Mexico TV Monopoly Challenged : Media: The government auctions two networks this week as new cable services start broadcasting.

For decades, Mexican media giant Televisa casually swatted away local television stations that dared compete for audiences here and quashed stars who struck out on their own.

From a secure home market, the corporation extended its reach throughout the Americas, including the United States.

On Thursday, several events will converge to threaten Televisa’s 92% share of Mexico’s television viewing audience as well as its extensive clout in the hemisphere.

That day:

* CineCanal will be launched, marking a partnership among four major movie studios and Televisa’s upstart rival, Multivision, to create a Spanish-subtitled cable movie channel. By summer, CineCanal will be available throughout Latin America.

* A new U.S.-based provider of Spanish-language programs will send its first satellite signal throughout the region. Miami-based International Television Inc. has teamed with a Venezuelan broadcaster to create a channel directed at Spanish-speaking women throughout the Americas. Multivision is among its first five clients.

* Bidders for the two national television networks that the Mexican government is selling off will be announced. The winners will have the best shot anyone has ever had at truly competing with Televisa, because the 170 stations up for sale reach beyond the cable-viewing elite to a mass broadcast audience. According to Mexican media reports Sunday, major U.S. media companies, including Capital Cities/ABC and Paramount Communications, have allied with Mexican firms to participate in the bidding.

Televisa executives have contended that neither the auction nor the cable competition worries them in the least. The government’s plans to sell the stations were known in late 1991, when the corporation placed stock on international markets. They did not prevent a successful offering. Competing against Televisa--which has the world’s largest library of Spanish-language programming-- will not be easy, analysts said at the time.

Nevertheless, there may be more chinks in Televisa’s armor in the 1990s. For one thing, advanced communications technology is diminishing the ability of giants such as Televisa to dominate national media markets.

Time Warner’s Home Box Office cable channel offers movies in Spanish throughout Latin America, and in the autumn, MTV plans to expand its weekly, one-hour Spanish-language program to a 24-hour cable station. NBC will soon join CNN in providing a Spanish-language news service. To compete, Televisa has formed a Pan-American network called the “channel of the stars” and is selling the programming throughout the region.

Meanwhile, Latin America’s television market is changing drastically.

Digital technology has reduced the cost of satellite transmission, creating space for six to 10 signals where only one could be sent previously.

“A lot of companies were standing on the sidelines because the satellites were sold out,” said Gary McBride, president of International Television. Besides the ability to send more signals over existing satellites, the amount of space available will increase substantially next year when Mexico launches the first of two new Hughes satellites with considerably more capacity and geographic coverage.

Satellite transmissions make the market more interesting to U.S. companies because it allows them to reach a larger audience than any single national market provides. As McBride noted, “Ecuador and Chile are small markets where it is hard to justify programming to satisfy national demand.” In contrast, the region as a whole becomes a large enough market to interest advertisers and, therefore, media companies.

The ability to reach millions of viewers in a single language was an important factor in MTV’s decision to launch the network, said Sara Levinson, executive vice president.

The market becomes even more attractive when Spanish-speaking households in the United States are added. That has been an important part of Televisa’s U.S. strategy for decades. Even during the years the corporation did not own U.S. television stations, it provided most of the programming for Spanish-language television north of the border.

Now, Telemundo--the economically troubled, rival Spanish network in the U.S.--is trying to bolster its revenue by turning that program flow around and selling shows to Mexico. Buyers include an independent station in Guadalajara, the country’s second-largest city, and Multivision.

HBO Ole, the Spanish-language movie channel, and International Television are following a similar strategy by selling their programming on both sides of the border.

In this way, the U.S. entertainment companies are providing programming that did not previously exist for potential rivals of Latin media giants.

The ability to buy programming has allowed Multivision to create a 15-channel cable network to rival Televisa’s Cablevision with minimal spending on original programming.

Ricardo Salinas, a partner in one of the investor groups that plan to bid on the government television stations, said his group will start by purchasing programming.

The U.S. interest has also created opportunities for Latin American companies. When Venezuela’s Venevision linked up with Televisa to form a Pan-American network, the parent company of rival Radio Caracas Television went into partnership with International Television to create the network that will start sending signals Thursday.

HBO chose another Venezuelan company, Omnivision, for its partner in HBO Ole.

“We are going to see better quality international services replacing lesser quality national services,” predicted McBride. As national services are replaced, national monopolies will break down.

For example, when MTV began its Brazilian channel, TV Globo dominated the market, capturing 85% of the nation’s viewers. Entertainers who were not on Globo simply were not on television.

“MTV provided another outlet,” said Levinson. “We were able to help artists get visibility.”

So far, the biggest threat to Latin media monopolies has been cable, which in this region is admittedly an elite medium. But changes in government policy--notably in the notorious case of Mexico where Televisa overshadows all other media--could mean the airwaves will no longer be safe for monopolies either.

The government’s decision to sell off its media properties is creating a domestic company with enough clout to be a viable competitor to Televisa.

Contenders include the owners of Multivision; Salinas’ group, which includes Francisco Aguirre, whose father founded Channel 13 and who was station manager before the government takeover 20 years ago; Clemente Serna, chairman of one of Mexico’s few independent television stations, Television Tapatio in Guadalajara, and businessman Raymundo Gomez Flores.

“We are finally going to have competition after years of domination by a single company,” said Serna.

Significantly, the prospective bidders say they expect to involve foreign partners eventually. Gomez, president of Grupo Geo and Banca Cremi, was quoted by the official news agency Notimex and a local newspaper Sunday as saying that an investor group including Capital Cities/ABC Inc. and Paramount Communications’ Paramount Studios will try to buy the package that includes two television channels, the daily El Nacional newspaper and a movie theater chain. All are currently owned by the Mexican government.

Capital Cities, which includes the ABC television network, and Paramount each would own 24.5% of the properties.

The rest would be held by Mexican partners including Geo, Telecommunicaciones de Mexico and Grupo de Videomax, Gomez said.

Fox Broadcasting and Turner Broadcasting are also thought to be interested in the government properties.

A Fox spokesman confirmed that the company has held discussions with unspecified Mexican media groups. Capital Cities and Turner refused to comment. Paramount officials couldn’t be reached.

Foreign ownership of Mexican media is prohibited by law, but bidders say they are confident they can find a legal way to include a foreign partner in their corporations.

Televisa is already counterattacking, with 60 new television concessions that will allow the company to create its fourth network in Mexico as well as expand aggressively throughout the region, including the purchase of a controlling interest in a Chilean network and buying back a U.S. Spanish-language network.

Nevertheless, the possibility of a competitor for Televisa, especially one with international ties, is raising expectations in Spanish-language entertainment, where playing in Mexico has meant playing by Televisa’s rules.

After a run-in with Televisa when the network canceled an appearance by Banda Blanca because the 13-member salsa band had appeared on government television, band manager Roberto Rivera asked angrily: “What’s going to happen when there’s a common market if they can’t accept competition? What happens if Ted Turner comes in here?”

Rivera may find out sooner than he expected.