Over the last 12 months, the Mexican media and entertainment sector has been very active, driven primarily by the continued rise of streaming and a shifting regulatory landscape. Mexico’s media and entertainment market continues to grow, primarily driven by a young, digitally savvy population and the expansion of internet streaming.

The digital video content market alone reached USD3.2 billion in 2024 and is projected to more than double by 2033, with an annual growth rate exceeding 10%. With over 110 million internet users and 93 million active social media users, Mexico stands out as a key hub for digital innovation and media consumption in the global entertainment landscape.

Key Trends and Developments:

Increased Investment in Local Content: Platforms are heavily interested in investing in original Mexican productions (eg, Netflix’s USD1 billion commitment from 2025-2028).

Transforming the Industry with AI

Media and entertainment companies are implementing AI across the entire value chain, from content creation, production and editing, to distribution and personalised marketing, in addition to traditional AI uses like automation.

New Era of Sports Entertainment

With over 80% of the population watching sports, Mexico is shifting from traditional cable to streaming and Over-The-Top (“OTT”) platforms, driven by on-demand viewing preferences. This transition is unlocking new revenue streams through subscriptions, targeted ads, and the growing integration of live sports betting.

Social Media as Distribution Platforms

From content creation to influencer marketing and live streaming, social media has become a crucial distribution channel for entertainment in Mexico, surpassing traditional media outlets.

Ongoing M&A and Strategic Consolidation

Companies are acquiring local content libraries, Advertising Video on Demand (“AVOD”) players, and production infrastructure, and due diligence focuses on IP rights, licences, labour agreements, and regulatory exposure.

Business volume in Mexico’s media and entertainment sector is expanding rapidly across several platforms and formats:

Streaming Platforms

The video and live streaming platforms are expected to grow at a compound annual growth rate (CAGR) of 3.6% from 2026 to 2032 in Mexico, primarily due to increased internet penetration, a shift in consumer behaviour (partly influenced by the pandemic), and rising smartphone usage.

There is a strong and growing demand for localised and original content that resonates with Mexican audiences and streaming platforms (such as Netflix and Prime) have been investing significantly in high quality, Mexican produced content which have proved to be a success with tv shows such as Luis Miguel La Serie, Nadie Nos Va a Extrañar, among others.

Short-Form Video and Social Media

Platforms such as TikTok, YouTube Shorts, and Instagram Reels are increasingly popular, especially among younger audiences, driving high engagement and influencer-driven content.

Additionally, video advertising spending is growing rapidly and is projected to surpass traditional TV ad spending in Mexico in 2025 or 2026, signalling a shift towards digital as the dominant channel for most brands.

Videogaming and Interactive Media

Mexico is a major gaming market in Latin America, with growth in mobile, console, and PC gaming, as well as esports and live game streaming.

The Mexican video games market size reached USD1.8 billion in 2024 and is currently projected to grow at a 10.20% compound annual growth rate between 2025 and 2034. This growth is attributed to the increased use of smartphones, rising internet accessibility, the growing popularity of esports, and investments from international gaming companies.

Reality TV, Telenovelas and Long-Form Series

Local telenovelas and reality shows (now shifting into the streaming environment) remain highly popular, and there is strong demand for both international and locally produced long-form series. Vix (TelevisaUnivision) has become a key player, heavily investing in original productions for both traditional TV and streaming.

Mobile Video and Live Streaming: Mobile video consumption is surging due to high smartphone and internet penetration, and Mexico is a significant player in the global live streaming market. It is projected to have a Compound Annual Growth Rate (“CAGR”) of 15.6% from 2024 to 2030, mainly driven by the combination of cloud-based solutions and 5G connectivity, which improves accessibility and social media integrations.

In the last 12 months, deal-making in Mexico’s media and entertainment sector has been shaped by five key trends.

Tailored Revenue-Sharing and Back-End Structures

With no standardised framework for streaming profit-sharing, parties are negotiating clauses, especially regarding monetisation models. Audit rights, revenue definitions, and data access are becoming focal points in negotiations.

Flexible Rights and Windowing Models

Contracts are now more frequently structured to allow in-season stacking, multiple exploitation windows (for example, traditional TV and streaming), and geographic-specific licensing. Side letters and interim agreements are also being used to address evolving platform needs without disrupting content availability.

Advertising and Data Monetisation Deals

As AVOD gains traction, deal terms increasingly cover advertising revenue splits, user data usage rights, and compliance with Mexico’s data protection laws. This includes tighter language on consent, reporting, and liability.

