[NYTr] RCTV Incites More Conflict with Venez Govt as Cable Station

[All the News That Doesn't Fit]

excerpted from VIO Venezuela Daily News Roundup - July 31, 2007.

[RCTV has failed to register as a broadcaster of Venezuelan content in
its new guise as a satellite TV station, warranting possible government
sanctions.  Following the non-renewal of RCTV's license to broadcast
over the open-access airwaves in Venezuela, the opposition-affiliated
station opened a U.S. headquarters from which to air content produced
in Venezuela.  However, RCTV, known for being the country's oldest
television station and its most frequently cited for legal infractions,
has since failed to meet registration requirements for status as a
satellite broadcaster.  The Financial Times reports that failure to do
so endangers future programming.  RCTV's troubled trajectory points to
the high cost of allowing corporate media outlets to operate as
national political actors, for the station's support of the 2002 coup
and economic strike discredited its claims to neutrality, and other
broadcasters including Venevision, the public channel TVes, and the
regional network Telesur have since gained favor.-VIO]


The Wall Street Journal - July 31, 2007
http://online.wsj.com/article/SB118584705626682998.html

Venezuelan Cable Station Faces Chávez Showdown

By Jose de Cordoba

CARACAS, Venezuela -- A samba band snaked through the studios of Radio
Caracas Television on July 16 to celebrate the broadcaster's return as
a cable station just seven weeks after President Hugo Chávez refused to
renew the station's broadcast license, knocking it off the air.

The new cable version of RCTV, called RCTV International, was just as
feisty as the broadcast version had been. Popular anchorman Miguel
Ángel Rodríguez started his show with a Chávez critic who blasted the
arrest of four university students for handing out political leaflets
during a soccer game. Next, a Catholic bishop warned that Venezuela was
sliding toward totalitarianism. "I'm so happy to be back," beamed RCTV
co-anchor Luisiana Ríos.

But the celebration turned out to be premature. The Chávez government
last week announced legal requirements that may force RCTV
International off cable outlets tomorrow, possibly silencing the
opposition broadcaster for good. Essentially, the Chávez government is
requiring RCTV International -- a Miami-based company which gets much
of its programming from Caracas-based RCTV and transmits to Latin
America -- to register as a Venezuelan content producer. The
registration requirements, which include airing Mr. Chávez's marathon
speeches, would make the cable venture economically "unfeasible," says
Marcel Granier, RCTV's chief executive officer.

RCTV International's managers are considering their options. So are
Venezuela's cable and satellite-TV operators, who worry that if they
continue to carry RCTV International programs, the Chávez government
will hit them with heavy fines, says Mario Seijas, the president of the
Pay TV Association of Venezuela, whose members include both satellite
and cable operators.

RCTV's travails show how difficult it has become to remain politically
independent during the tenure of Mr. Chávez, who has said he needs to
exert a "new hegemony" over most aspects of Venezuelan life to create
"21st-century socialism." In recent years, Mr. Chávez has moved to
squelch political opposition and to extend his brand of left-wing
politics to neighboring countries. His efforts to control the domestic
media threaten to silence a key mass outlet for opposing views.

Since winning a landslide re-election in December, he has nationalized
the country's leading telecommunications and energy companies and taken
majority control of major oil projects from foreign oil companies. He's
tightened his grip as well on the country's armed forces, who now
salute superiors with a slogan popularized decades ago by Cuban
dictator Fidel Castro -- "Socialism, Fatherland or Death." In the weeks
ahead, Mr. Chávez plans to unveil a draft of a new constitution that is
expected to include an end to presidential term limits.

'Four Horsemen'

Mr. Chávez has had a turbulent relationship with Venezuela's media
since he was first elected in 1998. As disenchantment grew over Mr.
Chávez's radicalization and over his close relationship with Mr.
Castro, the four major private broadcasters, together with the nation's
unions and business association, moved to fill the power vacuum caused
by the collapse of Venezuela's established political parties. Mr.
Chávez dubbed the broadcasters the "Four Horsemen of the Apocalypse."

