The New Salvo In Carlos Slim's Mexican TV Wars

Kerry A. Dolan
The New Salvo In Carlos Slim's Mexican TV Wars

Mexico's TV wars are heating up once again with reports that the country's competition regulator is looking into ties between billionaire Carlos Slim's residential phone company and a Mexican satellite TV company. Reuters reported earlier today that the ties between Telmex and Dish Mexico (backed in part by EchoStar of the U.S.) are under investigation because the relationship may be a way into Mexico's TV market for the world's richest man. Slim has already been denied a TV license by the Mexican authorities.

Shares of Telmex and America Movil (AMX), telecom companies controlled by Slim, fell only slightly -- just a bit more than 1% -- in trading on the New York Stock Exchange on Tuesday. That's probably because the investigation was expected, say analysts in Mexico. Slim's competitors had requested the probe. "I'm not sure how much this is [a blow] against Slim or against the market," says Santander analyst Gregorio Tomassi, adding that probe by competition regulator Cofeco could be a general probe of the pay TV market. The two largest broadcasters, Televisa (TV) and TV Azteca, could be affected by the investigation as well.

The probe could take a while, too. " The investigation might take a few months before it reaches a conclusion and then Slim could appeal the ruling, so the unbundling of his association with Dish, if it were to be considered illegal, would still take a long time," says Eduardo Garcia, editor of Mexican business news website Sentido Comun.

Garcia says that if Telmex loses its partnership with Dish, it would weaken Slim's competitive position vs. the cable TV companies offering Internet and phone services. Telmex is the dominant phone provider in Mexico; its Telcel subsidiary offers wireless service. " Right now, the association with Dish helps [Slim] buffer his rivals' triple-play offerings," Garcia explains.

Competition between Televisa, TV Azteca and Slim's companies, including Telmex and his restaurant chain Sanborns, has been heating up all year. Slim's companies have ceased to advertise on the regular broadcast networks run by Televisa and TV Azteca, though Tomassi says Slim's companies are advertising on cable channels like ESPN that are carried by Televisa's cable TV arm, Megacable. "It's war. This is one more sign of a war that really became evident at the beginning of the year," says Tomassi.

"Two colossals fighting," quips Garcia, referring to Telmex and Televisa. "Should be entertaining."