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Former Argentine President Nestor Kirchner has set his sights on confronting Grupo Clarin and is taking steps to rein in the most powerful media group in Argentina, several sources told Debtwire.
“I’ve taken on the military, the Church and the IMF. Now its time for Clarin,” a politician that regularly speaks with the former president claimed he heard him say. Another source close to the former president’s inner circle confirmed hearing the same phrase and said that the former president will likely try to find a local private equity group to buy a stake in the company.
Kirchner adopted a similar tack in previous cases involving strategic industries, such as Transener and YPF, as previously reported by this news service. Among its many media holdings, Clarin owns Multicanal and a stake in Cablevision, two cable television companies that have over 80% market share in some major markets like the City of Buenos Aires. Clarin’s 60% stakes in the cable TV companies are the media group’s main source of income.
“The fact that local impresarios, with interests in Argentina, participate in the decision making in these companies can be positive if the strategic values of these companies for the development and growth of our society are still kept in mind,” Mr. Kirchner said, responding to e-mailed questions by this news service. “This can be the case with Repsol YPF or Aerolineas Argentinas, but never with a newspaper, a radio station or a TV channel. I really don’t understand what one thing has to do with the other.”
However, the former president could be looking to buy a stake in the group through a proxy, opposition Senator Maria Eugenia Estenssoro said. Kirchner approached Clarin with an offer through his proxy, Rudy Ulloa, according to Senator Estenssoro and a source close to Clarin. That overture took place in late March, said the source close to Clarin.
A few weeks later, Gabriel Mariotto, the newly appointed head of Argentina’s media regulatory body, announced an initiative to reform the country’s broadcasting law. The government, led by Kirchner’s wife now-President Cristina Fernandez de Kirchner, subsequently communicated that the revised law would focus on dissolving monopolies, such as Clarin’s, leveraging the Peronist party’s majority voting power in Congress. Nestor Kirchner is currently the president of the Peronist party.
“Such an offer never existed,” Mr. Kirchner said. “I simply have no interest whatsoever in acquiring Clarin or any other newspaper, no matter how important it is. I am not interested, nor do I have the capital required.
“The reform of this law, which among other things [currently] enables the concentration of mass media in few hands, will undoubtedly affect certain parties. It is normal in these cases to see sectors of our society who for fear of losing their privileges get nervous and do not hesitate to lie or fool people,” Mr. Kirchner said.
The new media law is currently being prepared by regulatory agency COMFER to replace the one issued by the government during the 1976-1983 dictatorship. As previously reported, it would allow telcos like Telefonica and Telecom to enter media broadcasting and compete with Cablevision and Multicanal. The law would also require divestments if market share exceeds 35% and will require that foreign participation not exceed 30%, affecting the Clarin-held companies.
Fintech, a US-based hedge fund that assisted Clarin with the contentious debt restructurings of both Cablevision and Multicanal, owns 40% of both companies.
While a Clarin spokesperson declined to comment, a regular advisor to Grupo Clarin said Ulloa, a former chauffeur of Nestor Kirchner, made the purchase offer when Grupo Clarin’s CEO Hector Magnetto was in a hospital outside Argentina receiving cancer treatment. The proposal was similar to one Ulloa put to Telefonica in April, the Clarin advisor said.
Unknown before Nestor Kirchner’s arrival to the presidency back in 2003, Ulloa has built a fast, successful career in the media industry, becoming the owner of El Periodico Austral and TV Channel 2 in Santa Cruz. Ulloa is also reportedly the owner of the Buenos Aires-based newspaper Pagina/12. Ulloa did not reply to several calls seeking comment.
Mr. Kirchner’s’ vision for the media sector entails investment from international players like Carlos Slim and Rupert Murdoch with local players holding controlling stakes in the content producing sector, a congressional source that frequently speaks with Mr. Kirchner said. President Cristina Fernandez de Kirchner separately met both Slim and Murdoch in recent months, according to media reports.
“[Mr. Kirchner] wants to dismantle the powerful Clarin monopoly linked with agribusiness and create a local media sector with more players involved in other areas of the economy,” the congressional source said. The Kirchners will ask economically favored allies to establish a presence in media the source said, mentioning the example of Pampa Holding management purchasing CIE’s group of Argentine radio stations.
Pampa Holding is a local private equity group that reportedly purchased important stakes of Argentine energy companies with the support of Mr. Kirchner during his presidency.
Mr. Kirchner did not respond to Debtwire’s requests to clarify his relationships with Mr. Ulloa. He also did not reply to questions concerning the timing of changes to the media law. During his administration, the law was never challenged and Clarin was allowed to merge the top two cable television companies without any regulatory interference.
The timing is now right to change the law, said the member of the congress that regularly speaks with the president. ”You should remember that when Nestor Kirchner assumed power, this country was a mess. Unemployment was around 20%, the country was barely growing, the country was still in default, and the amount of reserves in the Central Bank was five times less than now. At that time, Kirchner had no leverage to challenge Clarin,” the source said.
The member of congress said that Kirchner has decided to defeat Clarin and is aware that if he does take the conglomerate on now, the media group could pose a future challenge to him and his wife. Carlos Slim and Telefonica have also been lobbying the government to establish limits on Clarin, the latter angling to offer broadcasting services over its existing network, the congress member added.
Clarin also requires regulatory approval for the merger of Multicanal and Cablevision and the merger is also being challenged at the Supreme Court, this news service previously reported.
COMFER President Mariotto declined to provide a date for the presentation of the draft of the bill to be sent to President Cristina Kirchner but said it would be sent to congress within the next 45 days. The new bill should pass before year-end, as previously reported.
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