CEO Cablevisión: ‘All candidates lead to the change we need’

Cablevision’s Carlos Moltini gestures during an interview with the Herald.
Editor-in-Chief
Cablevisión CEO Carlos Moltini talks about the pay-TV market and Clarín’s controversies
Cablevisión General Manager Carlos Moltini is one of the top execs of the Grupo Clarín multimedia consortium. In an interview with the Herald held at Cablevisión’s imposing headquarters in the BA neighbourhood of Barracas, Moltini discussed many controversial issues regarding the communications market, such as competition with Telefónica telecommunications company, net neutrality, the dominant or leading position of Clarín in the cable TV market, and the industry’s finances.
Telefónica and Clarín (multimedia groups) aim darts at one another, but they seem to agree on one point — opposing the neutrality regulation introduced by the new Telecommunications Law, with approval of its articles still pending.
Net neutrality must not be confused with axing freedom of expression. Everyone is entitled to the right to a place on the information highway without any conditions. Thing is, Netflix has been setting up a business for profit, and this presents us (Cablevisión) with a far bigger bandwidth demand. This results in a very tense impact on subscriptions (to our services). Either Netflix is charged a fee or consumers will have to cover the cost. In my opinion, it ought to be Netflix. Bandwidth is not unlimited. The company invests US$300 million dollars yearly and the increased bandwidth consumption demands US$80 million annually, as a result of growing streaming. Paying (for increased bandwidth use) does not amount to axing anything, I stand up for freedom of expression.
The emergence of Netflix and video streaming services may also increase the number of potential subscribers for Fibertel (the Clarín-owned Internet provider). Wouldn’t increasing the number of subscribers be beneficial for Cablevisión/Fibertel as Internet providers?
Yes, but the growth of subscriptions entails more bandwidth demands, which forces the company to enlarge its infrastructure. This is not more profitable.
On a more general level, how do you think Cablevisión will be affected by the Telecomunicaciones Argentina Digital (Digital Argentine Telecommunications) law, approved in 2014?
The text is very general, there are no details in it. We’ll have to wait and see what the authorities do when it comes to implementing the law. As it is, the law shifts the value of the cable TV industry to the telecommunications sector. When you zoom in on the telcos, Telefónica clearly stands to win, and this is extremely damaging for paid television services. Of course the hardest hit will be satellite TV businesses (telephone companies were prevented from grabbing this segment), due to its immediacy. But if the limitation is the result of having to build their own cable network instead of satellite broadcasts, it will take some time but in the long run the result will be the same.
In Argentina there’s a huge media and paid TV market player (Clarín) and another one in the telecommunications sector (Telefónica). Why wouldn’t they be able to compete against each other, as is the case in a great deal of countries in the world?
The main issue is asymmetry. Argentina’s global market amounts to 17.5 billion dollars. Out of this figure, 13.5 billion goes to telcos and 4.5 billion to paid TV. Would you challenge a company that offers a pack combining land lines, mobile services, broadband Internet and television (Telefónica), while competitors offer video and broadband Internet (Clarín and paid TV)? The 4.5 billion dollar share of paid TV includes 800 players, five of which have a certain size, while the remaining companies have a smaller share. The last player to play the game will be Cablevisión, but eventually it will meet the same fate. It’s just a matter of time and resilience. These companies, which have the biggest market share, are owned by global conglomerates. Telefónica’s business amounts to 80 billion dollars; Claro (owned by Mexico’s Carlos Slim) takes 60 billion dollars. The Formula One or the Premiere League are worth hundreds of millions yearly. Who’s going to buy the rights? With this firepower, with this scale, they will end up subjugating cable companies.
However, telephone companies will push the boundaries of the media law set for everybody: 35 percent of the market, 24 localities for cable TV, and 10 radio and TV licenses.
