March 23, 2018 / 4:50 PM / a year ago

UPDATE 1-Mexico regulator decides in Televisa's favor on pay TV issue

(Adds comments from analyst, background on case)

By Julia Love

MEXICO CITY, March 23 (Reuters) - Mexico’s telecommunications regulator said on Friday that it does not have evidence to find that broadcaster Grupo Televisa has market power in pay TV, reversing an earlier decision and sparing the company from additional regulatory measures.

The Mexican Supreme Court in February ordered the Federal Telecommunications Institute (IFT) to revisit its finding that Televisa has “substantial power” in pay TV, meaning it has the ability to set prices or block competitors.

The IFT said on Friday that it cannot determine Televisa has such market power under the conditions set by the court, meaning the broadcaster avoids tougher rules that could have forced it to open up its infrastructure to competitors.

The decision relieves pressure for Televisa in a part of its business that is becoming more important in the changing media landscape, said Intercam analyst Alik Garcia.

“The reality is that (Televisa) has already stopped being an open TV company and now is a telecommunications and pay TV company,” he said.

Televisa is subject to antitrust measures in Mexico for its high market share in broadcasting, but pay TV is classified as a telecommunication service.

Nonetheless, competitors had argued Televisa’s commanding lead in pay TV demanded greater scrutiny. The company holds about 60 percent of the pay TV market in Mexico, according to IFT statistics for the second quarter of 2017.

Investors remain cautious as the IFT could open another investigation into Televisa’s hold on pay TV, Garcia said.

Televisa shares were down almost 1 percent in early trading.

The IFT has long wrestled with Televisa’s role in pay TV. In 2015, the regulator found the company did not have substantial power, noting its market share had been slipping.

But rival broadcaster TV Azteca complained to a specialized telecom court, which overturned the IFT’s finding. Last year, the regulator reversed course, finding Televisa did have market power.

The Supreme Court forced the IFT to take up the issue yet again in February, prompting the regulator to decide in Televisa’s favor once more.

Mexico’s pay TV market has relatively few players, with competitors such as Megacable, Dish Mexico and TV Azteca. In some parts of the country, Televisa is the only option for pay TV because competitors lack infrastructure, Garcia said.

The Organization for Economic Co-operation and Development stressed the need for more competition in pay TV in a recent report on Mexico, finding prices had increased from 2013 to 2016. (Reporting by Julia Love; additional reporting by Miguel Angel Gutierrez; Editing by David Gregorio and Dan Grebler)

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