Billionaire Carlos Slim’s America Movil SAB (AMXL) is considering starting an online service for movies and television shows in Mexico, where the company is banned from using its network to offer traditional TV, according to a person familiar with the company’s strategy.
The company is holding off on starting the service, which is similar to Netflix Inc. (NFLX)’s, until a regulatory ruling on whether showing video on the Internet would violate the TV ban, said the person, who couldn’t be named because the plans aren’t public. The company would use distribution unit DLA Inc. to offer movies and shows as it already does in Argentina and Uruguay, with titles such as “Captain America” and “Lost.”
Offering video to home-phone and Internet customers would put Mexico City-based America Movil in more direct competition with Grupo Televisa SAB and TV Azteca SAB. Televisa, the nation’s biggest broadcaster, has lured away Slim’s clients with voice, Internet and TV-service bundles.
In Argentina and Uruguay, America Movil’s service is called Ideas Entertainment. It offers video subscriptions for about $5 to $10 a month and 24-hour pay-per-view movie rentals. The company is competing with similar services from Netflix and Telefonica SA (TEF) in Latin America.
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America Movil isn’t allowed to offer video over its landline network under the terms of its telecommunications license, granted to what is now its Telefonos de Mexico unit in 1990 when Slim acquired control of the company in a government privatization sale. Slim has tried unsuccessfully to obtain a TV license since, with the government arguing that the company hasn’t met requirements in its network connections with rivals.
An America Movil official who can’t be named under company policy declined to comment.
Telmex, as the fixed-line carrier is known, already offers some video online for free. The company produces news programming called Uno TV Noticias, and it has streamed video online of auto races and other sporting events, such as last year’s Pan American Games in Guadalajara, Mexico.
That production drew the attention of broadcaster TV Azteca, which complained to Mexico’s phone regulator that Telmex was offering TV in violation of its license. The Federal Telecommunications Commission hasn’t yet ruled on the complaint. Emilio Azcarraga, chief executive officer of Mexico City-based Televisa, also called for regulators to examine if Telmex’s license includes the right to offer TV programming.
If the agency rules that Telmex is allowed to stream video online, the company can go forward with its Netflix-like plan, said the person familiar with the company’s strategy. The service would be similar to the offerings in Argentina and Uruguay, which don’t include mail-in DVDs, a service Netflix offers in some markets, the person said.
America Movil said in October it agreed to buy DLA, then a unit of Claxson Interactive Group Inc. (XSON), for an undisclosed price. In addition to providing video content for Internet and mobile devices, DLA provides TV channels and pay-per-view programming to cable carriers in Latin America.
America Movil’s online video services complement the cable and satellite packages it offers across Latin America, including Brazil and Colombia. The company had 13.4 million pay-TV subscribers at the end of 2011, the most in the region.
America Movil fell 0.6 percent to 15.34 pesos at the close in Mexico City. Televisa was little changed at 54.37 pesos, and TV Azteca rose 1.2 percent to 8.21 pesos. Netflix, based in Los Gatos, California, gained 2.1 percent to $115.10 at the close in New York.
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