Identifier
Created
Classification
Origin
09BUENOSAIRES1101
2009-10-02 22:01:00
CONFIDENTIAL
Embassy Buenos Aires
Cable title:  

ARGENTINA: A PRIMER ON ARGENTINA'S MEDIA BILL

Tags:  PGOV ECON ETRD EINT EINV WTRO AR 
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E.O. 12958: DECL: 10/03/2039
TAGS: PGOV ECON ETRD EINT EINV WTRO AR
SUBJECT: ARGENTINA: A PRIMER ON ARGENTINA'S MEDIA BILL

REF: A. BUENOS AIRES 350 AND PREVIOUS

B. BUENOS AIRES 1008

C. 08 BUENOS AIRES 980 AND PREVIOUS

Classified By: DCM Tom Kelly for reasons 1.4 (b) & (d).

C O N F I D E N T I A L BUENOS AIRES 001101

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C O R R E C T E D C O P Y - CHANGED DECL DATE

E.O. 12958: DECL: 10/03/2039
TAGS: PGOV ECON ETRD EINT EINV WTRO AR
SUBJECT: ARGENTINA: A PRIMER ON ARGENTINA'S MEDIA BILL

REF: A. BUENOS AIRES 350 AND PREVIOUS

B. BUENOS AIRES 1008

C. 08 BUENOS AIRES 980 AND PREVIOUS

Classified By: DCM Tom Kelly for reasons 1.4 (b) & (d).


1. (C) Summary: For decades, there has been consensus within
Argentine political circles of the need to reform the 1980
media law, which dates to the military dictatorship
(1976-1983). A year after President Cristina Fernandez de
Kirchner (CFK) first announced an effort at reform, the
Chamber of Deputies approved a bill. Although many speculate
that the bill responds to CFK's political objectives by
potentially diminishing the holdings of Clarin Media Group,
the bill could not have succeeded without general support for
reducing the concentration of media ownership. The
government secured center-left support through modifications
which addressed fears that it would create a monopoly
provider of cable TV services. The draft law proposes
regulatory changes in three key areas: ownership of mass
communication channels, requirements for on-air content, and
regulatory oversight. U.S. cable programmers are among those
concerned about the law, and the Mission is trying to work
behind the scenes to get them access to GOA decision-makers
so that they can make their case.


2. (C) The bill moved to the Senate on September 21, where
the government hopes to secure approval by early-to-mid
October. The government would like to avoid modifications so
that the bill does not have to return to the Lower House for
approval. Behind the hurry is the fact that the government
will lose its majority in both houses in December when the
new members elected on June 28 finally take up their seats.
Although public criticism of controversial articles from at
least six ruling party Senators seemed initially to point to

modifications, that resistance may be fading. CFK and her
very hands-on husband, former President Nestor Kirchner, may
still get a law of their design by December. End Summary.

Background to Reform
--------------


3. (C) For decades, there has been consensus within Argentine
political circles of the need to reform the 1980 media law,
which dates to the military dictatorship (1976-1983).
President Cristina Fernandez de Kirchner (CFK),who first
announced an effort at reform in late 2008, publicly
presented the draft audiovisual law in March 2009 (ref A).
The Chamber of Deputies approved the bill after more than 12
hours of debate on September 17 (147 votes in favor, 4
against, 1 abstention, and over 100 deputies walking out
before the vote in protest of what they characterized as
procedural irregularities and undo haste). While most
acknowledge that Argentine audiovisual regulation is in need
of reform, many speculate that the bill responds to the
political objectives of CFK and her husband, former President
Nestor Kirchner (NK),by potentially diminishing the holdings
of the Clarin Media Group, whose many outlets are seen as
critical of the government. Ruling Victory Front (FpV)
deputy Manual Baladron publicly framed this initiative as "a
battle between the politicians and media corporations."

CFK Defends the Bill
--------------


4. (SBU) Following the Lower House vote, CFK publicly
defended the initiative during her September 20-24 visit to
New York to attend the United Nations General Assembly.
During a speech to Columbia University students, CFK
described the initiative as "profoundly decentralizing,"
inspired by U.S. laws that regulate media activity, and the
product not of government initiative but of civil society
advocacy. In a reference to Clarin Media Group, she added
"73% of the radio, television, and cable licenses in
Argentina belong to one single entity, which also owns
newspapers."

Consequences to Clarin
--------------


5. (SBU) Under the provisions of the bill, Clarin Media
Group, which by objective estimates controls about 46% of the
national cable market and owns both cable and broadcast
channels, may be forced to divest itself of a substantial
part of its media empire. While Clarin is the major player
in local media, it is by no means a monopoly. Clarin has

about 23% of the Buenos Aires radio market behind Radio 10,
with 34%. In television, Clarin lags Telefe, which enjoys a
market-leading 39% of the audience share, while Clarin's
Canal 13 has the second largest share (28% of the audience).
And while Clarin does have nearly half the cable market, it
only provides 10% of the content. Nevertheless, there is no
doubt that Clarin, which according to its own reckoning
stands to lose 236 of 264 media licenses, is CFK's target.

