VZCZCXYZ0006
RR RUEHWEB

DE RUEHBU #0822/01 1691657
ZNR UUUUU ZZH
R 171657Z JUN 08 ZDK
FM AMEMBASSY BUENOS AIRES
TO RUEHC/SECSTATE WASHDC 1343
INFO RUCPDOC/USDOC WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RHMFIUU/HQ USSOUTHCOM MIAMI FL
RUCNMER/MERCOSUR COLLECTIVE

UNCLAS BUENOS AIRES 000822 
 
SIPDIS 
SENSITIVE 
 
EEB/CIP FOR ANNE JILLSON 
DEPARTMENT FOR FCC 
USDOC FOR 4322/ITA/MAC/OLAC/PEACHER 
 
E.O. 12958: N/A 
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