Latin America AdvisorMexico's Supreme Court has rejected parts of the so-called "Televisa Law," namely provisions that automatically let broadcasters add data and telecommunications services on request, and that mandate the awarding of broadcasting licenses to the highest bidder via auctions. What effect will the Court's ruling have on competition in Mexico's media sector? What impact will it have on media giants Televisa and TV Azteca?Sallie Hughes, Assistant Professor at the University of Miami's School of Communications:
The implications of the ruling for Mexico's public sphere depend on what happens next. Thinking of diversity and quality of politically relevant information and domestic programming, steps need to be taken on several fronts. One is the creation of a transparent and fair process for the awarding of new commercial broadcast licenses and digital rights that takes into account ideological and geographic diversity while maintaining the independence of news production from political pressures. Every commercial broadcaster has its own commercial interests; for that reason, diversity in ownership is paramount. President Calderon has committed to creating new regional TV networks—reportedly made up of new stations created in every major city—that could link into one or two national networks. Telmex, the phone giant, is also asking to have its concession modified to allow it to provide television services; reportedly, the company is already talking to independent local content producers as well as international providers. The non-commercial side is just as important. The ruling that the state must apply similar procedures to non-commercial broadcasters could help take some of the bureaucratic pressure off community stations, the bane of commercial radio. However, the cost of digitalization will probably be too much for most. Without some sort of state stimulus, the fate of community radio remains uncertain. Finally, although academic proponents have found little echo, Mexico desperately needs a real public component in its media system. Directly or indirectly, the journalists and managers at Mexico's government-owned media ultimately respond to politicians in office for both their jobs and their budgets. This needs to be changed by creating both financing mechanisms and a more autonomous oversight board so that public service journalism can offer Mexicans higher-quality, less sensational, and less-biased news programming, as well as local, regional, and national cultural programming. John Price, President of InfoAmericas:
Four successive administrations in Mexico from de la Madrid to Fox all succeeded in dismantling government control over the economy, but in the wake of those reforms emerged a brand of corporatism where powerful companies yielded unbridled power, including the ability to shape legislation and get it passed. Such influence was wielded by Televisa and TV Azteca, Mexico's two largest broadcasters, when the country's television and telecommunications laws were reformed last year. The most egregious part of said reform was Article 28, which allows Televisa and TV Azteca to use the bandwidth in their present contracts with the government to provide additional services, such as telecommunications. Not only were the two broadcasting giants freed from the bother of having to participate in competitive auctions to gain the right to offer services such as telephony; they didn't have to pay the government anything for it, either. Last week, Mexico's Supreme Court judges ruled unanimously in favor of stripping out most of Article 28. It is a rare and welcome sight to witness Mexico's third branch both flexing its independence and standing up to Mexico's corporate elite ... When Calderon first made his promise to attack monopolies, few paid heed given the PAN party's historic links to corporate interests. Last week's action puts an indelible stamp of credibility on the Calderon government. That credibility is vital to the passage of some controversial reforms, including tax and energy reform, for which he needs the support of some of the left-wing factions of the PRI and possibly PRD legislators ...Rogelio Urrutia, Corporate Debt Analyst at ING Americas:
The Supreme Court's decision is aimed at avoiding monopolistic concentration in the granting of telecommunications concessions by means of granting them to the best suitable candidate rather than to those players with more economic power. Among other issues that were also voted against, the more relevant objections were the following: first, the Supreme Court invalidated the indulgence conceded to radio and television companies to provide telecommunications services without going through a bidding process and without making the respective payment to the government for the new concession title. The article that was modified allowed media and radio companies to provide telecommunications services only by requiring the government's approval and without a clear means of payment for the new concession. Second, the court also voted against the automatic endorsement of radio and television concessions without the fulfillment of any requirement. Third was the granting of television and radio concessions through an auction mechanism. Fourth, the fixed 20-year term for a television and radio concession was rejected. It is important to highlight that the Supreme Court's decision to reject these articles has implications only for television and radio broadcasters, as these companies were the ones that were going to benefit from the digitalization of their signals ...Republished with permission from the Inter-American Dialogue's daily Latin America Advisor newsletter.