UPDATE 3-Mexican tycoon Slim sets sights on digital content

Reuters

Mon Oct 17, 2011

* America Movil seeks to move into TV, online content

* Already biggest provider of cell phone, pay-TV services

* DLA offers movies, series from U.S. entertainment houses

By Cyntia Barrera Diaz

MEXICO CITY, Oct 17 (Reuters) – Mexican tycoon Carlos Slim’s America Movil, one of the world’s biggest cell phone companies, is buying a digital media firm to bring movies, TV series and music to its growing base of smartphone, tablet and pay-television customers across Latin America.

The purchase of Miami-based DLA Inc suggests a more aggressive move from America Movil into video-on-demand and streaming services in Latin America, where it dominates pay television services with more than 11 million subscribers.

“They have the distribution means, but lack the content,” said Actinver analyst Martin Lara. “There is an explosion of content (use) through multiple platforms: cell phones, blackberries, iPads … the content market is no longer limited to pay television.”

America Movil did not say how much it is paying Claxson Interactive Group for DLA and could not immediately elaborate on its brief statement to the stock exchange. The deal is pending approval from authorities but is expected to close in the last quarter of 2011.

According to DLA’s website, the company distributes movies and television series from top U.S. entertainment houses like Walt Disney Co , as well as music to televisions and smartphones alike.

Claxson and DLA are owned by the Cisneros Group of Companies, pioneers in the television market in South America.

America Movil’s chief executive, Daniel Hajj, told Reuters recently he expected the company to expand its online video services in the region, adding Peru and Argentina to its existing offerings in Colombia and Brazil.

With the DLA deal, America Movil would join a growing number of companies trying to lure in viewers with more attractive programming in a pay-as-you-go format.

Netflix Inc recently launched its online video rental in more than 40 countries and Cuevana, a free service, is also very popular in the region. Last month, Maxcom Telecomunicaciones launched its live television and video rental service in Mexico.

GROWING THE BIZ

America Movil is the biggest cell phone company in Latin America, with 230 million customers. It is also the leading provider of pay television services, via cable or satellite, and expects to double its client base by 2013.

Content was one of the pieces missing to round America Movil’s offer. With DLA, the Mexican company could bring adult entertainment Playboy TV, music channel DMX or The Concert Channel to clients’ screens in most of Latin America.

DLA has three business branches: video-on-demand with a vast library of titles to watch and pause at will; a broadband service available via any device with Internet access; and pay-per-view, offering 18 channels with top Hollywood productions.

It was not immediately clear if America Movil was offering this new service in Mexico, where earlier this year its sister company Telefonos de Mexico lost a battle to get a government permission to offer television services in the country.

Shares in America Movil in Mexico were down 1.39 percent at 15.58 pesos while its New York-traded shares were down 2.3 percent at $23.30.


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