“Though the terms requested that competitors provide their programming proposals, when it came time to assess the bids, they only considered geographic coverage and, to a lesser extent, the financial offer….”
Aleida Calleja */ Mexico, March 2015
For the first time in 31 years, Mexico held a bidding process for two new national digital TV networks, satisfying a long-standing demand of various sectors of society through a constitutional mandate. One of the provisional articles of the 2013 telecommunications and broadcasting reform stated that once the Federal Telecommunications Institute (FTI) -the regulatory agency with constitutional autonomy- was created, it should begin the bidding process for at least those two networks within specific time-frames.
Throughout the process, the FTI has met that mandate in a timely and transparent manner. However, there was an omission in the terms of tender that many consider an important lack that will keep these new networks from contributing to diversity and pluralism given the uniform content broadcasted by the duopoly of commercial television of Televisa and TV Azteca, which currently captures 96% of the national audience.
I am referring to the fact that while the terms requested that competitors provide their programming proposals, when it came time to assess the bids, they only considered geographic coverage and, to a lesser extent, the financial offer, which had a base price of around US$6 billion.
Some positive measures that could have been implemented by the regulatory agency include giving a higher score for the inclusion of independent production or the introduction of children’s programs, among other things, but this did not occur.
The Players
The terms of the tender were issued in March 2013 prior to the approval of the Federal Telecommunications and Broadcasting Law (FTBL) due to the timing of the constitutional mandate. Expectations were high after that because the winners could use the Televisa infrastructure, one of the measures imposed by the FTI because the company was considered the preponderant economic agent in broadcasting in 2013. This was also done because the law was expected to impose effective measures for decreasing concentration of the open TV market. Those expectations waned for several reasons, and of the eight players who initially entered the bidding process, only two remained at the end.
The first reason was that the FTBL, which was proposed by President Peña Nieto and approved by Congress, set effective measures for limiting concentration and asymmetrical regulation in telecommunications but failed to do so in broadcasting, pay TV, and cross-ownership of media. As such, control of those markets can continue in the hands of Televisa.
The second is that the implementation policy for the analog switch-off stayed in the hands of the Executive Branch through the Communication and Transportation Directorate, which has run an opaque process with insufficient information and several failures in the timeline for provision of digital TVs to the needy. (This measure in itself was questioned by many because it involved significant spending of public resources compared to the provision of decoders, which was the approach used in the 2012 pilot plan.) This has led many people to reach the conclusion that the national analog switch-off scheduled for December 31, 2015 in the Constitution is at risk. That risk means that new TV companies may be at a great disadvantage at that point because if there is not at least 90% penetration of digital TV equipment, their potential audience will be diluted.
The third is that, though it has not been proved, it is alleged that at least three competitors were very close to the President. These allegations came in the wake of the reports of corruption and conflicts of interest that emerged in the “Casa Blanca” case. As such, four actors (Grupo México, Grupo IAMSA, Grupo MAC Multimedia, and Grupo Lauman) were encouraged to bow out of the bidding process.
On November 20, the FTI published the results of the first stage of the tender. The finalists were Cadena Tres I S.A. de C.V., Grupo Radio Centro S.A.B. de C.V. and Centro de Información Nacional de Estudios Tepeyac, S.A. de C.V. The latter notified the FTI of its decision not to continue in the process in January and its owner, Mario Vázquez Raña, died in Mexico City in early February.
The Winners
Though these two final competitors submitted disparate economic bids (Radio Centro bid 3.058 billion pesos and Cadena Tres 1.808 billion pesos), the full FTI agency body decided to grant one network to each company, each of which includes 123 frequencies for geographic coverage of 94% of the territory together. The profiles of the two businessmen involved in these bids do not suggest that they will implement bold actions in order to introduce new content.
Olegario Vázquez Raña, the owner of Cadena Tres, which is part of Grupo Imagen, has operated Channel 28 with metropolitan coverage in the Mexico Valley for several years, as well as a pay TV channel and the Excélsior newspaper. His news coverage is no different from that which appears on open and pay TV. The only difference is that he has purchased some soap operas from the independent group Argos. He is considered one of the most influential businessmen in the country, and is also the owner of 27 hospitals and several hotel chains. Francisco Aguirre, owner of Grupo Radio Centro, owns over 70 radio stations in Mexico and the United States, and though he operated 13 TV channels in the 1970s, which the government took away from him at one point, his editorial line is not characterized by its independence from official lines of information, as is the case with the former.
Both players could access multiplexing and have at least three years to reach at least 30% coverage. Although they say that they are ready to start broadcasting next year, the most encouraging data from the FTI suggest that they will be able to capture just 8% of the market over the course of the next five years. The market is currently dominated by the TV duopoly, which controls 99% of commercial publicity in this segment with US$3.5 billion in publicity and another US$500 million in content.
The investment that would have to be made for the production of content is calculated in the millions of dollars for an audience that has been shaped by Televisa programing for at least 60 years and a platform that is very much pressured by the growth of digital media and consumption, particularly among the young. It would be desirable for both networks to truly offer pluralism and content, but based on the current data it seems that the elements that would allow that to happen are simply not there. We need to look at the alliances and strategies that emerge over the next few years to see if this measure manages to break down the quasi-monopoly of opinion that the two main TV companies, the largest producers and distributors of Spanish-language content, currently have.
* Aleida Calleja is the Advocacy Coordinator for OBSERVACOM.
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