Argentinean Papers Strike Blow Against Foreign Owners

By: Mark Fitzgerald

When Argentina’s newspaper publishers gather in Buenos Aires two weeks from now for the annual convention of the Asociaci?n de Entidades Period?sticas Argentinas (ADEPA), they will actually have something to celebrate — for the first time in four years.

Officially, Argentina is in its 50th straight month of recession — but newspapers are living through business conditions that can only be described as a depression.

Nationwide, daily circulation fell an astonishing 35.8% between 1997 and 2001, the World Association of Newspapers reported this year. Argentina’s daily-newspaper advertising revenue has collapsed, in dollar terms, to $654 million in 2000 from $1.5 billion in 1998, according to the latest available statistics.

With the steep devaluation of the Argentine peso, the dollar-denominated cost of newsprint has doubled in the past year and equipment costs are up as much as 270%. Smaller papers have been folding. Even in the big city of Buenos Aires, two of the three free-distribution dailies created to target commuters — including the well-financed Metro from the Swedish global publisher Metro International S.A. — have disappeared.

But after furious lobbying of a skeptical Congress and president, ADEPA managed to get legislation passed last month that will limit foreign interests from owning more than a 30% stake in papers and other media companies. Brazil this summer adopted a similar law — although that amounted to a liberalization of ownership because foreigners had not been allowed any stake in media companies since 1964.

The issue hits home for ADEPA’s president, Jose Claudio Escribano, subdirector of one of the country’s oldest and most prestigious dailies, La Naci?n in Buenos Aires. Escribano has acknowledged his company’s high debt without being specific — a Dow Jones report in June put it at $120 million — but he has had to deny recurring, though less than credible, reports in the local business press that Citibank Argentina is demanding a majority stake and management control to satisfy the debt. (A Citibank spokeswoman in Miami refused to comment on the reports, citing its privacy policy.)

Argentinean newspaper publishers pulled out all the stops to get the legislation passed. Perhaps their most effective tactic was a declaration issued this year in which they unabashedly wrapped themselves in the pale blue and white of Argentina’s flag. “It’s imperative that Argentinean society protect the cultural values that have been expressed, from the beginning of our nationhood, by a press that identifies fundamentally with our patriotic ideals,” it said in part.

The federal government hasn’t been completely friendly to newspapers. Last year, it slapped a 10.5% value-added tax (IVA in Spanish) on newsprint, advertising, and circulation. The tax burden was supposed to be offset by a break in payroll taxes, but publishers say the trade-off is not working out as planned.

scribano led a delegation of publishers to personally plead their case for tax relief to Argentina President Eduardo A. Duhalde — and got a blunt answer, as he told reporters afterward: “The president has promised that, on this point, there will be no modification.”

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