Telemundo, Azteca Spar in Court, Media
Networks’ Dispute Heats Up Over Exclusivity Pact With Producer
By Luis Clemens -- Multichannel News, 2/11/2007 7:00:00 PM
One of the most heated dramas in Hispanic television isn’t happening in front of the cameras. It’s the rivalry between Telemundo and Mexican broadcaster TV Azteca, both of which bill themselves as the world’s second-largest producer of Spanish-language programming.
“When you see your content attacked, we or any other media company, react very violently,” TV Azteca general counsel Francisco Borrego said.
At the heart of the ongoing legal dispute are Alan Tacher and the Nostromo production company, part-owned by Tacher. Nostromo produced and Tacher hosted several iterations of TV Azteca’s reality and talent show franchise La Academia (The Academy) before Tacher and Nostromo CEO Giorgio Aresu left Azteca in December 2005.
Six months later Tacher and Nostromo América had signed with Telemundo to produce reality show Quinceañera about Latinas on the verge of turning 15.
TV Azteca subsequently filed a lawsuit in federal court against Telemundo last August, citing a 2005 contract Tacher had signed in Mexico granting Azteca worldwide exclusivity for five years after the contract’s termination.
Telemundo countersued, and the case is now scheduled for a federal jury trial in November. That is, if the case is not dismissed or settled beforehand.
“These types of lawsuits are related to the heart of the enterprise, with its most essential, most vital part, which are its intellectual property rights,” Borrego said. “Perhaps there are not so many of these lawsuits but they are very heated, and many times they are the object of much media scrutiny.”
Azteca is also suing Tacher directly in Mexico where a local court ordered the embargo of studio equipment that was being used to film Quinceañera.
But the Telemundo-Azteca face off has not been confined to the courtroom.
Last September, in a move that garnered extensive media coverage, nine Azteca lawyers and 19 police officers arrived at the studio to seize cameras and other gear. In courtroom documents, Telemundo said Azteca’s head of security and additional private security guards were also present for the seizure. Azteca disputes this version. Telemundo said it videotaped Azteca’s head of security on the premises.
Telemundo in a federal court filing said, “TV Azteca has engaged in the wrongful use of force, made misrepresentations to courts in the United States and Mexico, and asserted meritless claims based on a license with an alleged 'exclusivity’ clause that is clearly unenforceable under Mexican law.”
TV Azteca and Televisa have hundreds of actors and other talent under “exclusivity” agreements, generally global in reach and long-lasting. Experts in Mexican labor law question whether the exclusivity agreements clash with the “right to work” provision in the Mexican constitution.
Experts in Mexican contracts and intellectual property law argue such agreements are valid. The debate lies at the heart of Telemundo’s ability to hire big-name Mexican telenovela stars.
If the exclusivity agreements are enforceable in the U.S., then Telemundo effectively is precluded from hiring many of Azteca or Televisa’s telenovela stars. In a similar case, a federal court in the U.S. sided with Telemundo, ruling that the network could hire former Televisa telenovela star Mauricio Islas. Furthermore, Televisa was ordered to cover part of Telemundo’s legal fees including a range of costs from parking fees to some 270,000 photocopies.
In September, Telemundo made public its desire to establish a broadcast presence in Mexico. In order to comply with local laws regarding foreign ownership of broadcast assets, Telemundo has a neutral investment in a firm controlled by Mexico’s Saba family. Between Nov. 22 and Dec. 15, 2006, TV Azteca aired reports on each weeknight newscast criticizing billionaire Isaac Saba Raffoul and the Saba family’s pharmaceutical business. The reports made no mention of Saba’s partnership with Telemundo to establish a network that would compete against Azteca in Mexico.
On Dec. 7, according to the TV Azteca Web site, the report included the following lines in Spanish: “Casa Saba has a dark history of impunity, abuse and injustice. The company has made its fortune at the expense of the suffering of millions of Mexicans and the well-being of the neediest … Isaac Saba Raffoul now plans to join forces with General Electric, a transnational enterprise accused of disloyal practices, fraud, monopolistic behavior and everything else that can be imagined … Today, together with General Electric, Isaac Saba Raffoul plans to extend his tentacles to increase his fortune and calmly profit at the expense of the health, wellbeing and interest of millions of Mexicans.”
Asked about the negative coverage of Saba’s pharmaceutical distribution business, Azteca America chairman Luis Echarte said, “We are constantly covering public health issues, and exposing situations that are clearly against public interest.”
The volume of reports about the Saba family dropped dramatically once the Mexican government threw cold water on the short-term possibility of issuing a third national broadcast license. But Telemundo president Don Browne considers the Mexican government stance only a temporary setback. “There is no question that there is a momentum building for some kind of a third network,” he said during a December interview.
Meanwhile, lawyers for NBC Universal, which took control of Telemundo in April 2002, have tried to make matters more complicated for TV Azteca’s network in the U.S. Azteca America operates a station in Los Angeles, the largest Hispanic market, through a local marketing agreement with Pappas Telecasting.
In a November letter to the Federal Communications Commission, NBCU argued Pappas Telecasting’s Los Angeles station license should not be renewed. “TV Azteca and its corporate affiliates and principals lack the character qualifications to hold cognizable interests in U.S. broadcast licensees,” the letter said. “TV Azteca has used strong-arm tactics — including armed raids — against legitimate U.S. business operations in Mexico. Meanwhile, TV Azteca enjoys unfettered access to the highly competitive U.S. Spanish-language broadcast market and reaps the financial benefit of serving that.”
In December, Browne said, “In general, what we are trying to do is create a reasonable opportunity in Mexico to do the same things that Azteca is trying to do here. Frankly, the message here is you can’t have it both ways. If you are going to be anticompetitive you will basically then suffer the consequences. Azteca, in particular, has been very hostile to any attempts we are making.”
Azteca America Chairman Echarte described the NBCU letter to the FCC as “ridiculous.”
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