Reuters: Regulatory News: UPDATE 2-Mexico slaps conditions on Televisa-Iusacell tie-up

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UPDATE 2-Mexico slaps conditions on Televisa-Iusacell tie-up Jun 14th 2012, 17:43 Thu Jun 14, 2012 1:43pm EDT * Deal approved, but with tough conditions * TV auctions to play key role in future of tie-up By Cyntia Barrera MEXICO CITY, June 14 (Reuters) - Mexico's competition watchdog said on Thursday it approved broadcaster Televisa's bid to buy half of cell phone company Iusacell but imposed tough conditions on the deal, seen as crucial to helping both companies mount a serious challenge to tycoon Carlos Slim's telecoms empire. Televisa, the world's biggest producer of Spanish-language shows, has been fighting for 14 months to push through its $1.6 billion bid for 50 percent of Iusacell. Mexico's federal competition commission, Cofeco, slapped several conditions on both companies for approval, and said they would face fines of up to 10 percent of annual revenue if they fail to meet them. Televisa said it will contemplate whether to accept the conditions on the proposed merger. The survival of the companies' venture was also tightly linked to an upcoming auction by the Mexican government of new television frequencies that could potentially threaten the lead of Televisa and TV Azteca, a sister company of Iusacell. "If after 24 months the auction of a third television network has not been made successfully, it will automatically trigger a mechanism to dissolve the partnership between Televisa and Grupo Salinas in Iusacell," Cofeco said in a statement, but did not clarify what it means by a successful outcome. Grupo Salinas, owned by one of Mexico's richest investors, Ricardo Salinas Pliego, is a unit of Iusacell. A source close to the Cofeco decision, who requested anonymity, said a successful auction could mean that the companies refrain from filing any legal challenges to the process. Imposing a time frame on the auction is aimed at preventing a possible landslide of legal appeals that could end up delaying the process for months or years. Chief telecom regulator Mony de Swaan has estimated that the auction process could take 18 months. But Mexicans will not be able to watch new channels until late 2014 or 2015. Entrepreneur Salinas is well-known for vigorously contesting regulators, government agencies and rivals in courtrooms when he feels his businesses are threatened. Market-watchers say Salinas effectively derailed Televisa's bid to team with NII Holdings' Nextel two years ago after some of his group's companies filed a barrage of more than 70 court appeals, which tied up the process in red tape. The companies then parted ways. BUMPY ROAD Televisa, the country's top television company, in April 2011 bid for Iusacell, a company with less than 5 percent of the mobile phone market in Mexico. Cofeco blocked the tie-up in a 3-to-2 vote in January because of concerns about an alliance between Televisa's boss, Emilio Azcarraga, and fellow TV mogul Salinas, who owns No. 2 broadcaster TV Azteca, as well as Iusacell. Regulators argued the deal would create an incentive for the pair to fix advertising prices in a host of media ranging from television commercials to content downloaded on smartphones. But Televisa and Grupo Salinas proposed alternatives to ease regulators' concerns, Cofeco said in Thursday's release. Another condition imposed by Cofeco is that Televisa and Iusacell offer all cable and satellite TV customers a new pay TV package that includes all four of Televisa's free public channels, Televisa said. "This offering will complement the current pay programming package of 14 over-the-air and pay-TV channels launched in 2007," Televisa said. Additionally, Televisa must offer the sale of advertising time to participants in the Mexican telecommunications industry. This condition means that Televisa may once again have to sell advertising airtime to businesses owned by Slim. The tycoon stopped buying ads from Televisa last year. Companies owned by Slim control about 70 percent of Mexico's mobile phone market and 80 percent of the country's landline market. Regulators have so far not allowed Slim to enter Mexico's television market. Televisa shares were up 1.7 percent at 55.98 pesos ($4.00) on Thursday. Link this Share this Digg this Email Reprints

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