Center-Left Support Secures Bill's Approval
--------------


6. (C) Despite the Kirchners' barely disguised political
objectives, the bill could not have succeeded without general
support for reducing the concentration of media ownership.
The government secured support from center-left deputies
outside their coalition, including nine out of ten Socialist
representatives. This was critical to the bill's Lower House
approval. Just two days prior to the vote, the government
wooed center-left votes by eliminating a provision allowing
telephone companies into the cable market. This addressed
concerns on the left about potentially creating a monopoly
provider. Santa Fe Senator and possible 2011 presidential
contender Carlos Reutemann (ref B) publicly accused the
Socialist party ) and his Santa Fe rival, Socialist Governor
Hermes Binner -- of serving the interests of the national
government by supporting the media law and described them as
"true allies of Kirchnerism." (The charges did not seem to
hurt Binner -- soon thereafter, his forces prevailed over
Reutemann's in Santa Fe province's municipal elections on
September 27.)

Scores of Opposition Deputies Refused to Vote
--------------


7. (SBU) Prior to consideration in the Chamber of Deputies,
Vice President Julio Cobos, Buenos Aires Mayor Mauricio
Macri, deputies-elect Francisco de Narvaez and Gabriela
Michetti, and Radical party leaders met publicly to block
the legislation, criticizing in particular a number of
articles. Opposition deputies criticized the
administration's rush to move the bill before the new
Congress convenes in December. In addition, they said the
debate was void because the ruling party had failed to comply
with congressional procedures. Over 100 deputies from the
Radical, Republican Proposal, Civic Coalition, and Peronist
dissident sectors left the floor in protest of the vote.
Leading papers "La Nacion" and "Clarin" asserted that in
walking out on the vote, the opposition missed an opportunity
to kill the "forced sale" article, one of the more
controversial points requiring companies to divest themselves
within one year of licenses in excess of ten.


8. (SBU) The day after the vote, Radical Deputy and chair of
the Freedom of Expression Committee Silvana Giudici and Civic
Coalition deputy Patricia Bullrich held a press conference
charging that ruling party officials had surreptitiously
modified at least three articles between committee hearings
and the vote.

Highlights of the Bill's Provisions
--------------


9. (SBU) Most observers agree that the current antiquated
media law needs an overhaul. The statute, drafted under a
military dictatorship, regulates mass media without reference
to satellite, cable, internet technology or the
internationalization of the mass media over the past 30
years. The draft law seeks to make regulatory changes in
three key areas: ownership of mass communication channels
considered as a whole, content, and regulatory oversight.

Ownership
--------------


10. (SBU) Proposed rules would severely limit concentrated
ownership of audiovisual media. Foreign ownership of any
company with a media license would be limited to 30%, and no
company could possess more than ten licenses for all
audiovisual media. Furthermore, cable distributors would be
prevented from owning broadcast licenses. National
programmers, those with over 60% local content, would receive
preferential treatment under the law. The law would divide
the broadcast spectrum into three equal parts: private
enterprise, social organizations, and the State, and the
latter two sectors would presumably pick up licenses after

the private owners divested. Those companies in violation of
the ownership rules would have one year to comply with the
law; any company that does not divest itself of licenses in
excess of ten within that time would be forced to sell its
interest. Owners, understandably, fear that forced
divestiture would be at fire-sale prices. While owners may
rightly fear a forced sale procedure, the applicable section
of the law is vague and seems to leave considerable
discretion with the regulator.

Content and Regulatory Oversight
--------------


11. (SBU) The draft statute also establishes local content
and other programming and advertising limitations. The law
requires a minimum amount of Argentine content, although the
precise level may depend on the channel's programming format.
For example, Section 58 of the law establishes a screen
quota for national movies, requiring foreign programmers that
transmit more than 50% of fictional feature-length films to
spend 0.5% of their annual revenue to acquire and transmit
local Argentine films.


12. (C) The law, if enacted, would be administered by an
autonomous board. The current regulator, the Federal
Broadcasting Committee (known by the acronym COMFER in
Spanish),would be superseded by a panel composed of two
presidential appointees, three congressional appointees (one
pro-government and two opposition appointees),and two named
by a committee of provincial leaders. Each member would
serve a four-year term. It is thought by many observers that
the Kirchner government would gain control of the board under
this distribution.

Foreign Companies' Reaction
--------------


13. (SBU) The foreign players in the Argentine media market,
including many big American cable programmers, find several
aspects of the proposed legislation worrisome. According to
the Television Association of Programmers (TAP),advertising
restrictions are the most troubling because they could,
potentially, destroy the profitability of what is considered
the largest pay television market in Latin America. In
addition to advertising limits, foreign media companies are
most concerned by content regulation and tax consequences of
the draft law. During CFK's September 22 meeting with
businesspersons in New York, a Fox International Channels
representative voiced the concerns of his peers by asking
that foreign companies not be discriminated against in the
competition against Argentine companies. CFK expressed
interest in this viewpoint and offered to follow up. The
Embassy is in the process of discussing this commitment with
Casa Rosada staff and trying to hold them to the President's
verbal commitment.


