Televisa Gets Green Light on Controversial Telecom Deal

Televisa Mexican TV Station Logo - P 2012

Televisa Mexican TV Station Logo - P 2012

Initially nixed due to price-fixing concerns, the $1.6-billion investment comes with conditions.

MEXICO CITY -- In a highly controversial decision, Mexico's antitrust regulator on Thursday conditionally approved a joint telecom venture between media giant Televisa and rival network TV Azteca's sister company Iusacell.

Televisa agreed in April 2011 to purchase a 50 percent stake in cell phone company Iusacell for $1.6 billion, which would mark Televisa's first foray into the wireless telephone business. But the Federal Competition Commission (CFC) halted the deal because of price-fixing concerns.

The watchdog expressed concern that the tie-up could generate collusion between networks Televisa and TV Azteca in the setting of advertising rates for the television and telecom sectors. Televisa and Iusacell appealed the commission's ruling and on Thursday the CFC reversed its decision, clearing the way for a conditional alliance.

Among the conditions imposed by the CFC, the regulator said that a broadcast license for a third national channel must be granted within two years; if not, the Iusacell partnership will be dissolved.

Just last week Mexico announced the auction of two digital terrestrial channels in response to demands for more competition in the broadcast TV market. Currently, the television duopoly of Televisa and TV Azteca control a combined 95 percent of the nation's television stations.

The CFC also is requiring Televisa and TV Azteca to comply with a must carry-must offer obligation. The networks, which also own pay TV systems, will pay a fine of 10 percent of the companies' annual revenue if they do not offer their over-the-air channels to rival cablers.

Additionally, the CFC said Televisa must divest its interest in Total Play, a pay TV and telecom platform owned by TV Azteca parent company Grupo Salinas.

In a Thursday company statement, Televisa said it will analyze the terms and conditions of the ruling to decide whether to accept or challenge them through legal means.

Should Televisa agree to the terms, Iusacell would find itself in a stronger position to compete against Telcel, the domninant cell phone company owned by Carlos Slim, the world's wealthiest man. The CFC resolution prohibits "discriminatory" ad pricing against rival telecom outfits and that would give Slim some leverage, who has accused the networks of collusion in the past.

The Televisa-Iusacell decision comes at a time when tens of thousands of people are taking to the streets to protest Televisa and TV Azteca's "biased" coverage of Mexico's upcoming presidential election. A massive youth-led movement has accused Televisa of manipulating information and accepting payments in exchange for favorable coverage of a frontrunning presidential candidate.