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Televisa's grip hard to gag.

One of the world's largest, richest and most powerful television combines-- Mexico's Grupo Televisa, headed by Emilio Azcarraga Milmo--had its wings somewhat clipped. The Mexican government sold its two television networks for $641 million dollars to a group of private investors headed by Ricardo Salinas Pliego who owns a chain of appliance stores across the country.

The deal. Which has many unusual aspects, was part of the Mexican government's overall privatization drive, which already has netted it better than $200 billion within a five-year period.

The government's sale of its Channel 7 and Channel 13 is seen as providing an unusual competitive element for Televisa, which broadly dominates Mexican television, attracting some 90 per cent of all viewers, and--like some giant

octopus--has its fingers in a great many international pies.

Expansion-minded Televisa is not only into television, but also into publishing, music and movies. In 1992. Azcarraga lavished $50 million on a 25 per cent interest in the American Univision, which services the majority of Hispanic homes in the U.S. and runs 13 Spanish-language TV stations. Televisa--last May--made a deal with TeleCommunications of Colorado calling for the distribution of pay cable and satellite programs in Latin America. In turn, Tele-Communications bought a 49 per cent interest in Televisa's spreading Cablevision service.

There were odd aspects to the Mexican TV privatization deal and, not surprisingly, they generated plenty of rumors. Precisely what impact the revitalized new chains will have on Televisa is uncertain and, like most of Azcarraga's dealings, is wrapped in secrecy, with Latin executives generally refusing to comment.

For instance, Jaime Avila, president and CEO of Univision, and one-time right handman to Azcarraga, declined to comment. "Mr. Avila doesn't speak to the press," said his representative.

Three groups, including one that combined Paramount and Capital Cities/ABC, submitted bids for the two government networks as well as a chain of movie houses. The bids ranged between $414 million and $451 million.

The winning bid, by Ricardo Sailhas Pliego and his family, was $641 million, fully $200 million more than his competitors.

This has led to a flood of rumors, fed by the fact that Azcarraga was not allowed to participate in the bidding. However, the bidding was influenced by the government's interest in attracting a buyer basically friendly to the PRI, Mexico's long-time leading political party of which Azcarraga and his networks have been unabashed supporters for many years.

Some observers even suspect that Azcarraga money is somehow behind the Salinas bid which was, after all, a surprising 30 per cent higher than the next-closest offer.

Mexican government spokesmen, however, maintained that politics played no part in the deal.

Salinas himself(no relation to the Mexican president, Carlos Salinas de Gortari) is on record as not wishing to make major programming or political-related changes. "Why would I do that?" he is quoted as saying. "I believe that the things they are doing are right."

Televisa has always been a staunch supporter of the Mexican government, particularly in its news broadcasts. The group not only runs four television networks, but also owns magazines, daily newspapers and io radio stations.

Earlier this year, the government assigned Mexico City TV channel 9 to Televisa-- a defacto fourth network--as a kind of consolation prize for not being able to bid for the two government networks. Televisa not only dominates the Mexican TV market, but also collects around $1 billion a year in TV advertising revenues.

In fact, considering its wide reach, Televisa represents just about the only choice advertisers have in Mexico. Azcarraga is known to drive a hard bargain, and takes full advantage of Televisa's primary position in the market. He has sharply increased advertising rates, which may account for the five per cent drop in ad volume on the domestic networks last year. However, due to that rate rise, revenue has increased 6 per cent.

One American stock analyst told The Wall Street Journal that he considered the Televisa stock overpriced by between to per cent and 15 per cent.

This does not change the networks' powerful position. It goes so far that, if an actor or actress appears on a rival network, his or her chances of finding future em- ployment on a Televisa show are considered slim.

The switch in ownership at Channel 7 and Channel 13 isn't expected to change that situation, nor is it likely to impede Televisa's drive to service Hispanic audiences outside of Latin America. However, observers feel that Salinas may order some changes in his networks' news divisions to make them at least slightly less subservient to the govern- ment and allow some form of mild criticism of the PR[ policies, which basically have re- sisted all calls for political reform.

The big question for Salinas will be his future program supply since Televisa ap- pears to control all avenues and is in a position to flex its muscles when it senses a new competition. Salinas, whose family comes from Monterrey. has said that he would seek Mexican and foreign partners, but has also vowed not to limit himself to foreign sources as exclusive suppliers of programs.
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Title Annotation:includes related article on Protele
Publication:Video Age International
Date:Sep 1, 1993
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