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Cablegate: Argentina: Goa Steals the Ball, May Take Over Soccer

VZCZCXYZ0001
OO RUEHWEB

DE RUEHBU #0942 2301054
ZNR UUUUU ZZH
O 181054Z AUG 09
FM AMEMBASSY BUENOS AIRES
TO RUEHC/SECSTATE WASHDC IMMEDIATE 4235
INFO RUCNMER/MERCOSUR COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC

UNCLAS BUENOS AIRES 000942

SIPDIS
SENSITIVE

E.O. 12958: N/A
TAGS: EINV EFIN ECON PGOV KPAO AR
SUBJECT: Argentina: GOA Steals the Ball, May Take over Soccer
Broadcast Rights

Ref: Buenos Aires 0350

1. (SBU) On August 11, the Argentine Football (soccer) Association
(AFA) unilaterally canceled its contract with satellite TV
broadcasters (TSC) -- a consortium which includes U.S. firm DirecTV
and possibly some other U.S. investors -- amid rumors that the GoA
was poised to offer up to US$165 million per year, over double the
current royalties, for broadcast rights to show football games for
free on government-owned commercial TV. AFA leadership met August
13 with Argentine President Cristina Fernandez de Kirchner (CFK),
and while the meeting was described as "very positive" by the AFA
side, no agreement was reached. According to press reports, CFK
only had two conditions: that football broadcasts be "for everybody"
(i.e., on free rather than pay TV) and that no employees of the
companies that lost the contract lose their jobs because of the
change. Chief of Cabinet Anibal Fernandez also reportedly said that
the GoA "will not put a single peso" into the venture.

2. (SBU) Marcelo Bombau, President of TyC (which was a joint venture
partner with local media conglomerate Clarin Group in the football
broadcasting consortium) said August 11 that his company would sue
the GoA, adding in televised comments that he would "take his
complaint to the U.S. Embassy." Indeed, on August 13 (prior to the
AFA/CFK meeting) Bombau, along with DirecTV's Argentine General
Manager Manuel de Abelleyra, met with CDA and emboffs to brief him
on the unilateral takeover. Bombau claimed that TyC is 80%-owned by
U.S. investors, including DirecTV, and will pursue legal remedies
for breach of contract, possibly including an expropriation claim
under the U.S.-Argentina Bilateral Investment Treaty (BIT). He said
that TyC has still not received anything in writing from the AFA
regarding termination of the contract, and promised to send the
Embassy a paper explaining TyC's ownership, ties to the United
States, and current situation. Bombau added that TyC will likely
seek USG help at an appropriate time.

3. (SBU) CDA urged prudence in order to keep the focus on the
alleged breach of contract rather than the USG's potential advocacy
role in a case involving Argentina's national sport, but the next
day local daily "Critica" reported the meeting itself in a front
page article (titled "The Empire Strikes Back" with a large picture
of Darth Vader), in which Bombau confirmed having gone to the
Embassy. While Critica cited "witnesses" who said Bombau requested
"intervention" by Post with the GoA, Bombau was quoted as saying
that he only told Post "how we see the situation" and how it affects
stockholders such as DirecTV. The Embassy complained to Bombau and
several of his associates the next day for flagrantly ignoring the
CDA's request for discretion.

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Comment
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4. (SBU) AFA has been publicly grumbling for a while that it is in
dire financial straits and that it was not getting enough money from
the television rights to soccer games. The fact that the powerful
Clarin Group is a half owner of TSC, the consortium that had held
for 18 years the broadcast rights to major league soccer games, is
not a minor detail. AFA's sudden cancellation of its contract with
TSC and its ensuing dalliance with the Kirchners was quickly and
widely interpreted here as another salvo in the long-running clash
of the titans between the Kirchners and the Clarin Group. The GoA
has clearly placed great importance on this issue. Offering to
broadcast games on state-owned television has great populist appeal
in soccer-crazed Argentina, with soccer fans now expecting to watch
their favorite sport for free, rather than pay for it through cable
or satellite TV subscriptions. It also provides an opportunity for
the government to strike a blow against the Clarin Group, the
dominant Argentine media player (reftel) that was once supportive of
the Kirchners but lately has grown more critical.

5. (SBU) Post will continue to monitor the situation to see that
U.S. investors are treated fairly, but we will also seek to prevent
Bombau and friends from pushing the USG into the middle of the
controversy. We currently see little chance that AFA will reverse
its decision to find a more lucrative television arrangement, and
the Kirchners may indeed be delighted to stick the Clarin Group in
the eye and get cheers from soccer fans across the country. It
seems likely that TSC will have to take its case to court.

KELLY

© Scoop Media

 
 
 
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