The Buenos Aires Herald

Argentina’s media law

Sunday, July 21, 2013


Blow-up in media regulation

The Supreme Court must resolve a conflict amassing doctrines pertaining to freedom of speech.

Since the Audiovisual Communication Services Law was sanctioned by Congress in October, 2009, it has been the object of an intense legal dispute, given that part of the Kirchnerite cycle’s legacy gambles its future on it.

By Martín Becerra*

For Ámbito Financiero

The current translation to Spanish for “blow up” is to inflate or even explode. In photography parlance, it is used for image enlargement. The Supreme Court must decide in a case that encapsulates all these meanings, involving the state political power and part of the private economic power. It is here where — explicitly or silently — part of the Kirchnerite cycle’s legacy gambles its future. Expectations will be inflated, enlarged or they will explode according to the Court’s ruling. The zoom focuses on the most profitable of the Media Law regulated sectors: cable television.

Since it was sanctioned by Congress in October, 2009, the Audiovisual Communication Services Law (for short, the Media Law) became the object of a legal battle. Clarín, the country’s main media outlet alongside Telefónica, secured quite early in the process an injunction that suspended a few — albeit critical — articles. It was only in December, 2012, that judge Horacio Alfonso ruled the articles challenged by Clarín to be constitutional. This occurred after the Supreme Court itself rebuked the courts for the delay in analyzing the case and the government for lethargic application of the rest of the law, which had not been challenged in court.

In April, 2013, the Civil and Commercial Appeals Court modified the previous ruling. By ruling in favour of Clarín Group, the Court decided that the Media Law is constitutional with regard to the boundaries set against the accumulation of open licences (for radio and television) but unconstitutional in its cable restrictions. These restrictions apply to the ownership of more than 24 cable licences or surpassing 35 percent of the market on one hand and, on the other hand, owning open television and cable licences in the same area. The law also bans cable operators from managing more than a signal of their own.

It was thus that Court players ushered in a debate on the regulation of the cable sector that the Court must now consider. This debate reaches the core of the media system, since Clarín occupies a dominant position on the cable market — which it secured thanks to an authorization by former president Néstor Kirchner in December, 2007, for the merger of Cablevisión and Multicanal. It is also critical because the double winning formula paid TV Internet represents 89 percent of the group’s total profit, according to data provided by the Chamber of Commerce. Therefore, the Court’s ruling would maintain Clarín’s main asset while the possible decentralization of the cable sector would have an impact on the configuration of the conglomerate managed by Héctor Magnetto.

As far as the Court is concerned, cable sector concentration is a necessary condition to enable economic sustainability and independence. The ruling is based on the assumption — shared by some economics academics — that a larger scope grants media outlets independence from governments and allows them to provide better services at lower prices to their clients. In the history of cable television in Argentina, both assumptions prove to be false.

The Court’s ruling transcends, however, Clarín’s case and its dispute with the government. In fact, if the fundamental presumption of the Court’s were correct, a high level of concentration would have to be ensured so that other market actors reach the sustainability that comes with freedom of speech. Since any concentration means that many resources are seized by few actors, the assumption becomes unattainable. On a different note: in the case of news media, the Inter-American Doctrine of Human Rights posits that by reducing concentration, the state encourages other actors to exercise their right to communication. As Owen Fiss put it, freedom of speech depends on the available resources and, if these resources are subject to concentration, freedom of speech becomes detached from the public interest.

However, when faced with a Court that only sees state action — but not any actions perpetrated by large private groups — as a threat to the freedom of speech, the government hasn’t attempted to find a proper response and focused on questioning the Court’s members for having participated in various activities co-organized by Clarín.

In the first instance verdict, judge Alfonso washed his hands of the cable sector. Attorney-General Alejandra Gils Carbó’s rulings (Gils Carbó is expected to hand down her ruling in the next few day after, as a prosecutor, she ruled in 2006 against the merger between Cablevisión and Multicanal which was later endorsed by Kirchner) as well as the texts presented by the government fail to explain why it is forbidden to pair ownership of open and cable television or why it is necessary to restrict the signals of the own production of a cable operator. In other countries, where this impediment does not exist, cable operators are required — through “must-carry” rules — to deliver the competition’s signals on equal terms without any restrictions on the number of their own signals (the US, Mexico).

One could argue that, in a country such as Argentina, where more than 80 percent of home subscribers have cable television, this service cannot be so concentrated, because cable operators start to become virtual bottlenecks through their abuse of subscription fees, rapacious policies toward their rivals, content discrimination and privileged absorption of the most coveted programming (as happened with football broadcasting rights for almost two decades). In the end, Fin Syn rules (Financial Interest and Syndication) in the US also restricted the cable signals and own content that an operator could incorporate in its programming schedule in order to prevent anti-competitive positions. The regulations against cross-ownership of media outlets in the US were highly restrictive until 1996 (Telecommunications Law), when national television channels (CBS, ABC, NBC) were forbidden to offer cable television. The Telecommunications Law also allowed telecommunication companies to become cable operators. In the UK, following the phone-hacking scandal featuring leading group News Corp, a 15 percent limit was set on the total income of national media markets. Any group surpassing that percentage point would have to renounce some of their assets.

However, in order to justify adopting restrictive regulations, such an argument would require the state to prove that it has tried in vain to enforce legislation to defend competition, that it has encouraged openness by selling frequencies to new operators who were then boycotted by concentrated actors, that it promoted the creation of co-operatives and new signals and contents. Furthermore, it would require a well-documented knowledge of the industry. Instead, the government decided to put on hold the access of new operators to the cable sector, just as it favoured the concentration following the intervention in the competition defence area which falls under the responsibility of the Domestic Trade Secretary and it collaborated to extend operator licences to neighbouring districts and only produces information when it senses a possibility of benefiting from doing so.

The Supreme Court must resolve a conflict amassing doctrines pertaining to freedom of speech, market economy and the defence of competition, the preservation of the public interest and the state’s mandate to regulate a crucial sector such as the cable television. The Court’s ruling will boost the position of some actors and detonate the stance of others.

(*) Martín Becerra teaches media policy at the Universidad Nacional de Quilmes and is a researcher for Conicet.