Observacom
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Free competition and pluralism in the radio and television market in Chile

Pedro Anguita R. *

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The legal framework as applied to the media market in Chile is inadequate … The lack of specific regulation for the public information market has meant that authorities responsible for ensuring free competition do not consider its unique nature and its importance for the overall functioning of our democratic system. There is no specific mandate to protect pluralism.

Regulation of the radio and television market is difficult for two reasons: it is inextricably linked to freedom of expression and must operate in accordance with a State broadcasting concession (which is very limited). As a result, promoting principles and rules in the allocation of radio and television concessions, limits on the business concentration of these industries and subsidies that lessen the defects and barriers to the audiovisual market is a major challenge. Added to this are recent changes in the ways audiences listen to the radio and watch television as a result of the expansion of the Internet. Today, some countries are moving towards the elimination of radio frequency licences for broadcasting. Pay television (cable and satellite) is also undergoing important changes. A trend, referred to in the United States as «cord cutting», has also emerged, which consists of the massive transfer of customers, particularly from cable TV, to Internet platforms such as Netflix, Hulu and YouTube. Although this trend has not been observed in Chile or other countries in the region, it deserves special attention given that what happens in the United States usually transcends that country’s borders. The aforementioned changes should undoubtedly be present in any discussions of future regulatory reforms. In the case of Chile, although the television and radio broadcasting market has a limited set of standards, they do not constitute an authentic regulatory framework. From 2001 onward, the interpretation of said standards was placed in the hands of the system for free competition, the main institutions of which are the National Economic Prosecutor’s Office (i.e. Fiscalía Nacional Económica, henceforth the FNE) and the Court for the Protection of Free Competition (i.e. Tribunal de Defensa de la Libre Competencia, henceforth the TDLC). With respect to the work undertaken by these institutions regarding media ownership subject to State concessions in terms of radio and television, we can conclude the following:

The legal framework as applied to the media market in Chile is inadequate. In practice, there are no minimum rules on incompatibilities, prohibitions on acquisitions or controls of the media. In fact there are only two regulations: the first (article 9, paragraph 3, Law 19.733) conditions the entry of foreign capital in the ownership of a broadcasting station to an equivalent treatment of Chilean capital in the country of origin of the foreign investor. The second (article 15, paragraph 11, Law 18,838) prevents the owner of a television concession from obtaining a similar concession in the same service zone, with the exception of Televisión Nacional de Chile. The Prisa Group acquired twelve stations in breach of the principle of reciprocity without any authority or court of justice declaring the expiration of this full right, or the imposition of any sanction as provided for by the law.

One aspect that has not been settled in the Chilean doctrine is freedom of enterprise, which is very limited in the case of radio and television companies and does not ensure pluralism given that this is a market limited by a shortage of broadcasting outlets. This peculiarity of regulated markets has not been highlighted by the institutions charged with ensuring free competition. Such bodies should therefore redefine the indicators or methodologies used to evaluate the market, and apply specially developed criteria to measure concentration, as has been the case for many years with respect to comparative law. The only such measurement applied in Chile has been the Herfindahl-Hirschman Index (HHI), which was designed for all kinds of markets.

There has been more diversity and pluralism in Chile’s radio market, although this situation has changed in recent years. Two large domestic holding companies -Beithia and Luksic- have acquired many media outlets. Initially these were just television channels (Mega and Canal 13), but later included radio stations, which presents new challenges with respect to regulation. According to the ownership structure in Chile, the radio broadcasting market has four main conglomerates: Iberoamerican Radio Chile (11 stations): these are Concierto, Activa, ADN, 40 Principales, Imagina, Pudahuel, Futuro, Rock and Pop, Uno, FM Dos and Corazón. The Luksic Group (5 stations): these are Teletrece Radio, Horizonte, Oasis, Play and Sonar. The Bethia group (5 stations), which after acquiring the Megavisión television channel took control of Radio Candela, followed by the Carolina, Romántica, Infinita and Tiempo radio stations. The Dial Group (4 stations): Beethoven, Duna, Disney and Zero. All of the other radio companies have only one radio concession. The situation of the radio broadcasting market underlines the ineffectiveness of the few rules that protect free competition, as well as that of the powers of the FNE and the TDLC in this area.

Free-to-air television in Chile was initially reserved for the State and the country’s three most important universities. This changed without any legal reform. The universities retained ownership of their concessions but transferred operations. This did not result in any objections from free-competition officials. The companies that currently operate the free reception television channels belong to the State (Televisión Nacional de Chile) and business groups: Mega by the Beithia Group and Canal 13 by the Luksic Group. Foreign multimedia companies also have stakes: Chilevisión by Time Warner; UCV TV by GCO SpA, while Telecanal belongs to a Mexican conglomerate, the ownership of which has been linked to Ángel Gonzalez, although according to a complaint that is currently being investigated, the conglomerate also has the broadcasting concession for the La Red channel, which is prohibited by law.

The FNE and TDLC only recently began to address operations issues in greater detail, and they have generally approved these without any significant analysis. FNE reports were limited to indicating that the consulted operations «did not generate adverse effects to the process of free competition in the market», which «would not alter the number of participants in said market». Moreover, the definition of the relevant market that such entities use is anachronistic, as it only evaluates substitutability between FM and AM radios, ignoring radio stations that broadcast over the Internet and that do not use a broadcasting concession. The TDLC recently imposed conditions on holdings operations that operate television channels and radios, such as banning tied advertising sales and the provision of free advertising slogans on their radios. The joint sale of advertising space has also been regulated, so that the advertising spaces can be purchased separately. The body has also banned arbitrary discriminations, including cross-subsidies that are contrary to free competition, and has demanded the separation of radio and television business interests in independent companies. Finally, it has limited the duration of the non-compete clause which has been set at two years from the signing of the contract.

The lack of specific regulation for the public information market has meant that authorities responsible for ensuring free competition do not consider its unique nature and its importance for the overall functioning of our democratic system. There is no specific mandate to protect pluralism. Therefore, the investigation that is normally carried out by the FNE or the TDLC only considers free competition, which does not guarantee the existence of pluralism. This has not been addressed by the authorities in charge of free competition. Lastly, the function that the FNE has in informing, bearing in mind «the effect on competition» in the operations consulted regarding concessions for the radio and television broadcasting market after the reform contained in Law 20,361, have not been consolidated in a text that includes an interpretative criteria that synthesizes and guides market participants.

* Professor at Universidad de los Andes, Chile.

... (en este espacio hay varias líneas de código de programación personalizado)