BRIEF-ARI Network Services provides details of termination of merger agreement
* ARI Network Services -upon termination of merger agreement by Expedition Holdings on specified conditions, co to pay termination fee of about $4.8 million
(Adds regulator comments)
MEXICO CITY, March 2 Mexico's Grupo Televisa said on Thursday that Mexico's telecommunications regulator has declared that the media and entertainment company and its units have substantial market power in pay television, which could lead to tougher regulation.
The company said in a statement the ruling paves the way for the regulator to impose certain measures, but the company said it would challenge the decision. Televisa's cable operator Cablevision issued a similar statement.
Televisa shares dropped 0.5 percent on Thursday and have fallen more than 4 percent this week from a more than one-year high amid media reports of the ruling.
The Federal Telecommunications Institute's (IFT) decision reverses an initial 2015 ruling that was struck down by a Mexican tribunal in January.
President Enrique Pena Nieto's government implemented sweeping telecommunications reform to rein in the country's dominant telecoms and broadcasting oligopolies.
The IFT said in a statement it had analyzed the pay TV market from 2009 to 2014 and determined that Televisa did not face significant competition. It said it has begun to analyze potential antitrust measures it could impose.
The regulator said Televisa was the only company to have both satellite and cable pay TV operations and had an advantage over rivals since it could offer TV channels from its broadcasting arm on its pay TV platforms under better conditions than its rivals.
The 2013 reform introduced a "must-carry, must-offer" rule that forced Televisa to allow rivals to show Televisa's public broadcast channels for free, but the IFT said there was no sign during the analyzed period that the rule had significantly affected the market.
Pena Nieto's government has been accused of being tougher on billionaire Carlos Slim's giant America Movil, whose profit margins have shrunk since the reform, than on Televisa.
In 2015, the IFT ruled Televisa was not a dominant player in pay TV since competitors such as Dish, Megacable and Axtel were adding subscribers and taking market share from Televisa.
That ruling was challenged by a rival cable provider, Total Play, part of Grupo Salinas.
Televisa is the country's largest pay television provider, accounting for some 60 percent of all subscribers, according to IFT figures. Its satellite and cable businesses made up more than half its revenue in 2016.
Separately, the IFT has discussed forcing Slim to legally separate part of fixed-line telecoms unit Telmex from the rest of his America Movil company, sources have told Reuters. (Reporting by Michael O'Boyle; Editing by Jeffrey Benkoe)