During three turbulent days in April 2002, when Mr. Chávez lost power
in a coup attempt and then regained it, private broadcasters lined up
with the opposition and didn't broadcast pro-Chávez protests. That,
together with the broadcasters' support later that year for a two-month
general strike against the Chávez government, earned the broadcasters
Mr. Chávez's enmity. The broadcasters deny having anything to do with
the coup and say they couldn't report events because it was too
dangerous for their reporters to do so.

Mr. Chávez has denounced broadcasters as tools of the rich, and has
used their need to renew government broadcast licenses as a pressure
point. Billionaire Gustavo Cisneros, who with his brother Ricardo owns
RCTV's main rival, Corporación Venezolana de Televisión CA, known as
Venevisión, met with Mr. Chávez at a Caracas army base in 2004.
Afterward, Venevisión softened its news coverage and canceled a show by
Napoléon Bravo, an acerbic political commentator. "We stopped putting
salt and pepper on the news," says Mr. Cisneros. "It was a matter of
survival."

RCTV, however, kept hammering at the Chávez government. Its newscasts
focused on a growing crime wave in Caracas and provided a voice both to
Chávez foes and to supporters who complained about the government's
inability to provide housing and other services. "Facing a totalitarian
regime, you can either adapt to it, thinking you will survive, or you
can confront it," says Mr. Granier, RCTV's chief executive, who owns a
large stake in the station.

RCTV's management figured that the station's popularity would protect
it from attack by the Chávez government, which already was being
criticized internationally. But in December 2006, shortly after Mr.
Chávez was re-elected, he announced that the government wouldn't renew
RCTV's broadcasting license this May. He cited the station's alleged
links to the failed 2002 coup.

When the government closed the station, it seized RCTV's transmitters
and equipment worth $130 million to use for a new government station
that is now using RCTV's broadcast frequencies, Mr. Granier says. The
shuttering of RCTV sparked international criticism and a nationwide
student movement to defend civil liberties, but Mr. Chávez refused to
budge.

Now Globovisión, an all-news channel that reaches about 20% of
Venezuelan households, is the only remaining broadcaster that sharply
criticizes Mr. Chávez. It too has been threatened with closure by the
government. Another broadcaster, Televen, has made compromises, taking
a program that regularly disparaged the government off the air,
although it still broadcasts some news that is critical.

Meanwhile, over the past five years, the number of government channels
has gone from one to six. Venezuela's congress and other
Chávez-controlled government entities such as the municipality of
Caracas have started TV stations that take the government line and
criticize Mr. Chávez's enemies.

The loss of RCTV's broadcast license crippled the station, which had
revenue of about $250 million a year, says Mr. Granier. RCTV and
Venevisión have been perennial rivals for the top spot in Venezuela's
ratings race. RCTV's broadcasts had reached 95% of Venezuela's more
than 5 million households. Venezuela's cable and satellite-TV channels,
by comparison, reach just half of the nation's households. If it remade
itself as a cable station, RCTV figured, it might lose 80% of its
advertising revenue. It was unsure how many of its 3,000 employees it
could retain.

Even so, RCTV thought it could survive. It could count on the goodwill
of many Venezuelans. In some public opinion polls, eight out of 10
Venezuelans, many of them supporters of Mr. Chávez, opposed the
president's move to close RCTV. During the seven weeks RCTV was off the
air, Globovisión provided an hour of broadcast time for RCTV to air its
news show, which quickly won top ratings. RCTV executives also figured
that the company's international visibility would enable it to line up
new cable customers elsewhere in Latin America and among U.S. Hispanics.

New technology also held promise. Even though the Chávez government had
banned RCTV reporters from many government offices, including those of
the president and vice president, the station kept reporting news
events. The reports were carried on the station's Web site and on cable
by Caracol TV, a Colombian broadcasting ally. When RCTV's Web site
crashed due to heavy traffic, the station posted segments on YouTube.

The station's on-air personalities tried to keep the station alive in
the minds of viewers. Stars taped future episodes of soaps. RCTV
presented top-rated shows such as "Radio Rochela," a long-running
satire, and quiz show "Who Wants to Be a Millionaire?" live in two town
squares in Caracas's suburbs, drawing large crowds. "None of us knew
how important we were to our public," says Juliet Lima, the young star
of Camaleona, one of RCTV's top soaps.

