KMEX, 12 Other TV Stations Lose Licenses : FCC Judge Denies Renewals, Says Mexico Tycoon Illegally Controls Spanish-Language Facilities

A federal administrative law judge refused Wednesday to renew the license of Los Angeles TV station KMEX (Channel 34) and 12 other Spanish-language stations across the nation on the grounds that the broadcasting chain to which they belong is illegally controlled and influenced by a Mexican television magnate.

In his ruling, Judge John H. Conlin of the Federal Communications Commission said he found that Mexican media baron Emilio Azcarraga and his family had created an “abnormal relationship” that made the TV stations dependent on their influence and direction.

The family made loans to employees for stock purchases in the three companies that owned the stations, handpicked employees and generally made the stations dependent on foreign subsidiaries, Conlin said.

Considered Significant

One FCC official, speaking privately, said that, although denial of TV stations’ renewal applications is not unprecedented, Conlin’s ruling is considered significant.

U.S. law limits foreign ownership of domestic television and radio stations to 20%. Although Azcarraga has not exceeded that limit, the judge said that “the groundwork had been laid for an enterprise that would be receptive to, and indeed, dependent on, influence and direction from non-U.S. citizens and foreign corporations under their control.”

The companies involved are the Spanish International Communications Corp., which owns KMEX, KFTV-TV in Fresno, WLTV-TV in Miami, WXTV-TV in Paterson, N.J., and KWEX-TV in San Antonio; Bahia de San Francisco Television Co., which holds the license for KDTV-TV in San Francisco, and Seven Hills Television Co., owner of KTVW-TV in Phoenix.

‘Repeater’ Stations

In addition, the judge’s ruling applies to license renewals for smaller low-power and “repeater” television stations licensed to these three companies in Bakersfield, Austin, Tex., Denver, Hartford, Conn., Philadelphia and Tucson.

“We’re obviously very disappointed and surprised by this decision,” said Norman P. Leventhal, an attorney for the three companies. Leventhal said he believes that the judge had taken a “a very novel and expansive view” of the law and that “an appeal is a distinct possibility.”

The companies have 30 days to file an appeal with the FCC’s review board. If unsuccessful there, they can ask the full commission to review the decision. The stations also can pursue the issue further in federal court.

An FCC official said the TV stations can continue to operate until the matter is finally resolved.

Leventhal said the judge did not find that the public had been harmed or that there was any intention to violate the law. Instead, the attorney said in an interview, the judge based his decision on the way in which the companies are structured.

According to the FCC, Spanish International Communications Corp. was the brainchild of Azcarraga, who wanted to establish a chain of Spanish-language TV stations in the United States. This chain was intended to serve the growing Latino population and to provide a source of revenue for one of Azcarraga’s companies, Televisa, the world’s largest producer of Spanish-language television programming, the agency said.

In his efforts to found the chain of stations, the FCC said, Azcarraga and members of his family financed the purchase of stock by several employees who were U.S. citizens, including Reynold Anselmo, who is president of all three companies. Anselmo owns 25% of Spanish International Communications Corp. (SICC) and up to 45% of the other two companies, Leventhal said.

Loans Known for Years

The loans by the Azcarraga family for stock purchases have been known to the FCC for years, Leventhal said.

“Even though the family (Azcarraga) loaned money and supplied programs, they never participated in the operations of the stations, nor did they ever exercise any control or influence,” he said.

Leventhal also said financial help from the family ended 15 years ago, when the U.S. companies began to function on their own. “They have been financed by U.S. banks ever since,” he said.

The FCC also questioned the relationship between the stations and another company controlled by Azcarraga, the Spanish International Network (SIN), which supplies programming to the TV stations and sells advertising time for them.

SIN and SICC, for instance, share headquarters in New York. Anselmo, who also is chief executive of this company, owns 25% of SIN. The rest is owned by Azcarraga’s company Televisa.

Influence ‘Is Pervasive’

In his ruling, Conlin concluded that Anselmo is in effect “an agent of Televisa.” He said: “Through Anselmo, the influence of the Azcarragas is pervasive.”

A spokesman for Anselmo said he would have no comment until he had read the judge’s ruling and referred questions to Leventhal.

SIN has other legal problems too. In a lawsuit in federal court in Los Angeles, minority partners in SICC have accused Anselmo and Azcarraga of fraudulently making deals in which they profited through SIN at the expense of SICC shareholders.

As an example, the case charges that a SIN affiliate in Sacramento allegedly received Mexican programming from an SICC station without paying SICC for it.

U.S. District Judge Mariana R. Pfaelzer in Los Angeles issued a preliminary ruling in August sustaining many of the charges against SIN and is expected to rule any day on a motion that would place day-to-day operations of SICC in the hands of a court-appointed manager.

KMEX is the second oldest station in the chain. Anselmo, who was export-division manager for Azcarraga’s company at the time, founded the station in 1961, the same year he started SIN and the San Antonio station. Today, SIN claims that its network of affiliated stations--many of which have no connection to Azcarraga--reaches about 4.1 million Spanish-speaking households, or about 82% of Latino residents in the United States.

The Azcarragas dominate Mexican television and are described as one of that nation’s most powerful families. Emilio Azcarraga Sr. built a nationwide radio network in Mexico starting in the 1920s. During the 1940s, Azcarraga Sr. built the Churubusco Studios, producer of some of the country’s best movies.

When television arrived in the 1950s, he opened his own station, Channel 2, then merged it with stations owned by two other prominent families, including a former president of the country, to create Telesistema Mexico. His son, also named Emilio, expanded Telesistema into Televisa in 1973 by adding another station.

Emilio Jr. also established a cablevision network to bring U.S. shows into Mexican homes and Spanish International Network, which brought Mexican fare to the United States. Soap operas produced by Televisa are widely broadcast throughout Latin America.

Times staff writers Dan Williams in Mexico City and George Ramos in Los Angeles contributed to this story.