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### Viewing cable 06MEXICO7054, MEDIA WARS: THE CONTINUING DEBATE OVER

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Reference ID | Created | Released | Classification | Origin
--- | --- | --- | --- | ---
06MEXICO7054 | 2006-12-22 19:07 | 2011-03-17 12:12 | UNCLASSIFIED//FOR OFFICIAL USE ONLY | Embassy Mexico
Appears in these articles: http://wikileaks.jornada.com.mx/notas/hay-preocupacion-de-que-el-duopolio-televisivo-sigue-ejerciendo-influencia-sobre-poderes-judicial-y-legislativo

`

    VZCZCXRO2903
    PP RUEHCD RUEHGD RUEHHO RUEHMC RUEHNG RUEHNL RUEHRD RUEHRS RUEHTM
    DE RUEHME #7054/01 3561913
    ZNR UUUUU ZZH
    P 221913Z DEC 06
    FM AMEMBASSY MEXICO
    TO RUEHC/SECSTATE WASHDC PRIORITY 4700
    INFO RUEHXC/ALL US CONSULATES IN MEXICO COLLECTIVE PRIORITY
    RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
    RUEAFCC/FCC WASHDC PRIORITY

` `

    90779
    2006-12-22 19:13:00
    06MEXICO7054
    Embassy Mexico
    UNCLASSIFIED//FOR OFFICIAL USE ONLY
    06MEXICO1080
    VZCZCXRO2903
    PP RUEHCD RUEHGD RUEHHO RUEHMC RUEHNG RUEHNL RUEHRD RUEHRS RUEHTM
    DE RUEHME #7054/01 3561913
    ZNR UUUUU ZZH
    P 221913Z DEC 06
    FM AMEMBASSY MEXICO
    TO RUEHC/SECSTATE WASHDC PRIORITY 4700
    INFO RUEHXC/ALL US CONSULATES IN MEXICO COLLECTIVE PRIORITY
    RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
    RUEAFCC/FCC WASHDC PRIORITY

    UNCLAS SECTION 01 OF 03 MEXICO 007054

    SIPDIS

    SENSITIVE
    SIPDIS

    STATE: WHA/MX FOR MATT ROTH, EB/CIP FOR NICK FETCHKO; USTR
    FOR JONATHAN MCHALE, CATHERINE HINKLEY; FCC FOR EMILY
    TALAGA; DOC FOR GERI WORD

    E.O. 12958: N/A
    TAGS: ECON ECPS MX EINV
    SUBJECT: MEDIA WARS: THE CONTINUING DEBATE OVER
    ESTABLISHING A THIRD TV NETWORK IN MEXICO

    REF: MEXICO 1080

    ¶1. (U) Summary:  The new head of the Secretariat of
    Transportation and Communications (SCT) Luis Tellez has been
    sending mixed signals this past week over whether or not the
    Calderon administration will push for the opening of a third
    television broadcast channel in Mexico.  Both Tellez and a
    commissioner of Cofetel have been quoted as saying that
    Q&additional analysisQ8 is required before granting a license
    for a new company to compete with broadcast television
    duopolists Televisa and TV Azteca.  For their part, the two
    broadcasters have continued to attack potential rival General
    Electric (GE) and its Mexican partner Isaac Saba.  The debate
    has also reached the halls of the Senate.  Even if the new
    government does indeed press for a third station, the steps
    that need to be taken to open the doors to a new channel in
    Mexico still remain unclear.  Some analysts claim that the
    apparent hesitancy is due not to inexperience in opening new
    licenses but to lack of political will.  End Summary.

    Mixed Signals from SCT
    ----------------------

    ¶2. (U) Media reported on December 14 that Tellez had met
    earlier in the week with Cofetel to inform the commissioners
    of president Felipe CalderonQ,s goal of opening the market to
    a third television broadcaster.  Currently, Televisa controls
    258 of MexicoQ,s 455 television stations while TV Azteca
    controls 179.  The two companies are responsible for 80% of
    television concessions and 90% of audiovisual content in
    Mexico.  According to unconfirmed reports in the media, which
    were later rejected by Cofetel commissioner Eduardo Ruiz
    Vega, Tellez informed Cofetel that it should work with the
    SCT to find a way to counter the duopoly and find a legal
    formula to open the way for NBC-Telemundo to enter the
    market.  Columnist Dar!o Celis of Reforma charged that Tellez
    had threatened the Cofetel commissioners not to make public
    their discussion.

