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