News

Mexicos Proposed Pay TV Rules Under Fire

11/29/1998 7:00 PM Eastern

Mexico City -- International programmers, represented by
the Television Association of Programmers Latin America (TAP), have raised some strong
concerns over the new pay TV rules being drawn up by the Mexican government.

The concerns relate mostly to advertising and local-content
provisions that are contained in a preliminary government document.

The most worrying issue for the TAP is the Mexican
government's current proposal to keep the six-minute-per-hour limit of advertising
time on cable networks in place. The TAP said this is overly restrictive for programmers
that are trying to improve the financial health of their networks by increasing
advertising revenue.

The TAP's legal counsel, Ariel Bentata, added that the
Mexican cable industry should be entitled to 15 minutes of advertising per hour -- the
same amount of time allotted to the broadcast industry.

"Cable is not so much of a public service as
broadcast," and for that reason, it shouldn't be granted less commercial time,
he said. "If people do not like advertising on cable, they do not have to get cable.
We should be allowed a freer environment than broadcast."

The current six-minute advertising rule also puts Mexico
out of step with the rest of the region, where anywhere from 12 minutes to unlimited
advertising time on cable is allowed, Bentata said. In this sense, "Mexico is the
most restricted market in the region," he added.

The second major issue that the TAP is lobbying on is local
content. To date, the Mexican government has proposed requiring two hours of local
programming per day on every network. That, warned Bentata, "would destroy the
concept of panregional channels."

"What we want to do is limit the local-content
requirement to the bare minimum, in line with the bilateral agreement already
signed," he said, referring to the 1995 satellite-reciprocity agreement between the
U.S. and Mexican governments that was designed primarily to regulate the direct-to-home TV
industry.

That agreement allowed both countries to beam satellite
signals into each other's territories. It also stipulated that programming entering
Mexican territory by satellite only had to have a "modicum" of local content.

Bentata said any inclusion of local content on panregional
channels should also be calculated on a systemwide basis, and not on a channel-by-channel
basis.

The preliminary document that the TAP has taken issue with
is not a done deal. Instead, it is a working paper that Mexico's government has
produced to discuss and consult with major groups within the industry, including the TAP.

After this latest round of consultation, the government is
expected to draw up a second and final document, which needs a presidential signature to
be incorporated into the 1995 Telecommunications Law.

Although there are existing rules governing the industry,
this latest legislation represents the first attempt to draw up a detailed and
comprehensive set of rules governing all aspects of Mexico's pay TV business.

Another issue that both sides are chewing on is program
classification. The TAP has suggested that Mexico function in the same way as Argentina on
this issue.

The Argentine pay TV industry bases the classification of
cable content on guidelines drawn up by the U.S. studio trade group, the Motion Picture
Association of America. They are then submitted to the Argentine Cable TV Association,
which works with the government.

In Mexico, the idea would also be for Canitec, the national
cable association, to take responsibility for keeping the industry's own house in
order on this issue.

Enrique Yamuni, president of Canitec, said another
important point under discussion is access to broadcast signals. The government has
proposed that pay TV operators apply for permits if they want to transmit broadcast
signals. Yamuni argued that this should only be the case if operators want to retransmit
signals outside of broadcasters' local markets.

The issue of access to broadcast channels is particularly
pertinent to Mexico's DTH industry.

Panregional DTH platform Galaxy Latin America's
DirecTv service has been lobbying the Mexican government to grant all pay TV operators in
Mexico the right to carry national broadcast channels.

DirecTv's panregional competitor, News Corp.-backed
Sky Latin America, is teamed up with the dominant local broadcaster in Mexico, Grupo
Televisa S.A., and it currently has exclusive DTH rights to Televisa's four broadcast
channels.

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