Increased Due Diligence in M&A

Companies expanding their content or tech capabilities are engaging in strategic acquisitions. M&A deals now involve more comprehensive IP audits, filings with antitrust authorities, and risk assessments in light of Mexico’s ongoing regulatory transition in the telecom and broadcasting sectors.

In the past year, the landscape of back-end participation in film and television has continued to evolve, largely in response to the growing influence of streaming platforms and the increasing complexity of content distribution. Traditionally, back-end participation involved talent receiving a share of profits, either net or gross, generated from various exploitation windows, such as theatrical release, syndication, and international sales. However, the rise of Subscription Video on Demand (“SVOD”) platforms (eg, Netflix, Amazon, Disney+) has prompted a significant shift in compensation models.

The prevailing trend is a strategic move away from classic profit participation toward more predictable, upfront compensation structures. Streaming platforms and major studios are increasingly offering fixed payments or “buyouts” in lieu of traditional back-end points. This approach offers enhanced clarity and certainty for all parties involved. Some innovations include performance-based bonuses tied to clear metrics, such as viewership, awards, or the number of seasons produced, providing tangible incentives aligned with content success. Rather than relying on the more complex and delayed profit calculations of the past, these models offer direct, measurable outcomes.

Furthermore, some studios have introduced “per-point” models, assigning a fixed value to each participation point, often with escalators for longevity and performance. This fosters greater transparency and aims to reduce potential disagreements over profit definitions. This forward-thinking approach also allows studios to efficiently exploit content across their own distribution channels, optimising content reach without the need for complex, project-specific profit allocations or additional negotiations with profit participants.

Despite these significant advancements in compensation models, complexities can still arise, particularly within legacy deals or where newer models require further clarification for all parties. Common areas that can lead to discussions or disagreements have been outlined below.

Clarity in Profit Definitions

In older agreements, discussions may arise concerning the calculation of “net profits,” as studios often apply various deductions (eg, distribution fees, overhead, interest) that can influence the pool available for participants. The absence of industry-wide standardisation in some of these older definitions can sometimes lead to varying interpretations.

Transparency and Access to Information

Talent and their representatives occasionally seek to review studio records. While studios generally aim for transparency, the sheer volume and complexity of financial data can sometimes lead to requests for further clarification or detailed breakdowns.

Vertical Integration and Internal Transactions

As studios increasingly integrate production and distribution, conversations can sometimes focus on ensuring that internal transactions (such as licensing content to affiliated networks or platforms) are conducted at rates that are perceived as fair market value by all stakeholders.

Evolving Revenue Streams From Streaming and Digital

The rapid growth of streaming has introduced new considerations regarding which revenues are subject to back-end participation. Discussions may arise over how streaming revenues are best accounted for within the profit pool, especially when content is distributed across multiple platforms within the same corporate group.

Interpreting Contractual Terms

Many older contracts may not explicitly address newer forms of distribution or revenue streams, which can lead to differing interpretations regarding what is included in the back-end calculation under evolving market conditions.

In recent years, the evolution of audience habits, particularly the dominance of streaming platforms and the stagnation of box office performance, has led to the emergence of new financing structures in the media and entertainment industry.

The entertainment industry is continually adapting its financial structures. Traditionally, compensation often involved theatrical pre-sales and back-end participation. However, with the rise of digital platforms, these are increasingly complemented by flat-fee buyouts, minimum guarantees, and hybrid models. These newer approaches are particularly common in streaming-first productions. Studios and platforms are opting for these defined financial agreements to provide greater clarity and predictability for all parties. Rather than open-ended profit-sharing, talent now frequently receives performance bonuses tied to specific metrics, such as renewal thresholds, awards, or content visibility across digital platforms. This aligns incentives directly with content success and broad audience reach.

In Mexico, non-traditional financing has also taken the form of:

• co-production schemes backed by public incentives (eg, EFICINE or FOPROCINE), allowing talent to access state support without relying on downstream revenues;
• equity investment from private funds or brand sponsors, especially in independent cinema and docuseries; and
• licensing pre-sales to international buyers, which are structured as lump-sum, territory-specific fees rather than contingent back-end shares.

These financing strategies offer greater predictability but reduce long-term upside for talent. As back-end models become less viable, creators are increasingly negotiating higher upfront compensation and retaining ancillary rights, such as soundtrack or character exploitation, to preserve future revenue opportunities.

