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Cablegate: Argentina: Embassy Advocates for U.S. Interests On New

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RR RUEHWEB

DE RUEHBU #0737/01 1501352
ZNR UUUUU ZZH
R 291352Z MAY 08
FM AMEMBASSY BUENOS AIRES
TO RUCPDOC/USDOC WASHDC
RUEHC/SECSTATE WASHDC 1194
INFO RUEHSG/AMEMBASSY SANTIAGO 1162
RUEHMN/AMEMBASSY MONTEVIDEO 7125
RUEHBR/AMEMBASSY BRASILIA 6818
RUEHSO/AMCONSUL SAO PAULO 3715
RUEHRI/AMCONSUL RIO DE JANEIRO 2455

UNCLAS BUENOS AIRES 000737

SENSITIVE
SIPDIS

USDOC FOR 4332/ITA/MAC/OLAC/APEACHER
USDOC FOR 3134/USFCS/OIO/WH/JLEBLANC

E.O. 12958: N/A
TAGS: ECON OVIP PREL BEXP AR
SUBJECT: ARGENTINA: EMBASSY ADVOCATES FOR U.S. INTERESTS ON NEW
BROADCASTING LAW

REF: BUENOS AIRES 587

(U) Sensitive but unclassified. Not for Internet distribution.

1. Summary: In recognition of the important U.S. commercial
interests that could potentially be affected by the new broadcast
bill that the GOA is drafting for submission to Congress in the near
future, the Embassy arranged a meeting for the major U.S.
broadcasters and content producers operating in Argentina to meet
with the lead advisor to the broadcasting agency (COMFER) to discuss
important issues related to their operations. Buenos Aires has
become the broadcasting and production regional hub for many of the
most important Pay TV companies in the United States, including
Turner, Fox, Discovery, MTV, Disney, and HBO. The meeting was
organized at the initiative of the Embassy in response to
expressions of concern from industry contacts whose entire regional
operations will be affected by the new law. The meeting served to
enhance GOA understanding of the broadcasting industry and the
contributions it makes to the country's economy. The GOA
appreciated the Embassy's efforts and has continued to consult with
the U.S. companies and the Commercial Office as the bill is drafted.
The draft that will be sent forward appears to take into account
all of the issues and concerns that were tabled by the U.S. firms.
Ambassador and Embassy plan to follow up. End Summary.

2. Shortly after a sudden change in the head of COMFER (Argentina's
FCC equivalent) and the Argentine Government's announcement of plans
to draft a new Bill of Law for the broadcasting industry, CSBA
organized a meeting for leading U.S. companies in the sector with
Omar Szulak, the main advisor to the new head of the COMFER,
Mariotto. The U.S. companies were all members of TAP (Television
Association of Programmers - Latin America, which represents the
industry's interests throughout the region. The U.S. companies that
participated, included Fox Latin America, Turner Broadcasting (a
Time Warner Company), MTV (a Viacom company), Disney, HBO and
Discovery. These companies have collectively invested over USD 800
million in Argentina in the last two years and have created
approximately 2,700 direct jobs and over 6,000 indirect jobs through
their extensive contracting arrangements with local equipment and
service providers. Buenos Aires is now the regional hub for most of
the major U.S. broadcasters and producers of Pay TV programming in
Latin America. Turner, Fox, Disney, Discovery and MTV have all
located their Latin American headquarters in Buenos Aires attracted
by the highly skilled, creative, multi-cultural and multilingual
talent pool, as well as the large number of qualified local firms
capable of providing equipment and services to this industry which
is highly dependent on contractors.

3. During the meeting, which lasted four hours, the companies made a
brief presentation about their recent investments and operations in
the country followed by a rich and intense discussion of key aspects
of the new regulatory framework that could be critical for the
success of their operations throughout Latin America. The insights
shared by the companies were very much appreciated by Mr. Szulak who
said he learned a lot about the industry and the importance of
Buenos Aires in Latin America. (In 2007, over 700 audiovisual
works, including movies, TV programs, documentaries and commercials
were produced in Buenos Aires).


4. The U.S. companies had been trying to get an appointment with
Mariotto, the new head of the COMFER, and his main advisors since he
took office on April 4 with no success, and were grateful to the
Embassy for having taken the initiative to set up this productive
meeting with Mr. Szulak. Omar Szulak has a B.A. Degree in
Communications from the University of Lomas de Zamora in Buenos
Aires and a Masters Degree in Marketing and Communications from
University in Maryland. He currently is the President of the Media
Lab at the University of Lomas de Zamora.

5. Early drafts of the bill had the potential to be detrimental to
U.S. company interests and were strongly protectionist of Argentine
industry. The issues of greatest concern were a requirement that 60
percent of the signals available through pay TV be Argentine; and a
requirement that all pay TV (signals transmitted by a cable operator
through subscription) not contain any advertising. The U.S.
companies explained how the industry is structured and demonstrated
why advertising is now the main source of income for pay TV today,
because the fees paid by cable operators for broadcast rights are
trending effectively toward zero due to the concentration of pay TV
ownership that has resulted in recent years from
mergers and acquisitions by the market leaders. They also pointed

out to Mr. Szulak that there are not enough local signals in
existence to comply with the proposed 60 percent transmission quota.
Furthermore, they explained that since their firms and many
Argentine contractors are actually producing content for the entire
region, many of the apparently "foreign" signals are actually
transmitting content "made in Argentina."

6. As a result of this meeting and several smaller follow-on
meetings at the request of the advisor to the drafting committee and
representatives of TAP, the GOA drafters now have a much more
complete and accurate understanding of these important aspects of
broadcasting and Argentina's high stakes in successfully supporting
the indsutry's regional growth and competitiveness. The original
draft was imprecise, full of old statist concepts, and
protectionist. The paragraphs of the draft that the Embassy was
shown are the same as the drafts written five years ago during a
previous aborted GOA attempt at promulgating a new broadcast law.
TAP members and their lawyers will keep close tabs as the draft
moves forward to ensure that no modifications are made that will be
prejudicial to their industry or violate any of the provisions of
the U.S.-Argentina Bilateral Investment Treaty. Initial feedback
indicates that the GOA has understood and has taken the points made
by the U.S. companies under consideration. According to industry
sources, a final draft will be presented to the President and to the
Secretary for Legal and Technical Affairs Zanini in late May for
review and submission to the Senate. Ambassador is seeking a
meeting with Zanini. For those interested in history and political
context related to the broadcast law, post recommends reftel.

WAYNE

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