14. (SBU) Advertising would be regulated and limited under
the provisions of the draft law. The bill would reduce the
current standard 12 minutes per hour of advertising to six.
Foreign media companies warn that this would increase prices
of content to cable operators and other platforms.
Argentina, TAP claims, has the most affordable basic
subscription fee in Latin America, allowing for over 70 cable
channels providing consumers a wide range of entertainment.
For foreign companies to profit under the new rules, they
would have to raise subscription rates, which they fear the
government would block. Otherwise, they may be forced to
abandon the market. It also restricts foreign advertising, a
key element of the international pay television business,
which depends upon pan-regional and even global
retransmission of its programming and advertising.


15. (SBU) Content regulation would be a significant feature
of the law and one that concerns most foreign players. Cable
operators may not broadcast the content of foreign
programmers that are not registered in Argentina. Of the
U.S. media groups, HBO and Discovery have not established
operations in Argentina, and they fear that failure to
maintain a local domicile would disallow retransmission of
their content over the local airwaves. DirecTV and TAP also
point out that the law would create a dangerous framework
under which pay TV stations could be regulated in the same
way public utilities are regulated. Content could be
"nationalized" and companies like DirecTV could be forced to
carry local stations on their satellite network-an expensive
and difficult requirement.


16. (SBU) Potential tax consequences are also causing foreign
companies heartburn. All programmers are subject to a new
tax proportional to the amount of their gross invoicing for
advertising. The applicable rate is higher for foreign
programmers.

Up Next: the Senate Vote
--------------


17. (C) The bill advanced to the Senate on September 21,
where the government initially hoped to obtain a speedy
approval, without any modifications, by October 7. The
Kirchners are resistant in particular to modifications to two
articles, described by the press as the "heart" of the bill
and "not-negotiable" to the First Couple. Six ruling party
Senators have called for changes to these two articles known
as the forced sale article (161) and the regulator article
(14). Key among this group is Peronist Senator Guillermo
Jenefes from Jujuy province, who chairs the Systems, Mass
Media and Freedom of Expression committee, and belongs to two
of the other three committees that are studying this bill.
(Note: Jenefes' in-laws own a multimedia company, and he has
served on the board of television company Telefe.) These
Senators have argued that article 161 is "unconstitutional"
by violating property rights and that article 14 gives the
Executive Branch too much authority to renew and revoke media
licenses.


18. (C) In response, the Kirchners have pressed Peronist
senators and governors to ensure that not a single article is
modified, which would require the bill to return to the Lower
House for approval. CFK herself reportedly called from New
York to repeat the directive to FpV bloc leader Miguel
Pichetto and tried unsuccessfully to reach Senator Jenefes by
phone from the U.S. Once she returned to Argentina, the
pressure increased with promises to senators in exchange for
their votes, according to "La Nacion."


19. (C) The pressures or inducements appear to have worked.
On October 2, Senators on the four committees studying the
bill, including Senator Jenefes who previously said that it
was "very probable the Senate would introduce changes,"
signed the bill without modifications, according to local
press. After initial press reports that the government was
shy Senate votes regarding the two most controversial
articles, the government can now count on 38 votes to pass
the bill, according to "La Nacion." They would need 37
senators for a quorum to get to a vote. After voting the
bill out of committees, the government plans to send the bill
to the floor for a vote on October 9. A number of
well-informed observers across the political spectrum,
including former Kirchner Chief of Cabinet Alberto Fernandez
and influential conservative columnist Joaquin Morales Sola,
told the DCM October 2 that the bill is likely to make it
through the Senate relatively unscathed.

Limited Public Reaction
--------------


20. (SBU) Despite intense press coverage (especially in
"Clarin" which is devoting pages and pages to the debate),
the bill has not fueled public interest on par with the
government's extended conflict with the farm sector in 2008
(ref C). (Alberto Fernandez told the DCM, "The man on the
street could care less.") The first public protests occurred
September 21 and 22 among a few hundred residents of
upper-class neighborhoods in Buenos Aires City.

Comment
--------------


21. (C) While critical media coverage of Lower House
opposition deputies walking out on the vote set the tone for
a Senate showdown, it appears that the end result will be the
same. Senator Jenefes' willingness to play ball with the
Kirchners opens the way for passage. Government supporters
and some opponents will interpret success on the measure as
confirmation that the Kirchners have regained political
momentum despite their electoral defeat in the June midterms.
In our view, that is an overstatement, and the media bill
could turn out to be one of the Kirchners' last hurrahs.
Even after the bill passes the Senate, it is likely to become
enmeshed in interminable court challenges. Morales Sola told
the DCM that he and other critics of the law hope that it
emerges from the Senate "as ugly (i.e., unreformed) as

possible, so that the challenges in the court are easier."
Further into the future, either the new Congress or more
likely the government that replaces the Kirchners in 2011
will scrap the law and try again.

MARTINEZ