Grupo Clarin SA, Argentina’s biggest media company, tumbled the most on record after the country’s Supreme Court upheld a 2009 law that limits ownership of cable franchises and television and radio stations.
Investors are dumping the shares on concern that Clarin will be forced to sell some of its licenses at unfavorable terms to comply with the law, said Christian Reos, head of research at Buenos Aires-based brokerage Allaria Ledesma & Cia. The seven-member court voted yesterday to overturn an April ruling by an appeals court that the media law was unconstitutional.
“Nobody knows what will become of the company right now,” Reos said in a telephone interview. “It’s very hard to value because they may be forced to divest quickly. There’s no way of knowing if they will find buyers, if they’ll have to take low prices for the assets or if they will be compensated by the government.”
In the 392-page ruling, the Supreme Court said the government should compensate license owners for the loss of their rights.
Clarin said in a statement on its website yesterday that the ruling “openly violates acquired rights.” The company said it’s evaluating its options, including seeking remedies through an international court.
According to Clarin’s statement, its cable operator Cablevision SA would have to reduce its 158 licenses in Argentina to 24 and pare its market share to 35 percent from 47 percent.
Clarin also owns 10 radio stations, four broadcast TV channels and an Internet provider.
The government has no current plans for an expropriation or intervention, Martin Sabbatella, head of the media regulator, told reporters in Buenos Aires yesterday.
“We’re not planning an expropriation or intervention,” Sabbatella said. “If someone doesn’t follow the law, the state has to act and guarantee that it’s upheld.” He didn’t mention Clarin.
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