannot own any more than two radio
stations in one region, or any more than five nationally.
"If we violated this law, we would risk GOA anger, and for
what -- just to own some radio stations that are of low
benefit?" He claimed that Daniel Hadad owns more than that
limit, as do some others.

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Comment
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11. (C) Aranda is one of Argentina's most powerful and
insightful media figures, with contacts all over the country
and region. His observations about politics, business, and
how power is wielded here are revealing, as are his views
about just how hardball this - and previous - governments can
play in attempting to control the media. His observations
also point to just how weakened the GOA is in this "post-farm
strike" era, given that it has likely given up passing a new
Media Law -- once a central GOA strategic priority -- until
at least March 2009. End Comment.
WAYNE