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Cablegate: Argentina: Important Issues at Stake in Proposed New Media

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EEB/CIP FOR ANNE JILLSON
DEPARTMENT FOR FCC
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TAGS: ECON EINV PREL ECPS KPAO OVIP KMDR PHUM TSPL AR

SUBJECT: Argentina: Important Issues at Stake in Proposed New Media
Law

Ref: (A) Buenos Aires 803

(B) Buenos Aires 800
(C) Buenos Aires 791
(D) Buenos Aires 737
(E) Buenos Aires 715
(F) Buenos Aires 663
(G) Buenos Aires 587
(H) Buenos Aires 531

1. (SBU) Summary: Gabriel Mariotto, Director of Argentina's FCC
equivalent agency COMFER, will be in Washington on June 19-20 to
meet with FCC officials, Congressional leaders, and media
associations. The Government of Argentina is in the final stages of
drafting an ambitious new federal broadcasting law that could
radically transform the current 1980-era law that was passed by
decree (with subsequent modifications) under the military
dictatorship. U.S.-based media firms here have big interests: they
have collectively invested over $800 million in Argentina in the
last two years, created 2,700 jobs, and are using Argentina as an
important regional hub for their growing businesses, contributing to
Argentina's - and the region's - economy and national innovation.
In addition to these commercial interests, there are vital issues
relating to freedom of expression at stake and we have been
approached by key media and press figures expressing concern (see
refs C, F, G). We would like to point out to our U.S. Government
colleagues the most important commercial issues under consideration
in the GOA's draft media law -- potential quotas on local signal,
and potential advertising time limits -- that could affect the many
U.S.-based media companies here, and we ask that you raise them in
your conversations with Mariotto. Also important to consider is the
backdrop of the GOA's own conflicts with the powerful media
conglomerate, Clarin Group. There are legitimate media monopoly
issues at stake, but also concerns widespread in local media that
the government will seek to impose more controls on content and
media freedom. The GOA has made a point of wanting to learn from
the U.S. experience. We have an excellent opportunity to possibly
positively influence the drafting a first class media law. End
Summary.

----------------------------------
Top Comfer Officials Head to Washington
----------------------------------

2. (SBU) Gabriel Mariotto, Head of the Federal Broadcasting
Commission (COMFER), Argentina's FCC equivalent, and his top deputy
Omar Szulak, met with Ambassador on June 11 to discuss their
upcoming trip to Washington, and to review the latest GOA efforts to
advance this proposed bill through the GOA Congress. (Please read
reftels for further background on this issue.) Mariotto and Szulak
told the Ambassador that they understand our commercial concerns
about some aspects of the draft GOA media law, and applauded FCS's
collaborative efforts in bringing together all the U.S.-based media
firms to discuss the bill with his team (ref C). He said that their
schedule will include June 19 meetings with Mr. John Giusti, Acting
Chief of the FCC's International Bureau, Washington Senator Maria
Cantwell, and Congressman Jay Inslee, and that Argentine Ambassador
to the United States, Hector Timerman, has been working to set up
their schedule.

--------------------------------------------- -------
U.S. media firms in Argentina invest and create jobs
--------------------------------------------- -------

3. (SBU) U.S.-based media firms here have big interests in the
outcome of any new media law. They have collectively invested over
$800 million in Argentina in the last two years, and have created
about 2,700 direct jobs and over 6,000 indirect jobs through their
extensive contracting arrangements with local equipment and service
providers. They are using Argentina as an important regional hub
for their growing businesses, and contributing to Argentina's - and
the region's - economy and national innovation. U.S. players here
include Fox Latin America, Turner Broadcasting (a Time Warner
company), MTV (a Viacom company), Disney, HBO, and Discovery.
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. In 2007, over 700 audiovisual works,
including movies, TV programs, documentaries, and commercials were
produced in Buenos Aires.