That 35 percent amounts to three million subscribers, this is the reason why there’s a long way to go. And 35 percent per company, shared among three companies, is a limit that doesn’t add up. As for the maximum of 24 localities, it remains to be seen how it works out. If the service is provided through satellite it won’t work, there’s only one provider (like DirecTV). Telephone companies will eventually be unable to provide satellite services.
In that case, if telephone companies were given a share of the satellite TV market, they wouldn’t be able to own any other audiovisual communications businesses, as specified by the media law, and Telefónica would have to sell Telefe network television channel.
Claro (Slim) doesn’t own any network television company, and neither does Telecom. Telefónica may well do without Telefe, which accounts for a minimal part of its business. The 24 localities limit does not prevent companies from having a 35 percent market share.
Cablevisión claims to have 3.6 million subscribers out of a paid TV market of nine million users. With an 85 percent market share in large cities like Córdoba or Buenos Aires, which are also the most lucrative ones, Cablevisión still has no capacity to compete (against other players)?
We have a 40 percent share of the global market. In Buenos Aires City, consumers are able to choose among Telecentro (Pierri), Cablevisión (Clarín) and DirecTV. We have this market share because consumers, every month, choose the best TV or broadband Internet service. We are market players. We’re not alone anywhere. The power of monetary transactions and infrastructure is hard to solve. We buy 500,000 cable modems yearly, Telefónica buys five to seven million.
Freedom of choice doesn’t look that clear when there’s such a huge market player. For example, Cablevisión/Fibertel has grown considerably over the last two years.
We have not attracted customers by threatening people in the street. We have an enormous approvals rating. Our fees never go higher than the inflation rate. If some consumers subscribe to the service on a promotion package, they always knew it had an expiry date. If, one day, McDonald’s gives away a Big Mac and the next day it doesn’t, this doesn’t mean that its prices have increased 100 percent.
Telefónica has been accused of increasing its market share through its ability to buy broadcast rights. Isn’t this situation similar to the accusations against Clarín when it had a monopoly of soccer broadcasts for over a decade?
This argument is a fabrication, it doesn’t exist, it’s completely false. When the owners of soccer broadcast rights (TyC Sports, a company Clarín has a share in) put the goods on the market, buyers who purchase a bigger volume pay a lower price. This policy has been analyzed by the Competition Defence Commission, which ruled it well-grounded. The issue at stake is that soccer broadcast rights have been growing in nominal terms. It’s the case of Fútbol para todos, which started out at 600 million pesos and is now at 1.2 billion, and AFA claims it is owed 1.6 billion. Then cable TV companies, which were not willing to pay higher prices, plus the process of expansion of the sector, started to sell. The market, at one point, had three companies: Multicanal, VCC and Cablevisión, which decided that the best policy was to run a bigger scale operation. Smaller companies were unable to compete.
Isn’t this the same scheme you perceive as threatening in the hands of Telefónica?
It’s partly that way. Truth is, the cable TV industry allowed the development of an infrastructure. If you set telephone companies free, the cable TV industry will disappear. The cable TV companies which, in the 90s, decided to sell their businesses, did so out of their own volition and the operations reached millions of dollars. With this law, what you get is one sector being outdone by another and dismantling it.
There’s a significant micro level case. In Santa Rosa, province of La Pampa , the 2009 media law allowed the Cooperativa de Electricidad (Electricity Utility) to provide cable TV services. As a result, Cablevisión was forced to drastically cut down the subscription fee. Why did this happen?
The Cooperativa subsidizes electricity through cable TV services. Its electricity bills are higher than Córdoba’s or Buenos Aires ’. Because of the cable TV competition, it’s a dumping case. It gradually increased its portfolio through health care and funeral services. By giving away the service, they forced the remaining companies to shut down. It plans to do the same with paid TV. Since we would have to fire long-time workers in Santa Rosa, the company continued operating at a loss.
If Clarín, already a powerful player, is given access to telephone services (the parity situation they intend to get), wouldn’t the market become skewed toward one side?