    ¶3.  (U) On December 15, however, Tellez held his first press
    conference as head of the SCT and evaded directly answering
    questions about authorizing a third television network.  He
    said that CalderonQ,s plans do not include a third national
    network, but instead focus on licensing regional radio and
    television channels. Tellez did say that the GOM would be
    ready to open the fixed telecommunications sector and media
    to greater foreign investment, but only if the United States
    and other countries open their radio and television markets
    to Mexican companies.  The statement may have been in
    reference to NBC/UniversalQ,s suit filed with the FCC against
    TV AztecaQ,s participation in KAZA in Los Angeles.
    Undersecretary for Communications Rafael del Villar said at
    the press conference that the idea for a third channel had
    not been rejected but that it would Q&be analyzed.Q8

    ¶4. (U) On December 14, media reported Cofetel commissioner
    Gerardo Gonz lez Abarca as saying that the conditions do not
    yet exist in Mexico to merit the licensing of a third
    national television channel in the short run.  He claimed
    that Q&Mexico does not have experience in licensing radio and
    television frequencies Q( and there is no study over the real
    necessity of a new alternative, or above all of the type of
    content that should be offered (by a third channel).Q8  In
    order to create these conditions, Gonz lez Abarca said it is
    necessary to reach agreement between Hacienda (the
    Secretariat of Finance), the SCT, the Secretariat of

    SIPDIS
    Governance (Segob), and Cofetel.  Gonz lez did recognize that
    opening a licensing process in the first trimester of 2007 is
    one of Felipe CalderonQ,s promises for his first 100 days in
    office, though Secretary Tellez denied this in his press
    conference the next day.

    The Politics of TV
    ------------------

    ¶5. (U) The debate on opening a third channel has also surged
    in the Senate.  PAN senators Federico DQring and Marco
    Antonio CortQs Mendoza (both on the SenateQ,s Radio,
    Television, and Cinema (RTC) Committee) came out in favor of
    a serious debate on the issue, saying that the Federal Radio
    and Television law need to be revised, particularly regarding
    the regulation of content.  DQring acknowledged that there
    are frequencies available for a third channel, and said that
    the idea of a third network formed by educational and
    cultural stations should not be discarded.  However, DQring

    MEXICO 00007054  002 OF 003

    also accused PRD senator Ricardo Monreal, who is not on the
    RTC committee, and his party of trying to pressure the
    Calderon government to open a third network through
    Q&political beatings and insultsQ8 directed at Secretary
    Tellez.  The president of the RTC, PRD senator Carlos Sotelo,
    has not commented on the issue.  One PRI senator on the
    committee voiced objection to opening the sector, claiming
    that it would run the risk of augmenting the exorbitant costs
    of political campaigns.

    ¶6. (SBU) Comment: The political nature of the debate becomes
    more apparent every day, from the rumors of Q&secretQ8
    meetings between Secretary Tellez and Cofetel to TellezQ,s
    denial of such a meeting and carefully worded, ambiguous
    statements on the subject.  Cofetel commissioner Gonz lez in
    the daily Q&El FinancieroQ8 accused the old SCT leaders of
    leaving Cofetel with Q&a hot potato.Q8 Q&You have to ask the
    ex-officials (of the SCT) why they didnQ,t grant new
    frequencies or commence licensing in their six years in
    office.Q8  The answer is likely that they lacked the
    political will to do so.  Though no officials like to admit
    it, the PRI senator's objection may explain why: candidates
    depend on Televisa and TV Azteca for advertising during the
    political campaigns.  PRD's support of a third channel stems
    from its opposition to the so-called Q&Televisa LawQ8 passed
    by Congress in April (reftel), which the PRD and others
    condemned as strengthening the existing duopoly.  Televisa
    and Azteca in turn angered PRD leaders with their coverage of
    the hotly contested presidential election and CalderonQ,s
    inauguration. End Comment.

    Televisa and Azteca Pick a Fight
    --------------------------------

    ¶7. (U) Outside the political realm, the media wars rage on as
    Televisa and TV Azteca continue their coordinated attack on
    Mexican businessman Isaac Saba and his Grupo Xtra, General
    Electric's (GE) partner in Palmas 26.  GE, owner of
    NBC/Universal and Telemundo, formed Palmas 26 with Grupo Xtra
    in April, and the partnership was approved by the GOM in May.
     In September, Palmas 26 officially requested that Cofetel
    and SCT start the process needed for a spectrum auction to
    open a new network.  Since November 20, Mexicans have been
    treated a series of almost nightly Q&exposQsQ8 on both
    Televisa and TV Azteca news program, delving into the world
    of pharmaceutical distributors.  The programs blamed two
    dominant companies, most prominently Isaac SabaQ,s Grupo
    Saba, in that industry for killing Mexicans because of the
    high price of medicines.  Both networks have aired interviews
    with sick and dying Mexicans dependent on medications, as
    well as with the new Secretary of Health and the president of
    the Federal Competitive Commission (CFC), to demonstrate how
    Casa Saba and the other major firm controlling pharmaceutical
    distribution in Mexico, the Nadro company, had created a
    monopolistic market, contributing to the deaths of thousands
    of Mexicans.  The interview with CFC president Eduardo PQrez
    Motta was a particularly interesting inclusion, since PQrez
    Motta had recently advised Congress that opening a third
    network would be good for competition.  In late November, the
    CFC also issued a recommendation to open the spectrum and to
    develop mechanisms to prevent monopolies from building in
    broadcasting.