This shift reflects a global trend toward riskier content investment and a recognition that transparent, enforceable back-end models have become increasingly difficult to sustain in vertically integrated, data-driven markets.

International co-productions often involve navigating divergent legal frameworks, regulatory requirements, and cultural business expectations. Mexico is considered a hub for international co-productions due to its sophisticated and savvy talent, as well as its available resources. In Mexico, such deals typically require careful alignment of contractual standards with both local and foreign norms, particularly regarding copyright ownership, profit allocation, tax incentives, and dispute resolution.

To address these challenges, we advise structuring co-productions through:

• detailed joint venture or co-production agreements, clearly allocating responsibilities, creative control, and territorial rights;
• choice-of-law and jurisdiction clauses tailored to neutral or enforceable forums;
• harmonisation of IP provisions, ensuring mutual recognition of rights and obligations under both systems; and
• contingency planning for funding gaps or regulatory delays, including fallback options for state incentives or approvals for censorship.

Cultural differences also play a significant role. In our experience, international partners may have contrasting expectations regarding production timelines, approval processes, or reporting standards.

In co-productions involving public funding, such as those supported by EFICINE or international film commissions, additional care must be taken to ensure compliance with each jurisdiction’s subsidy rules, local spend requirements, and content quotas.

There are no health measurements or restrictions regarding COVID-19 in force for any industry, including large-scale productions.

In Mexico, the most prominent union in the industry is the National Association of Actors (Asociación Nacional de Actores), commonly referred to as “ANDA” due to its Spanish acronym. Artists form ANDA from cinema, theatre, radio, television, stunt, nightclubs, and other artistic and entertainment branches “below the line” of production. ANDA has historically been an active union with relevant celebrities acting as its representatives.

ANDA has entered into multiple collective bargaining agreements (CBA) with different entertainment companies. Salary tabulators of such CBA are used as a reference for the salary and compensation that different positions in the industry shall be paid, even by companies that have not entered a CBA with ANDA.

According to the Mexican Federal Labour Law, CBAs must be reviewed annually regarding salaries and biannually regarding the total terms of the CBA. Annual negotiations between the ANDA and the industry have been conducted swiftly, and these negotiations have not significantly altered the contractual terms of the industry in recent years. Likewise, no relevant strikes or stoppages have occurred in the last decades.

ANDA and other institutions have been engaged in lengthy negotiations with the government to adapt labour regulations to meet industry practices and standards, as they significantly differ from traditional employment. The negotiations have recently included discussions around AI.

We do not foresee any significant impact on the industry in the future regarding collective relationships.

Content creators are typically hired under commercial agreements, rather than labour ones. Therefore, there has been no attempt by this type of creator to unionise. Please note that the content creator’s industry has not been specifically regulated in Mexico (except for a consumer protection guide). Most of these creators are hired as freelancers or independent contractors, without having any labour rights.

The Mexican Income Tax Law provides a tax incentive for the production and distribution of Mexican films and theatrical productions. This incentive enables income taxpayers to support national film projects, and in exchange for their investment, they receive a tax credit equivalent to the amount contributed. The tax credit can be used to reduce the taxpayer’s annual income tax and provisional payments within the same fiscal year. Not that incentives may not always cover all kinds of content production.

The tax credit is not cumulative for income tax purposes and may not exceed 10% of the income tax incurred in the fiscal year immediately preceding the year in which it is applied.

To qualify, the investment project must involve cinematographic production carried out in Mexican territory, specifically intended for the production of a cinematographic film through a process that combines the creation and production of the film, as well as the human, material and financial resources necessary for such purpose.

The applicable guidelines must be followed to access the incentive. It is also important to note that this tax incentive cannot be applied jointly with other and similar tax benefits provided under the Mexican Income Tax Law.

In the case of film productions, this incentive is known as EFICINE (Estímulo Fiscal a Proyectos de Inversión en Producción y Distribución Cinematográfica Nacional), its Spanish acronym.

For several years, film producers have been utilising the film tax incentive, although it is not employed in all productions. We understand that its use, in most cases, depends on the financial situation of each film project.

Additionally, we are aware that certain Mexican states, such as Jalisco, occasionally offer local incentives (eg, Cash Rebate 2025 and Filma Jalisco) to promote regional film production by reimbursing a percentage of eligible expenses incurred within the state. These incentives operate independently from the federal tax credit system and may vary in scope and availability depending on local budgetary conditions and policy priorities.

