By Fernanda Belchior, Assistant Editor, PPI Latin America, RISI
SAO PAULO,
Nov. 13, 2009 (RISI) -
Blockage of some distribution channels of Clarín and La Nación last week was only another episode of the ‘soap opera' about the relationship between the two most important Argentinean daily newspapers and the country's President Cristina Fernández de Kirchner. Accusations for both sides, pinch of media control, censure and newsprint are putting pepper on this novel with no heroes or villains.
Opposition lawmakers state that the broadcast reform bill that was recently approved in Argentina will open the country's airwaves to new players, but critics say it will increase the state influence on the media. Meanwhile, some experts believe it will be a great step to decentralize Argentina's audiovisual licenses explorations as it will reduce the license numbers each company can own from 10 to 24.
Increased inspection of newsprint suppliers
In a market where overall media has been managed by few players - Grupo Clarín currently owns an assortment of broadcasting stations, TV channels, magazines and newspapers - it's easy to understand why this bill has become a nightmare for media companies, which will certainly have their media concessions restricted. On the other hand, the text of the new bill enlarges the state's control as Argentina's government will be responsible for the media licenses approval.
The subject becomes more complex as Clarín coverage is currently reporting Kirchner's government irregularities, which is - again - a nightmare for Argentina's government. In a response, President Kirchner has started narrowing in on the daily newspaper with increased inspection procedures and also started questioning the legality of the board of its newsprint supplier Papel Prensa.
Papel Prensa, which has a production capacity of 185,000 tonnes/yr of newsprint at its San Pedro mill, is mainly controlled by the newspapers Clarín and La Nación, but the government also has a minority stake. It supplies paper to around 95% of medium and smaller newspapers in Argentina as well as its main controllers. The Papel Prensa's newsprint facility was created in 1978 in a state-private initiative to supply paper to the local newspapers. Since then, though, things have changed a lot. Clarín has become the main critical media to the local government worsening their relationship and consequently their common business.
On September 30, Group Clarín's board and Argentina's Secretary of Interior Commerce, Guillermo Moreno, had a meeting asked by Kirchner government in order to review Papel Prensa's current executive board formation.
Control of newsprint equals power
A company material fact submitted on Oct. 6 to the Argentinean Securities and Exchange Commission detailed the meeting. On the occasion, Moreno aggressively reported that Clarín monopolized the public opinion in the country and the government would not allow it. According to Moreno, Papel Prensa has been restraining newsprint supply to other newspapers in the country, which would force its competitors to import paper for higher and disadvantaged prices. Due to that, Moreno said the government would interfere in the company's shareholders composition by means of an emergency decree.
Local contacts say that all domestic newsprint output is preferentially directed to Clarín and La Nación. The remaining tonnage - very low, by the way - is shipped to other competitors. Some sources also question the paper distribution system, alleging the two dailies' controllers usually obtain Papel Prensa's newsprint for better price conditions. I learned that Clarín and La Nación pay a price for newsprint around $50-80/tonne cheaper than its competitors do.
In a response to the government, Group Clarín accused Moreno of abuse of authority and intimidation to the Public Income Federal Administration (AFIP) in Argentina, the same entity which is investigating the government representative's entry to Clarín offices on Sept. 10.
On Oct. 10, Clarín reported that the local government head chamber Aníbal Fernández denied that Kirchner government has a plan to nationalize or dispossesses Papel Prensa, but he reinforced that "the State will intervene in any action that might harm essential rights of product supply, which means paper in Papel Prensa case."
Under pressure, some executives have left Papel Prensa's board, alleging "personal reasons". Public Finance and Economy Ministry's representatives were named to replace them.
Far from being solved, Grupo Clarín and Argentina's government quarrel is one example of how paper control can dictate who is stronger in a media dispute. If you have the newsprint, you have the power.
By Fernanda Belchior, PPI Latin America assistant editor, fbelchior@risi.com
