Mexico’s lower house of Congress approved a modified proposal to increase competition in the telecommunications and media industries, inserting changes that benefit broadcasters Grupo Televisa SAB (TLEVICPO) and TV Azteca SAB.
The bill was approved 393-98 at 4:11 a.m. local time today to be delivered to the Senate, according to the house’s website. It will require the vote of two-thirds of the Senate. At least parts of the legislation will also need constitutional changes, which have to be approved by a majority of legislatures from 31 Mexican states and the capital.
In a measure to let foreigners own as much as 49 percent of Mexican broadcast networks, lawmakers added a “reciprocity” clause requiring outside investors to come from countries that also allow stakes of that size in their media industries. That could cut down on investment from companies from the U.S., which has a restriction of 25 percent foreign ownership in many cases.
Televisa and Azteca, both based in Mexico City, account for almost all of Mexico’s broadcast-television audience. The telecommunications law calls for creating two new broadcast networks through an airwave auction. Comcast Corp.’s Telemundo, a U.S. Spanish-language network, had sought to air in Mexico as recently as 2006, when it was owned by General Electric Co.
In an editorial last year in the Wall Street Journal, Televisa Chairman Emilio Azcarraga said his company wouldn’t seek to block U.S. investment in Mexican TV networks, “as long as we receive reciprocal treatment in the U.S.” Televisa has a 6 percent stake in Univision Communications Inc., the most- watched Spanish-language broadcaster in the U.S., plus debt that can be converted into a stake of as much as 30 percent.
The bill, proposed March 11 by lawmakers from Mexico’s three biggest political parties and supported by President Enrique Pena Nieto, seeks to reduce the dominance of Televisa and Azteca in media and of billionaire Carlos Slim’s America Movil SAB in the phone industry.
Televisa rose 0.7 percent to 64.42 pesos at the close in Mexico City. Azteca gained 0.2 percent to 8.43 pesos. America Movil climbed 1.9 percent to 12.58 pesos.
The legislation calls for stronger regulatory agencies with the power to force companies to dispose of assets if their market share is more than 50 percent. Televisa gets 70 percent of Mexico’s broadcast audience, and Mexico City-based America Movil has 70 percent of its mobile-phone subscribers. The proposal also would let foreign companies own landline telecommunications networks for the first time.
Another new clause inserted by Mexican lower-house lawmakers today creates an exception for a requirement that broadcasters offer their signals for free to pay-TV companies. If a company that has been determined to be dominant benefits from the free signals through a relationship with a third party, regulators can revoke the company’s license.
That rule would address the partnership between America Movil and Dish Mexico, a satellite-TV joint venture of MVS Comunicaciones SA and EchoStar Corp. (SATS) While Slim’s company doesn’t have a license to offer TV service itself, it has a marketing relationship with Dish Mexico, helping it compete against the packages of phone, Internet and TV offered by Televisa’s cable units.
To contact the editor responsible for this story: Nick Turner at firstname.lastname@example.org