Fernandez Escalates Clarin Fight With Push to Control Argentine Newsprint

Argentine President Cristina Fernandez de Kirchner asked a court to review the 1976 acquisition of a newsprint producer by Grupo Clarin SA, the country’s largest media company, and other newspapers. Opposition leaders called it an attempt to silence critics.

Fernandez said late yesterday that she will also send a bill to Congress that would designate the production, sale and distribution of newsprint a “public interest” and subject the industry to regulations that would ensure all newspapers can buy paper at the same price and under similar terms.

If Fernandez succeeds, supplies of the newsprint needed to publish newspapers would be controlled by the government. Opposition lawmakers, including former Buenos Aires Governor Felipe Sola and Elisa Carrio, said Fernandez’s administration is trying to pressure the press for favorable coverage.

“The president just wants a press aligned with the government,” Carrio told reporters last night at Congress. “They want to stay in power, abolishing the press.”

Fernandez said the sale of paper maker Papel Prensa SA to Clarin, La Razon and La Nacion was illegal because the owner, Grupo Graiver, was under pressure by the country’s military dictatorship to agree to the transaction. Clarin now holds a 49 percent stake in Papel Prensa after buying La Razon’s share. The government has held a stake, now at 27.5 percent, since the company was founded in 1972.

‘Absolute Certainty’

“I have absolute certainty on how things happened, but only the country’s judges can condemn,” Fernandez said in a speech at the presidential palace, after government representatives on Papel Prensa’s board of directors released a report on the sale called “Papel Prensa: The Truth.”

Grupo Clarin shares fell for sixth day, dropping 3.7 percent to 10.5 pesos as of 11:42 a.m. New York time, the lowest since March 25. The shares have gained 12 percent this year. year.

JPMorgan Chase & Co. reduced its recommendation on Argentine debt to “market weight” from “overweight” as global growth slows and “domestic political conflicts” intensify.

The yield on Argentina’s benchmark dollar bonds due in 2015 rose 19.7 basis points to 11.16 percent today, according to pricing from JPMorgan. The peso gained 0.1 percent to 3.9439 per U.S. dollar.

Newspapers’ Reaction

Clarin and La Nacion, in a joint statement, said that in court testimony made after the country returned to democracy in 1983, the Graiver family said it had sold Papel Prensa and other assets to settle large amounts of debt.

Members of the family were kidnapped and detained by the military the year after the sale for reasons unrelated to Papel Prensa, the statement said.

Isidoro Graiver, a member of the family that sold Papel Prensa, said in a statement published in both newspapers today that the transaction was voluntary.

“I didn’t and don’t want to have an asset or moral claim on the buyers of Papel Prensa,” he said.

Foreign Minister Hector Timerman said in an interview with Canal 26 on Aug. 18 that Lidia Papaleo Graiver, the sister-in- law of Isidoro Graiver, was “forced” to sell her assets.

“There are some people who called it Papel Sangre,” Timerman said in the interview, 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.”

Accusations of Bias

The government accuses Grupo Clarin of being biased against the ruling party in its coverage. The company’s flagship newspaper is the most widely read Spanish-language daily in Latin America, and Grupo Clarin also owns television stations, cable companies and Internet-service providers.

Papel Prensa, which produces 170,000 tons of newsprint annually to supply 170 dailies throughout the country, 75 percent of the Argentine market, said it is the victim of government attempts to control information.

Military Regime

“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 Aug. 20.

Yesterday’s report comes a week after the government moved to shut down Grupo 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 says is “totalitarian.”

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 legal issues.

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.

“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.”

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

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