New Laws Anger Advertisers and Media Owners in Argentina

So Much for Globalization: Foreign-Made Ads and Media Consolidation Are Limited

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Valentina Vescovi
Valentina Vescovi
Aixa Rocca
Aixa Rocca
There's a new media law in Argentina that's causing trembling among advertisers and agencies. The legislation says that one communications company can't own more than one cable channel, or both a cable and a broadcast channel at the same time.

This sort of measure is rare even on an international level. It would be like demanding that Time Warner, a major shareholder of CW, get rid of CNN, HBO, Cinemax and TNT. Or if News Corp could only choose to keep one of its cable channels and, in order to keep one of them, give up broadcast channel Fox.

The opposition, represented by several private media holdings, has cried, yelled and fought, but the government has not yielded, making life harder for the biggest fish of the media industry as well as local and international brands that do business here.

Now a bunch of advertisers are freaking out because the law establishes that, from now on, only ads entirely produced in Argentina, or co-produced with foreign funding but using staff that's at least 60% Argentine, will air on open radio and TV. This leaves out campaigns that are created abroad.

So much for globalization.

Now agencies and advertisers in Argentina will have to come up with and produce their own campaigns from scratch, and manage them with the resources they can find locally if they want to really reach a mass audience here.

The new law, passed a few days ago, replaces legislation that had been in force since the last dictatorial regime in Argentina. That's why one of the government's statements to promote the new law was "to cut, once and for all, with the military heritage" and "to end the monopolies," alluding to the biggest media holding of the country, Grupo Clarín, publisher of the No. 1 newspaper, an opponent of the current government.

This group, as well as other companies that opposed the government's proposal -- the Argentine Journalistic Entities Association and the Argentine Business Association, among others -- argued that the new law leaves total control of media in the hands of the government and restricts freedom of expression.

This isn't the only bad news: There's another measure that came into force before the media law and hit the Argentine private-business community hard: The government took into public ownership soccer game transmissions. Keeping in mind soccer is to Argentina what baseball or football is to the U.S., that means a lucrative business has been lost to the state, a business that used to be in the hands of a cable TV group partially owned by Grupo Clarín. One morning we all woke up and soccer games were on Channel 7 (the main national signal) and TyC had lost the exclusivity rights.

Advertisers are in trouble because the audience that until now was concentrated in just one signal (TyC) is now divided into multiple broadcast channels. Brands will definitely have to rethink their media strategy, even though the details on how to do it remain a mystery: Channel 7 -- the only public air signal and also the only one that reaches the whole country -- hasn't developed a plan for spots ad sales yet.

Historical levels of audience for this channel -- it went from 2 to 15 ratings points -- are going to waste, because they can't be reached by advertisers. Watching Channel 7 today is a lot like watching Chavez's official TV signal in Venezuela: You see nothing but pro-government campaigns. But if you want to watch the games, you have to put up with it.

"The most affected ones are those advertisers that used to base a great part of their communication strategies on soccer," said Miguel Ángel Galindo, MPG's director of operations. Among them are the biggest advertisers of the country, like Grupo Clarín's Editorial AGEA, Ford, Grupo Telefónica and Coca-Cola.

ABOUT THE AUTHORS
Valentina Vescovi and Aixa Rocca of SA Journalists, a freelance journalist firm based in Buenos Aires, are frequent contributors to Ad Age's Global News.
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