Saturday, September 20, 2014

México: Tycoon German Larrea Steps Down from Televisa's Board to Avoid Conflict of Interest

According to The Latin American TribuneMexican tycoon German Larrea has stepped down from broadcaster Televisa’s board to avoid potential “conflicts of interest” in the future awarding of two new television networks.

Televisa announced Larrea's resignation on Friday (September 19), saying it had been “informed that an entity controlled by Mr. Larrea has applied to participate in the auction of new broadcasting concessions for national networks” to be auctioned off in 2015 in México.

Televisa, Latin America’s largest media company, said Larrea asked to leave the board of directors “in light of the potential conflicts of interest that may result from his participation in the auction.

Regulators are requiring that participants in the bidding not have links to any of the existing TV networks, including Televisa and No. 2 broadcaster TV Azteca.

Larrea, who has been chairman and CEO of mining giant Grupo México since 1997 and chairman of the Southern Copper Corporation since 1999, also is CEO of Empresarios Industriales de México, Compañia Perforadora, México Compañia Constructora and Fondo Inmobiliario.

México’s government is auctioning off the new networks as part of a larger effort to increase competition in the country’s telecommunications and broadcast media sectors.

In early March 2014, México’s telecommunications regulator, known as the IFT, created as part of a telecommunications and broadcast media overhaul proposed by President Enrique Peña Nieto’s administration and approved last year, declared Televisa a “preponderant economic agent” in México’s broadcast market.

COMMENT: That dominant-player tag means the company, which has a nearly 70% market share of the Mexican broadcast industry, will be subject to asymmetric regulation to avoid market distortion if it does not bring that share below 50%.

The creation of the two new networks also is part of the broadcast overhaul.

In the telecommunications sector, two units of Mexican multi-billionaire Carlos Slim’s America Movil--Telcel and Telmex--have outsized market shares in México’s wireless and fixed-line markets, respectively, and also were declared dominant by the IFT.

America Movil said this summer it is prepared to divest assets to bring its share of México’s telecommunications market below 50%. 

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