Viewers watch TN and Canal 13 because they like TN and Channel 13. If they didn’t, they would watch 678 (the pugnacious show on the state-run La TV Pública or 360 (Electroingeniería group). Newsvendors do not go out selling Clarín at gunpoint. What Clarín publishes is to the liking and the perception of its readership. In fact, a new TV channel emerged (C5N), La Nación’s circulation increased, and Clarín’s didn’t. It was up to the consumer. Radio Mitre found it hard staying afloat until it found an audience niche. If you take a look at the Clarín newsroom, you’ll see journalists I may not agree with, who have a more progressive view than other parties.
You just mentioned that Clarín’s products compete against others. However, in spite of this multimedia’s merits, it has been historically questioned by other news outlets as regards newsprint supply and distribution.
This is false, there has always been freedom to import newsprint, and imported newsprint is cheaper.
That’s today, not before.
(It was) several years ago. Throughout the Kirchner governments, at least.
Why do you refuse to include certain channels with opposing views to the Clarín group in your programming grid?
It’s not the case that we refuse because it’s like that. The main definition of broadband is: it has a limit. The state has imposed import fees which prevent (the sector) from further developing broadband services, which would foster the digitalization process and would increase the spectrum. It’s not for the State to tell us to see things one way or the other. It’s not for the State to tell us what our products ought to be like.
How would an alternative cable TV channel be able to survive without a slot in the market’s main player? By refusing to include it in the programming grid, isn’t plurality affected?
It’s the other way around, it ought to be included in the free-of-charge public networks. When it has the leverage to play the Champions League, it will be included. There’s room for 73 channels and the supply amounts to more than 150. There’s no way we can offer an amateur product. Is there a reason why we ought to broadcast Telesur?
Because it’s a news channel that covers a wide range of topics and serves as an alternative to other channels. Ideology should not be a condition for inclusion in the programming grid.
It’s not about ideology. We had no requests to include Telesur but, instead, we received more than 100,000 phone calls when we removed Deutsche Welle.
Does the political change in 2015 create new expectations?
Of course, I think this chaos will lead to a more rational approach. I don’t know how rational it will be, I hope it will be more professional.
Do you have qualms about any presidential candidate?
No. We are in need of a change and all candidates lead to that change. Obviously, it would be interesting for us if the watchdogs, the AFSCA and the newly-created telecommunications board were able to solve the asymmetries between the big players and the national players the country needs. There are some examples, such as Peru , which Argentina would do well to avoid. It’s a country where Telefónica/Movistar have a gigantic market share, with the worst service and the highest rate. The lower strata of society are charged twenty dollars for twenty channels and a 75-dollar connection fee. I wouldn’t like that for Argentina .
Would you be interested in a project like Mexico’s, where Carlos Slim, the main telephone player, has been forced to back out to make way for Televisa, television’s gigantic conglomerate?
I like Chile as a guideline, it has a huge capacity to gradually resolve the (market) asymmetries. It made room for Movistar and Claro, and the state-owned company was able to have an investment capacity without losing strength. It’s an ecosystem where everyone stays alive and turns a profit. Investing in an industry which demands US$1.5 billion five-year plans from investors is very difficult without clear condition rules.
In Chile, however, there’s a high concentration of the printed news sector, but none is as diversified as Clarín, which has a share in every communications segment.
Different countries, different circumstances. Clarín did what it did while others did not want to do the same. The daily La Nación reached a benchmark of 300,000 subscribers and yet it decided to get rid of the service. It owned radio stations and also other outlets. The media in Argentina veered toward multimedia conglomerates because they foresaw the readers’ migration from paper to screen, and then the content had to be distributed, which is when Multicanal (Clarín’s first cable TV network) emerged. The stakes were higher with the merger with Cablevisión. You invest, trip, and get back on your feet again. Others had the same choice but went a different way.

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