We understand that other jurisdictions increase tax incentives by offering larger tax credits, allowing taxpayers to deduct certain investments related to film productions, and granting local tax incentives where filming takes place.

The film producers, with whom we have worked, have indicated that it is complex to move the film productions between jurisdictions because they must change service providers, language challenges when filming, the technological equipment and actors do not always meet the requirements of the film project and in general, moving productions represent administrative and operating costs that reduce the profit margins planned on each of their filming, among others.

Another challenge that triggers the movement of production between jurisdictions is that the payment of taxes cross-border can be a financial problem when paying taxes in those jurisdictions and at different times. In some cases, it is not always possible to credit taxes paid in one jurisdiction against those in another, even if the payments are made on different dates.

In general terms, we suggest reviewing, prior to starting operations or before taking advantage of tax incentives, the potential legal and tax restrictions that jurisdictions may have when applying tax incentives. Once the applicable restrictions are known, it is possible to define the margin of operational movement that would allow the entertainment companies to take advantage of the tax incentives.

It is important to mention that in recent years, the tax authorities of each jurisdiction have been increasingly scrutinising the cross-border operations of all taxpayers.

In that sense, whether they take advantage of cross-border tax incentives or not, and make payments abroad, entertainment companies may be subject to questioning and review by tax authorities. If this is the case, we recommend documenting all operations, payments, tax benefits, and any other relevant movements in detail to demonstrate the business reason and legality behind each transaction.

To date, we have not identified formal co-financing schemes between private investors and the government in Mexico, at least not in the form of structured partnerships where both parties share investment and risk in a coordinated manner.

However, Mexico does offer public mechanisms that support the entertainment sector independently, particularly in the form of subsidies. One example is FOCINE (Fomento al Cine Mexicano), a public funding program granted by the federal government through the Mexican Cinematography Institute, which is part of the Ministry of Culture. FOCINE supports specific stages of film production through annual calls and is structured as direct financial aid, not as a tax incentive or investment vehicle.

While FOCINE could be combined with private investment to complete a project’s budget, we have not seen this subsidy applied in the projects handled by our clients. In practice, most productions rely on private capital or standalone public support, rather than on structured public-private co-financing models.

On July 2, 2025, the Second Chamber of the Mexican Supreme Court decided case number A.D. 6/2025, regarding the ownership of content created by artificial intelligence (AI).

A user of an AI program designed to generate images, called Leonardo AI, applied to the Mexican copyright office to register an image. In the application, the AI was named as the author of the work. The copyright office denied registration, based on Mexican copyright law, stating that a human being must create a work of authorship and that it must be an original creation, which can only originate from human creativity.

The user appealed the decision. Once the matter was admitted and registered with the IP specialised court of appeals, the party filed a motion for the Supreme Court to decide  on its merits. While the final decision has not yet been published, the draft version of the ruling set forth that AI cannot be the author of a work under copyright law. Additionally, the preliminary draft ruling stated that AI-generated content is not owned by the individual who created the prompt or by the company that developed the AI model. Instead, this type of content may be considered public domain, even if the user paid for the service.

Notwithstanding the above, on July 14, 2025, the Supreme Court issued an official bulletin  clarifying that the ruling omitted any discussion related to the public domain nature of AI output, as such was unanimously removed during a private session. The final public version is yet to be published, as it will be discussed and ruled on August 6, 2025.

Until then, any conclusions about the legal status of AI-generated content remain premature. The Court’s final position will be crucial in shaping how AI-related industries, particularly those involving content creation, data-driven platforms and software development, approach copyright, liability and commercial use going forward. The issues raised in this case reflect legal and ethical questions that will likely remain central to the AI debate in Mexico.

In practical terms, if this interpretation were to prevail in the final ruling, it would leave businesses in considerable uncertainty. While the code for the AI software itself remains protectable, an AI's final output could fall outside the standard intellectual property framework. Even if the Court were to rule differently, or not consider it, this is a very relevant topic to be discussed, as worldwide the nature of AI output is being delineated.

Moreover, in case A.D.R. 131/2021, the Second Chamber of the Mexican Supreme Court also decided a case in connection with the possibility for a corporation to be the owner of a work of art. The Supreme Court decided that a copyright is not a right that legal entities may claim in their favour, but only natural persons, since it refers to aspects of human nature.