    ¶8.  (U) One reporter for duopolist TV Azteca noted:

     Q&It is almost impossible to think that someone can create
    competition in this country, not even foreign competition.
    If some company from the United States or Canada wanted to
    compete with Casa Saba, it couldn't because it is prohibited
    by NAFTA. Q( The worst is that neither Mexican laws nor
    international treaties have been able to impede Isaac Saba
    and his empire in the pain they cause Mexicans.Q8 End quote.

    ¶9. (U) The irony of TV Azteca, which has so strongly fought
    against Telemundo entering the Mexican market, condemning
    NAFTA for not allowing foreign investment, has not been lost
    on other media outlets.  Radio and print media commentators
    quickly picked up on the connection between the reports on
    Casa Saba and Palmas 26Q,s attempt to enter the television
    market, while acknowledging that the high price of medicine
    is indeed a problem in MexicoQ*and has been for decades.  On
    December 7, TV Azteca turned its attention to GE as well as
    Isaac Saba.  The network's news reporters described the
    Q&black history Q( a story of impunity, abuses, and
    injusticesQ8 of the Saba family, which Q&has made its fortune

    MEXICO 00007054  003 OF 003

    on the suffering of millions of MexicansQ8 through Casa Saba
    and its other companies.  The reporter went on to say,  Q&All
    this is not enough, and now Isaac Saba Raffoul plans to unite
    with General Electric, a transnational company accused of
    unfair monopolistic practices, deception, fraud, and all that
    you can imagine.Q8 He detailed cases brought against GE in
    the 1980s and 1990s, as well as problems the company has had
    in Japan and Spain.

    ¶10. (U) GE, for its part, responded to the attacks
    immediately with a paid announcement in newspapers and
    through radio and newspaper interviews with the company's
    Mexico director Rafael D!az Granados.  D!az drew the line
    between Palmas 26 and the Televisa/TV Azteca attacks clearly,
    telling one radio reporter that the Azteca program Q&is very
    much related to GEQ,s public interest in participating in
    MexicoQ,s television market. It seems to us at GE that this
    is another attempt on the part of the television company to
    impede free competition Q( we consider this to be part of a
    strategy on the part of the duopoly that wants to protect
    itself and avoid the participation of GE and its partners in
    the media market.Q8   Isaac Saba and Casa Saba have refused
    to comment on the media attacks.

    Comment
    -------
    ¶11. (SBU) So far, the Televisa/TV Azteca exposQs have done
    little more than provoke some discussion in Congress over the
    price of medications- and more than a little discussion
    within the SCT, Congress, and the press over the options for
    opening a third national network.  By apparently coordinating
    an attack on Casa Saba, Televisa and TV Azteca have
    demonstrated exactly why Mexico needs another competitor in
    the television market.  Still, regulators seem hesitant to be
    seen as favoring Telemundo.  Cofetel commissioner Gonz lez
    said to Q&El Financiero,Q8  Q&From what I know, only one
    company has expressed interest in this opening (of the TV
    market) and that is Palmas 26; but we cannot open the process
    for only one company, neither can we fix a price or a
    concession fee for only one interested party.Q8

    ¶12. (SBU) For the moment, any talk of opening a third network
    in Mexico is just talk.  After stories in the media that
    Tellez was pushing Cofetel to immediately look into setting
    procedures to grant a license for a third network, Tellez and
    del Villar seemed to backtrack in their press conference,
    focusing on the need for studies to examine the necessity of
    a new network and the content it might provide.  Even without
    studies, setting up a licensing and concession process could
    take years.  If they are serious about opening licensing for
    an additional national TV network or networks, CalderonQ,s
    team should set a clear timeline for opening the television
    market, both regionally and at a national level, and enforce
    deadlines for when Cofetel must issue guidance on the
    licensing process.

    ¶13.  (SBU) In meetings over the coming months with the new
    Calderon government, Post will stress the importance of
    encouraging competition, especially in the telecommunications
    sector.  Given commissioner Gonz lezQ,s assertion that Mexico
    lacks experience in licensing, we also encourage views from
    Washington as to how to provide support to Cofetel and the
    SCT on the licensing process. Competition is not the only
    issue in play here.  MexicoQ,s laws limit foreign investment
    in the country's media.  Earlier in December, Senator Javier
    Orozco demanded vigilance of GEQ,s role in Palmas 26, and
    Secretary Tellez alluded to the U.S.Q,s own restrictions on

    SIPDIS
    foreign ownership of media in his press conference.

    Visit Mexico City's Classified Web Site at
    http://www.state.sgov.gov/p/wha/mexicocity
    BASSETT

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