RCTV began laying plans to transform itself into a cable channel that
would use Miami-based RCTV International, a related company that shares
some stockholders with RCTV, to transmit its programming to cable
subscribers in Venezuela and other countries. It already had experience
in that field. It long had sold programming to RCTV International,
which was already marketing RCTV shows and programming from other
nations around the world.

By sending programming through RCTV International, RCTV figured it
wouldn't be required to follow Venezuelan domestic broadcast
regulations, including having to air Mr. Chávez's hours-long speeches
and news conferences. Last week, for instance, Venezuela's domestic
stations had to broadcast 13 hours of Mr. Chávez's ruminations about
the health of his friend Mr. Castro and the high quality of Cuban cows,
among other things.

On July 16, RCTV relaunched as a cable station. In its new incarnation,
it increased the amount of time devoted to news and opinion to six
hours a day, from 4½ hours. The first two weeks looked promising, with
the station drawing high ratings.

Caracas newspapers ran front-page stories describing how poor
Venezuelans in shantytowns ringing the capital, in order to get RCTV
International, were pooling resources to buy satellite dishes and
subscriptions to cable television. A photograph in El Universal, a
leading newspaper, showed a barrio family of eight watching the predawn
inaugural broadcast on its newly purchased satellite service.

RCTV's executives cautioned that the cable company would face immense
financial challenges. "We won't make money for many years," said Julian
Isaac, RCTV's vice president in charge of marketing. "We are not even
talking about breaking even." Some major advertisers remained
supportive, such as Empresas Polar, a beer and food maker that is the
largest private company left in Venezuela. Others canceled their ads,
says Pablo Mendoza, RCTV's vice president of market studies.

Heavy Fines

Last week, the Chávez government further increased the pressure.
Writing to cable-TV carriers, Telecommunications Minister Jesse Chacón
told them that Miami-based RCTV International must register as a
domestic content producer, subject to Venezuelan domestic regulation.
If RCTV International doesn't comply, cable and satellite-TV operators
will be required to drop the channel by tomorrow or pay heavy fines.

Mr. Chacón told reporters he saw no difference between RCTV and RCTV
International because "they generate all their information in Venezuela
and their production is aimed at Venezuelan society." RCTV
International, he said, was just a "mechanism" to try to avoid
Venezuelan regulations.

"We don't have a choice" about dropping the channel, says Mr. Seijas,
the president of the Pay TV Association. One association member that
carries the RCTV signal is DirectTV, 39% owned by News Corp., which is
negotiating to buy Dow Jones & Co., the publisher of The Wall Street
Journal. Mr. Seijas says that DirectTV's position is the same as the
association's.

RCTV's Mr. Granier contends that "the government is trying to
intimidate the cable operators," and that the requirement is illegal.
As an international cable operator, he says, RCTV International is
comparable to the Disney Channel and CNN, and shouldn't have to
register as a domestic firm. Although most of RCTV's programming is
still produced in Venezuela, the company says, its channel includes
content from other international providers, such as Televisa and TV
Azteca of Mexico and Time Warner Inc.'s Warner Brothers Entertainment
unit in the U.S. RCTV International's signal also is carried by cable
operators in Aruba, Curacao, and Trinidad and Tobago.

Mr. Granier says he plans to appeal the government's decision, and
hopes to persuade satellite-TV stations to continue to carry RCTV
International. He also is planning to beef up what he calls "strategic
alliances" with other broadcasters and cable operators in the region to
carry RCTV programming. Some of those stations, like Colombia's Caracol
TV, are seen on Venezuelan cable TV.

A fallback position is for RCTV to continue producing soaps and other
programming. Mr. Granier is not sure he'll be able to continue the
aggressive news coverage and political satire that has so irked Mr.
Chávez. "We will have to re-evaluate things," he says.

Ms. Lima, the soap-opera star, is disheartened. Two weeks ago, she felt
her station's own drama would turn out to be a defeat for Mr. Chávez.
"Like all soap operas, there is a villain who makes life impossible for
everybody, but then in the last chapter, the villain gets his just
deserts," she says smiling. Now, she says, she's not so sure. "I feel
we are starting out from zero again," she says.