Televisa-Telemundo strategic alliance allows Telemundo to distribute its content in Mexico, without confronting the two major TV broadcasters: Televisa and TV Azteca. Telemundo was perhaps lobbying for a TV license as a negotiating instrument rather than for the license itself. Telemundo had a major legal obstacle to enter into the Mexican TV broadcasting regarding foreign investment. Foreign investment for both radio and television broadcast are prohibited by law, whereas other telecommunication services allow up to 49% (i.e., pay TV) or up to 100% foreign investment (i.e., cellular services).
Telemundo´s incentives to deploy a network and to market its brand are outweighed by this alliance: effective content delivery with no network investment. Televisa and Telemundo will essentially be complementing their distribution channels without directly competing in each others market. The pressure of Telemundo, backed by GE, could have triggered in the near future the television spectrum bid in Mexico. Although the Telemundo-Televisa alliance does not cancel the possibility of a new entrant on the Mexican television market, the date for the public bid could be in several years from today. Moreover, the bid will likely be of regional channels licenses instead of a nationwide license. This increases the cost and the risks of acquiring a real tercera cadena.
(Comentarios publicados en Inter-American Dialogue´s – Latin America Advisor Telecom, March 24-28, 2008)
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