Mexican TV Giant to Add 62 New Stations : Media: Competitors denounce government for giving the licenses to Televisa.

Televisa, the giant corporation that controls most of Mexico’s television market, got even bigger last week when the government granted it licenses to operate 62 new television stations in a move that prompted furious Televisa competitors to charge that the government had betrayed them.

After forcing other companies to bid for television licenses in an auction this summer, the government simply gave away licenses to Televisa, the competing firms charged.

In effect, the new licenses create a fourth network for Televisa, and gave the company some positive news at a time when some analysts were beginning to warn potential investors away from its planned sale of a 10% stake this month. Televisa is seeking to raise $900 million from the stock offering.

Other broadcasters harshly criticized the government’s action.

“It seems arbitrary and completely unfair to us,” said Moises Saba, executive vice president of Television Azteca, the winning bidder in July’s auction of 169 government-owned stations.

Azteca paid $641 million for the stations, plus a chain of movie theaters, and has since announced plans to invest $30 million in updating them. Televisa received its new licenses in return for a promise to invest $176 million in the start-up stations.

“If they had told us they were going to give away licenses, we would never have offered that much,” Saba said. “Our projections were based on competing with three Televisa networks, not four. This drastically changes the situation.”

The government statement announcing the new Televisa licenses said only that the selection was based on “appropriate technical studies.” Saba accused Televisa Chairman Emilio Azcarraga, who already controls 85% of Mexico’s television market, of using his influence to obtain the licenses without open bidding.

Televisa executives could not comment because U.S. Securities and Exchange Commission regulations forbid them to make public statements this close to placing an offering on the New York Stock Exchange.

Representatives of Television Azteca met with communications officials last Thursday and Friday in an attempt to reach a mutually agreeable solution.

Sources close to the selection process said the four business groups that applied for the licenses Televisa received, including unsuccessful bidders in the July auction, might challenge the government’s action. They have the right under Mexican law to file an objection to the license assignments.

The added network will further increase Televisa’s already formidable presence in the Mexican television market, said Javier Ramirez, international operations director at Vector Brokerage.

While that is good for the company in the long term, it is not enough to convince him to change Vector’s recommendation that investors not participate in the Dec. 13 international offering, he said. The offering of shares by company insiders, including Azcarraga, would make 74% of the company’s stock available for trading while doing nothing to increase its capital, he said.

In addition, several other strong Mexican companies are planning international offerings this month. Ramirez believes the price of Televisa stock will drop below the offering price of $31 to $32 a share.