NBC Universal Contests Pappas License

A battle between NBC Universal, which owns Telemundo, and Spanish-language rival TV Azteca, took a bitter turn Thursday when NBCU filed a petition with the FCC to deny the license renewal of KAZA, a Los Angeles-area TV Azteca America affiliate.

The station is owned by Pappas Telecasting, but, the NBCU petition says, not really: Through a loan and other factors, NBCU says TV Azteca, the Mexican-owned parent of Azteca America, actually controls 51.6% of the station, far beyond the 33% investment threshold for foreign investors. Furthermore, NBCU claims TV Azteca clearly has operating control.

Though it’s that ownership question that might get the FCC’s initial attention, NBCU’s petition goes further than that, arguing that TV Azteca lacks “the character qualifications to own and operate a U.S. broadcast station.”

The filing claims that TV Azteca has ripped off shareholders with a “massive securities fraud,” that it arranged for an “armed raid” that stopped production of a Telemundo show in Mexico and filed “baseless criminal complaints” in Mexican courts against Telemundo and NBC’s parent, General Electric.

“These examples demonstrate that TV Azteca will stop at nothing…to exclude Telemundo from the Mexican TV market,” NBCU says in its complaint, which says TV Azteca uses its power in Mexico to “intimidate competitors.”

The FCC does consider the character of license holders, though it would seem doubtful NBCU would push that angle much with the commission when, in its filing, it concentrates so much on proving that TV Azteca, not Pappas, controls the station in the all-important Los Angeles market.

But the filing could be a way for NBC to force other U.S. agencies, including the State Department and U.S. trade representative, to put pressure on Mexican authorities to level the playing field for U.S.-owned companies to produce programming in Mexico and honor trade agreements.

NBCU and TV Azteca, in an intense fight for Spanish-speaking viewers, have clashed repeatedly. Earlier this fall, Telemundo filed suit, claiming that TV Azteca broke the law during Telemundo’s shooting of a show last summer when it stormed the set with armed police officers. TV Azteca claimed it owned the rights to the program host’s name and image. In the petition to deny, NBCU meticulously describes the police raid over several pages in their complaint.

"Basically, it's all about a long-standing and acrimonious business dispute between NBC Universal/Telemundo and TV Azteca," says Peter Pappas, executive VP of Pappas. "Neither TV Azteca nor Azteca America has any ownership interests--direct or indirect--in KAZA. Any assertions that Pappas ceded operational control to Azteca are entirely inaccurate."

TV Azteca did not have a comment.

Telemundo claims to reach 93% of U.S. Hispanic households in 142 markets through its 16 owned-and-operated stations, 36 broadcast affiliates and some 684 cable affiliates. Azteca TV is one of two main producers of programming in Spanish in the world. It operates two national networks through 315 stations throughout Mexico. The branches of Azteca TV include Azteca America, the chain of affiliates in the United States.