COMMUNICATION-BRAZIL: Media Set to Open to Foreign Capital

By Mario Osava Reprint | | Print |

Mario Osava

RIO DE JANEIRO, Dec 10 2001 (IPS) - The participation of foreign capital in Brazil’s communications media, banned under the 1988 Constitution, is expected to become a reality next year, the result of an amendment that the Chamber of Deputies is to take up for a vote Tuesday.

Foreign participation would be limited to 30 percent ownership in each media outlet, according to an agreement between the major political parties and business leaders from the communications sector. Under current law, only those born in Brazil or individuals who have been naturalised citizens for more than 10 years may own the country’s media entities.

The Constitution also prohibits bodies corporate, including nationally based companies, from being partners in ownership of newspapers, magazines and radio or television stations – a restriction that would be eliminated by the amendment.

The opposition in the lower house, led by the Workers’ Party (PT), at first rejected the proposed amendment, fearing the denationalisation of a sector they consider key to national sovereignty.

The media should only be opened to foreign capital once national legislation is in place that ensures that the programmes and news shows broadcast by these media are mostly nationally produced, argued Walter Pinheiro, leader of the PT in the Chamber of Deputies.

Lawmaker Henrique Eduardo Alves, rapporteur of the proposed constitutional amendment that has been wending its way through parliament since 1985, agreed with Pinheiro’s point and incorporated it into the bill that is up for the vote in the lower house this week.

The upshot of the legislation would be that only Brazilians or naturalised citizens could be in charge of programming decisions at television or radio stations.

The convergence of positions on this matter means approval of the bill is assured, according to Alves, deputy of the Brazilian Democratic Movement Party (PMDB), which is part of the ruling coalition. However, there is a nationalist-leaning sector and other groups of dissent in parliament that oppose the amendment.

To pass, the constitutional amendment requires 60 percent of the vote in the lower house, in other words, at least 308 of the 513 deputies must vote in favour. Furthermore, it must undergo two voting procedures in the Chamber of Deputies, and two more in the Senate, where it requires the yes-vote of at least 49 of the 81 members.

This proposed modification of the Constitution – which will allow media companies access to cheaper capital than what they can find within the Brazilian economy – is inevitable, Sinval Itacarambí, editor of ‘Imprensa’ magazine, told IPS.

Currently, the media face high-interest loans and stiff requirements when they seek new financial resources, according to Itacarambí.

Some of country’s traditional dailies, like Rio de Janeiro’s ‘Jornal do Brasil’ and Sao Paulo’s ‘Gazeta Mercantil’, the leading financial newspaper, are in dire economic straits, finding it difficult even to pay their workers. A boost from cheaper foreign capital could help balance out their finances, he said.

The consensus achieved by the organisations representing owners of newspapers, magazines and radio and television stations paved the way for approval of the constitutional amendment, six years after it was first proposed by then-deputy Aloysio Nunes Ferreira, who now serves as minister of Justice.

Crucial to the agreement was the support of Globo, the most powerful communications conglomerate in Brazil, with absolute dominance in television, and among the leaders in radio, newspapers and magazines.

With several media corporations operating at a loss, particularly the subscription-based cable TV channels, the Globo group needs capital if it hopes to maintain its expansion strategy and market hegemony after launching or acquiring numerous publications in the last few years.

The possibility of foreign capital’s minority participation will strengthen the media without the loss of nationally based control, as occurs in industrialised countries, say the business associations from this economic sector.

Furthermore, they add, it would correct an imbalance, because the traditional media, such as newspapers, magazines and broadcast television, are currently at a disadvantage in competing with the new media, like satellite TV and the Internet.

The new media operate across borders and have access to the international market for capital, says a joint declaration by the associations of newspapers, magazines and radio and television broadcasters.

One potential problem is increased concentration of power in the hands of broadcast television, particularly for the already dominant Globo network. There are no laws in Brazil that ban the creation of media monopolies, while such legislation does exist in the United States and in European countries.

With control over shares and content assured for the Brazilian owners, the potential for profit is what will attract foreign investors. As such, their money will be aimed at the strongest and most lucrative businesses, not at attempts to buoy up the faltering companies that most need their assistance.