Argentina Insists on Clarin Media Breakup Ahead of Court Ruling

Argentina’s government and one its leading critics, Grupo Clarin SA (GCLA), clashed over President Cristina Fernandez de Kirchner’s determination to break up the country’s biggest media conglomerate.

The government, in advertisements broadcast nationwide during soccer matches over the weekend, said it will strip most of Clarin’s television licenses even as the Supreme Court considers a company-requested injunction to block the move.

The Supreme Court ruled on May 22 that Clarin has until Dec. 7 to fall in line with an antitrust law approved by Congress in 2009 requiring the Buenos Aires-based company to sell dozens of television networks it operates across the country. Still, justices have yet to rule on a company lawsuit claiming its constitutional rights are being violated.

The government, deflecting criticism by opposition politicians and advocacy groups that it’s trying to control news coverage, said that its actions seek to guarantee “diversity and democracy” in Argentina’s media. If Clarin doesn’t adhere to the law the government will be forced to auction its licenses so no jobs are lost, the video said.

“The Argentine state will not expropriate the news media; the Argentine state will not nationalize the news media,” according to the advertisement, referring to the deadline date as “7D.” “The Argentine state will guarantee their jobs and compliance with a law that democratizes the news media in the Argentine republic.”

Clarin owns the country’s largest-circulation newspaper as well as its biggest cable-television operator, Cablevision SA, radio stations, Internet providers and Argentina’s biggest printing press. It has been feuding with the government since Fernandez’s late husband and predecessor, Nestor Kirchner, accused it of supporting farmers in a national strike over export taxes.

Constitutional Rights

Clarin responded yesterday, saying the law violates constitutional guarantees and that justices can still rule to extend its injunction and even in the worst-case scenario the law gives the company a full year to divest its holdings.

“Unless the government wants to implement something different, on Dec. 7, legally and factually, nothing should happen to the media outlets of Grupo Clarin,” the company said in a statement in its flagship newspaper and posted on its website. “This isn’t an opinion or an interpretation, it’s what the law says.”

Clarin shares are trading near a three-year low after plunging 24 percent since the Supreme Court’s decision in May. That compares with a 15 percent gain for the nation’s benchmark Merval index and an 8.7 percent jump in the MSCI Emerging Markets Latin America (MXLA) benchmark index.

Under the new rules, media companies can hold a maximum of 24 cable-television licenses and 10 broadcast radio and television licenses. Clarin has 240 cable networks, 10 radio and four broadcast TV licenses, according to the government.

To contact the reporter on this story: Nathan Gill in Quito at ngill4@bloomberg.net

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

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