Fernandez Says 1976 Sale of Papel Prensa Was Illegal

Argentine President Cristina Fernandez de Kirchner said the 1976 sale of newsprint producer Papel Prensa SA to media outlets including Grupo Clarin SA was illegal because the owner of the company, Grupo Graiver, was forced to sell.

“Those who signed the contract did so without freedom,” Fernandez said today in a speech at the presidential palace, after government representatives on Papel Prensa’s board of directors released a report of the sale.

The government will ask the country’s courts to rule on the validity of the sale, Fernandez said. She will also send a bill to Congress that would support the newsprint industry and mandate equal distribution among newspapers, Fernandez said, without providing further details on her proposal.

The report is the latest round in the government’s fight with Clarin. It accuses the company’s flagship Clarin newspaper, the most widely read Spanish-language daily in Latin America, of being biased against the government in its coverage.

Pablo Cerioli, one of the authors of the 400-page report called “Papel Prensa: The Truth,” said that Clarin, La Nacion and another newspaper “seized” the newsprint company from its shareholders with the complicity of the military. He spoke today in an interview with state-run television channel Canal 7.

The report comes a week after the government decided to shut down Clarin’s Internet service company Fibertel, saying that its merger with the company’s pay television unit, Cablevision SA, was illegal. Cablevision has vowed to fight the government’s action, which it said is “totalitarian.”

Merger in Doubt

Argentine lawmakers last year approved a government-backed measure that put limits on television and radio ownership, forcing Grupo Clarin to sell off assets. Enforcement is currently suspended while courts review its legality.

Fernandez said the bill sought to “democratize” the airwaves. The central provision of the law limits ownership of cable and broadcast operations in a single market. In pushing the bill, Fernandez said Clarin holds 73 percent of Argentina’s radio, television and cable licenses.

The government also sought to suspend a 2007 merger of Cablevision and Multicanal SA, saying the companies failed to fulfill their investment commitments. Cablevision has appealed the decision.

Fernandez’s husband and predecessor Nestor Kirchner complained of Clarin’s coverage of his party’s defeat in a provincial election in March last year.

Ownership History

“What’s your problem, Clarin? Why are you so nervous?” he said. “Clarin, tell the truth to Argentines. Be open. Use the media to inform and not misinform the people.”

Clarin, La Nacion and La Razon purchased Papel Prensa from Grupo Graiver, which was undergoing a financial crisis. Lidia Papaleo Graiver, the group’s owner, was later kidnapped by the dictatorship.

“There are some people who called it Papel Sangre,” Foreign Minister Hector Timerman said in an interview with Canal 26 television on Aug. 18, using the Spanish word for blood. “With the connivance of the dictatorship, she was forced to sell on unfavorable terms because she sold without knowing how much they would pay for the company.”

Grupo Clarin later bought La Razon’s shares in Papel Prensa, boosting its stake to 49 percent. The state has held a stake, now 27.5 percent, since the company was founded in 1972.

Papel Prensa said it is the victim of government attempts to control information.

“The goal of the military regime, like the current government, was to control print media by having total control over the key supply for its existence: newsprint,” the Buenos Aires-based company said in a statement.

Papel Prensa produces 170,000 tons of newsprint per year to supply 170 dailies throughout the country. It holds 75 percent of the Argentine market.

Clarin shares fell 5.2 percent to 10.9 pesos today in Buenos Aires.

To contact the reporter on this story: Eliana Raszewski in Buenos Aires at eraszewski@bloomberg.net

To contact the editor responsible for this story: Joshua Goodman at jgoodman19@bloomberg.net

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