Discovery Networks' Gustavo Lopez oversees legal issues in Latin America and the Caribbean

Tale of two cities, for Discovery Networks finds receptive ears with Clorox, FedEx, Burger King, HBO

It was to be the Latin American version of the Charles Dickens’ classic, a Tale of Two Cities.

For Gustavo Lopez, vice president of Legal for Discovery Networks, Latin America and U.S. Hispanic, the discussion he was to lead at WorldCity’s Government Affairs Connections gathering on Feb. 26 was going to be about Buenos Aires and Bogota.

More specifically, he wanted to talk about how utterly different was Discovery’s experience in working through knotty challenges with government regulation — this group might prefer the term intervention — in Argentina and Colombia.

While the attendees at the meeting agreed there is no “best” or “worst” government for executives in their position, it quickly became apparent that Discovery was not alone in its frustrations with the government of Argentina’s president, Cristina Fernandez de Kirchner.

Clorox’s Ricardo Leon registered concerns about labeling restrictions

“For the chemical industry, it is the most regulated country,” said Clorox’s Ricardo Leon, an Argentine whose responsibilities include Latin America but are global. The government does not allow them to describe the benefits of Clorox on its containers since “you are not a medical company.”

For Craig Prusher of Burger King, the company has “our little Argentina problem as well.” As anyone with young children knows, one of the primary reasons to go to a fast-food restaurant – at least in the eyes of the child – is for the inexpensive toy that comes with the meal.

Craig Prusher said Burger King’s toys have become an issue in Argentina

Burger King manufactures them by the millions in China, for the entire globe. The Argentina problem is that Argentina wants “local sourcing,” meaning the toys have to be produced in country.

FedEx’s Don Johnson also expressed frustration with the Argentine government

“Somehow I understand Venezuela and Bolivia,” said Don Johnson of FedEx Express, Latin America and the Caribbean, referring to two other nations in the region with leftist leaders not generally perceived as friendly to big business, “but I can’t understand Argentina putting up with Kirchner.”

Discovery’s challenge started as a spat between the Kirchner government and the powerful media company, Clarin. As part of an effort to limit the depth and breadth of Clarin’s ownership across various media, the government ended up with a bill that required locally created content and limited advertising.

The last five years have been good for Discovery, Lopez said, and “because of that, we have become a bigger target.” Nevertheless, despite paying attention to the early maneuverings of the legislation, Discovery and others were not entirely surprised to see the scope move beyond an attempt to limit Clarin’s influence.

Local media players see Discovery and others as infringing on their advertising sales and critics wonder why there’s not more local content.

For Discovery, a global television programmer which has been in Latin America for 16 years, and for fellow TV programmers like Fox, MTV, ESPN and Disney, this development was not good news.

Despite their efforts, despite the efforts of its trade association, despite a meeting held with Kirchner when she was in New York at the United Nations, nothing worked.

For Discovery and the other networks, it is painful. Most of the cable channels generate revenue from two sources: advertising and subscribers, and the new law hinders that ability and, at the same times, adds cost by requiring local content.

It is particularly painful for those companies who followed the siren call from Argentina a few years ago to bring their media companies to Argentina — a forceful approach was made to Lopez at the St. Michel, a now-closed Coral Gables hotel and restaurant.

“We had some pressure, at HBO,” said Jose Sariego. Disney, Fox and Turner did move significant operations there; HBO and Discovery did not.

The second city in the Latin Tale of Two Cities was Bogota, where Lopez was able to get an audience not with a high-ranking bureaucrat but with President Alvaro Uribe himself.

Colombia was going from two free channels to three — and that led to an effort to pinch the cable providers and, in particular, Discovery. The first attempt was to outlaw advertising on the network on the rationale that it could not accept advertising “because no law says you can.”

After efforts in the courts and the congress, Lopez found himself talking with Uribe.

“I want Colombia to become the center of production for Latin America,” Lopez quotes Uribe as having said. “We won’t participate in a law that hurts your industry. Welcome to Colombia.”

In that effort, they have created a new term: Coly-wood, a takeoff on the Indian version of Hollywood, Bollywood.

Government Affairs Connections is held six times per year and sponsored by Chevron and international law firm Fowler Rodriguez Valdes-Fauli.