Foreign investment in broadcasting

1. Executive Summary

Sections 45 and 46 of the Broadcasting Law No 22,285, as amended, exclude the participation of foreign investors as licensees of broadcasting services or as shareholders of licensee companies holding broadcasting service licenses in the Argentine Republic, except for those cases allowed by international agreements. Acknowledging that in certain cases this matter has generated a debate which has not yet been settled, we understand that investors coming from countries which had executed investment protection treaties with the Argentine Republic, including the “national treatment” and/or “most favored nation” provision, are enabled to invest in broadcasting under the terms of said treaties. Therefore, as an example, the signatories of the Treaty of Montevideo of 1980 (ALADI), such as, among others, investors coming from Brazil, Mexico, Chile and Uruguay, and, as the case may be investors coming from the Kingdom of Spain as a consequence of the execution of the Treaty for the Bilateral Promotion and Protection of Investment approved by Law No 24,118, would be under said situation.

2. Restrictions for foreign investors under the Broadcasting Law

Section 45 of Broadcasting Law No 22,285, as amended (the “Broadcasting Law”), establishes the following requirements, among others, in order to obtain a broadcasting service license:

“...the members of the company, shall hold at the time of its submission for the bidding process and maintain during the term of its license, the following requirements and conditions:
a) Be Argentine born or naturalized and not under age; (...)
e) Not have any corporate link or any other forms of submission to foreign journalism or broadcasting companies, unless the treaties executed by the Republic of Argentina with third countries allow so; (...)
If the offeror is composed by companies, the requirements and conditions previously mentioned, except for subsection c), must be fulfilled by the members of its board and of the latters” (the underline is ours).

Further, section 46 of the Broadcasting Law, in relation to the requirements to be fulfilled by broadcasting licensee companies, establishes the following:

“Notwithstanding the requirements and conditions established for its partners in the preceding section (section 45), companies shall comply with the following requirements (... ) b) Shall be neitherbranches nor subsidiaries nor controlled or directed by foreign persons or entities.”

In view of the aforementioned, the Broadcasting Law expressly prohibits the participation of any foreign investor in companies licensed for broadcasting services in the Argentine Republic. However, as a consequence of the application of certain investment protection treaties executed by the Argentine Republic, which preempt over the laws as provided for under section 75, subsection 22 of the Argentine Constitution, the requirements of the Broadcasting Law pertaining to nationality would not be applicable to investors from those countries.

3. Situation of United States investors

A good example of what has been cited in the previous paragraph is the situation of investors coming from the United States. After the application of the Treaty executed between the Republic of Argentina and the United States of America on Bilateral Promotion and Protection of Investments approved under Law No 24,124, those investments of United States origin are afforded “national treatment” and are thus admissible in the broadcasting framework of the Argentine Republic.

Section II of said treaty establishes the following:

“Every Party shall allow and treat the investments and its related activities in a way not less favorable than that which is granted in similar situations to investments or related activities of its own nations or companies...”.

This understanding was ratified by the Broadcasting Committee (COMFER), which through the enactment of Resolution COMFER No 350/95 approved the requirements to be fulfilled by persons or entities of United States origin requesting the granting of licenses for the rendering of complementary broadcasting services or the association with said licensees.

4. Situation of investors from countries which are signatories of international investment protection treaties

The situation of foreign non-United States investors must be analyzed under the terms of each investment protection treaty. In cases where those treaties include “national treatment” or “most favored nation” provisions, those investors and investments coming from said countries should be accepted by our country.

If investments in broadcasting from United States investors have been accepted by Argentine authorities and, for example, the Montevideo Treaty of 1980 on the Latin American Integration Association (ALADI) in its section 45 establishes that “Any capital coming from the member countries of the Association shall be afforded in the territory of other member countries a treatment not less favorable than that which is afforded to capitals coming from any other non member country, without prejudice to the provisions of the agreements to be executed in this matter by the member countries in the terms of the present Treaty”(1) (our underlining), then those country members of ALADI should receive the same (or not less favorable) treatment as that received by United States investments, and in consequence its investments should be admitted in broadcasting.

Investors from the Kingdom of Spain find themselves in a similar situation, since the Bilateral Promotion and Protection Investment Treaty executed between our country and that kingdom established in its section IV subsection 2 that “In all matters of the scope of this treaty, this treatment shall not be less favorable than the one granted by each party to the investments carried out in its territory by investors from a third country” (our underlining).

Investors from member countries of ALADI and Spain are in a similar situation to those investors from other countries that have executed treaties similar to those detailed in this chapter with the Argentine Republic.

In conclusion and in light of the above, United States investments have been granted a favorable treatment in order for its investors to be admitted in the Argentine broadcasting sector and granted “national treatment”. This treatment should be extended to those investments coming from, among others, member countries of ALADI, the Kingdom of Spain, and those other countries with which the Argentine Republic has executed bilateral treaties for the promotion and protection of investments, granting “national treatment” or containing a “most favored nation” clause, except for those cases where the Argentine Republic has expressly excluded broadcasting from the scope of said treaties.

(1) The Treaty of Montevideo of 1980 was effective 30 days after deposit of the third instrument of ratification (performed by Paraguay on February 16, 1981). The Republic of Argentina (through Law No 22,354) ratified said treaty in due time and is a member country of the ALADI, as well as the Federative Republic of Brazil, Republic of the Mexican United States, Republic of Chile and the Eastern Republic of Uruguay. The United States of North America is not a member country of ALADI.