Buenos Aires Times

opinion and analysis ON MEGA-MERGERS AND THE MEDIA

Clarín: Argentina's Vampire Squid

What happens when an unstoppable force meets an immovable object? In Argentina, it becomes Grupo Clarín, the media giant that has now become a regional telecommunications juggernaut.

Saturday 30 June, 2018
Grupo Clarín strikes again.
Grupo Clarín strikes again. Foto:JOAQUIN TEMES

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“The greatest trick the devil ever pulled was convincing the world he didn’t exist.” Roger ‘Verbal’ Kint. The Usual Suspects (1995).

 

Like tectonic plates, which, set in motion by powerful forces, gave shape to the colossal Andes Mountains, the Mauricio Macri administration has unleashed regulations that will alter Argentina forever. While most Argentines were distracted, confused by spiralling inflation and a currency crisis that refuses to go away, and equally flabbergasted by the national football squad’s performance under erratic coach Jorge Sampaoli, Grupo Clarín has quietly solidified its position as the country’s most powerful company, with the help of the president.

What happens when an unstoppable force meets an immovable object? In Argentina, it becomes Grupo Clarín, the media giant that has now become a regional telecommunications juggernaut. On Friday, the country’s newly created anti-trust watchdog (Comisión Nacional de Defensa de la Competencia) cleared the merger between Telecom and Grupo Clarín’s Cablevisión-Fibertel, creating a telecom company with assets worth some US$11 billion according to initial estimates. Second to none in Argentina, that is. Clarín’s direct competitors in that sector remain substantially larger at a global scale. Spain’s Telefónica and Mexican mega-billionaire Carlos Slim’s Claro weren’t going to go without a fight. To keep everyone happy, cloak-and-dagger negotiations between Peronist leader Miguel Ángel Pichetto, heads of all three telecom companies and members of the ruling Cambiemos (Let’s Change) coalition agreed to push a bill through the Senate as early as next week, guaranteeing the foreign companies they will be allowed to compete with Clarín.

While this may appear as nothing more than a business deal in an industry that is globally tending toward consolidation, it has effectively set in place the initial conditions of a battle for control of what is this age’s most important resource: information. Clarín has all but secured its control of Argentina’s media ecosystem: they are now the leading player in newspapers (both print and digital), broadcast TV, radio, cable TV, connectivity (internet access), along with landline and mobile telephones. With a hand in every pot, Clarín now fits the metaphor used by Rolling Stone journalist Matt Taibbi, who in the aftermath of the 2008 global financial meltdown referred to the all-powerful investment bank Goldman Sachs thusly: “The first thing you need to know about Goldman Sachs is that it’s everywhere. The world’s most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.”

At least since the brutal 1976-1983 military dictatorship, Grupo Clarín has been an incredibly valuable ally to those in power in order to further its business interests. Complicit in covering up crimes against the population, Clarín bought Argentina’s only pulp mill capable of generating newspaper paper, Papel Prensa, under suspicious circumstances in 1976, alongside the La Nación and La Razón dailies. During the presidency of Raúl Alfonsín (1983-1989), it viciously attacked the first democratic president’s (failing) economic policy, after failing in their lobbying of him into changing the media law in order to allow Clarín to possess a radio and TV licence. With Carlos Menem (1989-1999), Grupo Clarín’s Ernestina Herrera de Noble and Hector Magnetto secured Channel 13 and Radio Mitre. Coverage of Menem was, of course, flattering, until it wasn’t, and Clarín went to war once again. Menem called them an “information oligopoly.” It’s worth noting that in 1999, Goldman Sachs acquired 18 percent of Grupo Clarín. A blood transfusion of sorts.

The big stuff came with Néstor Kirchner (2003-2007), whose honeymoon with Clarín was such that his last act of government was to allow the merger of cable companies Cablevisión and Multicanal in 2007. After a falling out during the so-called 2008 “crisis del campo,” Cristina Fernández de Kirchner (2007-2015) and Clarín had their bitter showdown, which resulted in a controversial media law designed to break-up the company passed in 2009. The Vampire Squid, of course, won that round. A look at the lay of the land reveals Grupo Clarín’s advantage. Not only does it own the infrastructure through which information flows — and it is the only player capable of delivering quadruple play for the next few years — it’s also the largest content producer in Argentina. In order to read the Buenos Aires Times’ digital version, for example, you need an Internet connection. In order to watch a channel that is not owned by Clarín you need access to cable. What is to stop Cablevisión from prioritising its own content on the platforms it controls? Note too that the current merger gives them a huge chunk of the mobile pho- ne market, which is where we consume most of our information these days. Once its business interests aren’t aligned with the government, how will it treat President Macri?

Not that the competition was any better. Argentina’s telecommunications infrastructure is notoriously deficient. A report by Open Signal puts Argentina’s 4G as one of the slowest in the world, while Moody’s indicates the country, and region, has “low mobile broadband and smartphone penetration.” Chronic underinvestment, extreme regulation amid politically volatile governments and economic uncertainty mean connectivity outside Buenos Aires and a few other major cities barely reaches 2Mbps, compared with some 9.8Mps in Chile and a global average of 16.6 last year. According to Telecom, they are committed to investing US$5.2 billion over the next three years to improve infrastructure, with Telefónica pledging US$2.2 billion through 2017, and Claro indicating it’ll cough up an annual US$1 billion. Interestingly, both Telefónica and Claro gave up their opposition to Grupo Clarín being the only player allowed to offer quadrupleplay, paving the way for the Senate’s Media Commission to send the so-called “Ley Corta” which regulates telecommunications infrastructure to the floor for a vote. It all smells a bit fishy.

Macri appears to be doing the opposite of what Teddy Roosevelt did in the early 20th century, when he applied the Sherman Anti-Trust act to the likes of J.Pierpont Morgan to break up Northern Securities and John D. Rockefeller to dismantle Standard Oil. The president believes in the businessman as the central node in his economic worldview, expecting them to create wealth which should trickle down through employment and investment. Now, he has given in to the Vampire Squid. Let’s see how long that lasts.

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