--------------------------------
Issues at stake in new media law
--------------------------------

4. (SBU) Ambassador went over the points above with Mariotto.
Mariotto said he recognized and valued U.S. investment. He noted
that FCS had worked closely with him and his team in recent weeks,
including by organizing an important meeting for them with several
U.S.-based media entities in an effort to demonstrate the vital
issues at stake for both U.S. players and the GOA (refs D, E). The
issue of greatest concern to U.S. broadcasters is a requirement in
early drafts of the bill that 60% of the signals available through
Pay TV (signals transmitted by a cable operator through
subscription) be Argentine. The Ambassador and FCS pointed out to
Mariotto and his team last week, as have U.S. companies, that there
are not enough local signals in Argentina today to comply with this
proposed quota. Although COMFER officials and local media leaders
know this, this quota is seen by some here as a way to foster (or
protect) emerging and future local media industries. The Ambassador
and FCS were able to point out to them that, in fact, these U.S.
firms and their many Argentine contractors are actually producing
content for the entire region, and many of the apparently "foreign"
signals are actually transmitting content "made in Argentina."
Mariotto said he recognized these facts and was favorably inclined
to U.S. companies' arguments, but he noted that he faced heavy
lobbying from local media.

5. (SBU) The other commercial issue concerns time limits on
advertising. Early media bill drafts had severely limited Pay TV
advertising time, anywhere from zero to eight minutes per hour.
Post and U.S. companies explained to COMFER officials how the
industry is structured today, that advertising is now the main
source of income for Pay TV, and that 48 minutes is the
international standard for one-hour shows, with 12 minutes of
advertising. This advertising norm is due to the fact that 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. Again, Mariotto said he is
favorably inclined to U.S. arguments, but local media were pressing
hard.

6. (SBU) Separately, last week Ambassador and DCM raised these
issues with the President's legal advisor (ref A). He said he was
favorably inclined toward U.S. arguments and the GOA wanted to put
best practices from the U.S. and Europe into this new law.

--------------------------------------------- ------
Backdrop: GOA's Feud with the powerful Clarin Group and Free Speech
Issues
--------------------------------------------- ------

7. (SBU) Apart from the specific commercial issues related to the
proposed media law and U.S. media interests, an important backdrop
to understand is the GOA's ongoing complaints of negative media
coverage, particularly by the powerful Clarin Group, as well as
Clarin's dominant positions in print, TV, cable, and radio (refs A,
C, G, H). While other media players and observers largely share
concerns about Clarin's dominant position, they generally see these
complaints as an effort by the GOA to win more favorable treatment
by the media, rather than an example of distorted media coverage.
Many media commentators believe that GOA efforts to rewrite its
media laws are at least partly motivated by a desire for a tamer,
more compliant media, and to also limit Clarin's presence in these
sectors, more than any GOA desire (as it often states) to promote a
greater plurality of views of social actors. Ironically, it was the
GOA under former President Nestor Kirchner that granted the
regulatory approvals for Clarin that enabled the media group to grow
to its current dominant size. These included a ten-year
television/radio license and a cable merger, which together give it
overwhelming dominance of the Argentine media. Mariotto told the
Ambassador June 11 that he intended that the new law should
reinforce freedom of expression and expand access to media as well
as competition. GOA Legal Secretary Carlos Zannini offered the same
assurances (ref A). Both also acknowledged concern among Argentine
journalists. Both also said they looked forward to learning about
U.S. practices for dealing with worries about ownership
concentration, new technologies, and free speech.

----------------------------------
Biographies of Mariotto and Szulak
----------------------------------

8. (SBU) Mr. Gabriel Mariotto is a former dean of the Social
Sciences Department at the University of Lomas de Zamora in Buenos
Aires. He has also previously worked as the Under Secretary of
Communications within the Secretariat of the Media. He is
reportedly a close confidant of President Cristina de Kirchner and
her husband, former President Nestor Kirchner. (At his June 11
lunch with the Ambassador, described in ref A, Cabinet Chief Alberto
Fernandez identified himself as Mariotto's political patron.) Omar
Szulak has a B.A. degree in Communications from the University of
Lomas de Zamora in Buenos Aires, and a M.A. in Marketing and
Communications from the University of Maryland. He is currently
also the president of the Media Lab at the University of Lomas de
Zamora.

-------
Comment
-------

9. (SBU) We have been able to communicate to Messrs. Mariotto and
Szulak (as well as key inner circle contacts Alberto Fernandez and
Carlos Zannini, as described in ref A) the importance of our
concerns, including possible quotas on local signals and limits on
advertising. Nevertheless, as the process of drafting this
legislation still has longer to go, and given that there are
powerful local broadcasters and cable firms who could oppose our
positions, we believe that our Washington colleagues would be well
advised to also deliver this important message about quotas and
advertising to appropriate Argentine interlocutors, starting with
Mariotto and Szulak.

WAYNE

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