Copyright law lawfully grants an author (natural person) the right to exclusively exploit their creation. The Supreme Court decided that this is an appropriate distinction, since only natural persons are susceptible to performing a creative action.

Currently, AI-generated content can’t be enforced. Today, the copyright law clearly states that only natural persons are copyright owners and the works protected by copyright law are those of original creation. In practical terms, this means that:

• AI-generated works (output) cannot be registered for copyright in Mexico;
• no person or entity can claim exclusive rights over purely AI-generated content; and
• such content is free for anyone to use, reproduce, or adapt, as it is not protected by copyright law.

The concept of creativity is complex because some might say that generative AI is creative and autonomous; however, under Mexican regulation, only human beings can create works of authorship.

There is currently no public record of Mexican courts issuing decisions directly on the use of AI for generating or training on entertainment content (eg, movies, music, or television footage), except those mentioned above.

In a recent criminal case, the Court defined AI, but it was not related to M&E content.

The legal status of using copyrighted footage for AI training remains unsettled in many jurisdictions, including Mexico. However, the trend is moving away from unlicensed, large-scale scraping of content toward negotiated licensing agreements.

While Mexico has not yet enacted specific legislation addressing AI training and copyright, its legal framework is influenced by international trends and treaties. The Mexican Supreme Court’s upcoming decision on this matter, which, if the Court’s current interpretation prevails in the final ruling, states that AI-generated works (output) could not be eligible for copyright protection  (as mentioned in 5.1 AI and Copyright), provides some clarity but does not directly address the legality of using copyrighted footage as training data. The use of third-party footage for AI training without a license could still expose developers to infringement claims, especially if the footage is protected by copyright.

The ANDA and the industry have always been active regarding collective bargaining negotiations. We do not foresee any significant changes in the industry, other than the usual business-as-usual salary and benefits increases.

Even though entertainment unions are active, a wide percentage of professionals in the industry are hired informally or through freelance agreements. This hiring structure may expose entertainment companies to individual or collective labour claims.

Unlike Hollywood, Mexico currently lacks a unified or regulated framework for revenue-sharing in connection with digital-first content. This represents one of the main challenges in the industry, as there are no standardised models or collective bargaining agreements that dictate how profits are to be distributed.

Global streaming services may require the use of their standard contracts. As a result, revenue-sharing terms are typically negotiated on a case-by-case basis, leading to inconsistencies and a lack of clear benchmarks, which creates uncertainty for all parties involved.

Another key issue relates to rights clearance, especially for content that is exclusively commissioned or produced by a streaming platform. Platforms often seek to secure robust IP rights to maximise long-term monetisation, including not only the initial streaming rights but also potential avenues like international distribution or merchandising. The scope of these IP rights and the compensation for their acquisition become crucial points of negotiation.

Mexico is well-known for its telenovela industry, which has now shifted its production and distribution focus to the streaming environment. In this context, the sector is leveraging its previous experience in traditional TV to model revenue-sharing negotiations; however, these models often fall short when applied to streaming environments. As the digital market in Mexico continues to develop, there is growing interest from unions and guilds in establishing clearer practices and possibly advocating for collective mechanisms.

The approach to in-season stacking (making current season episodes available on a related streaming service) when there is no express license agreement is often complex; it involves the following considerations.

• If a dispute arises due to the lack of clear contractual terms, platforms may seek negotiation or mediation, whether privately or before the copyright authority in Mexico. Copyright disputes can be brought before civil courts, particularly when the dispute involves claims for damages, unpaid remuneration (such as royalties), or contractual breaches.
• To enable in-season stacking, platforms often negotiate amendments or side letters with producers or rights holders, which may involve additional payments or revised terms. In the meantime, they may enter into temporary agreements to avoid content disruption, with the understanding that final terms will be formalised later.
• Platforms may weigh the commercial benefits of in-season stacking (eg, increased subscriber engagement, reduced churn) against the legal and financial risks of proceeding without explicit rights. In some cases, platforms may choose to delay stacking until rights are clarified.

In order to avoid disputes, if the original licensing or production agreement does not expressly address in-season stacking, platforms should proceed with caution. They may refrain from making episodes available on the streaming service until new terms are negotiated, to avoid potential legal exposure or disputes with rights holders.

As mentioned before, ANDA has salary tabulators that serve as a reference for hiring certain positions within the industry. Such salaries may be considered part of the production costs. Also, ANDA may charge fees for the provision of certain services or for providing its affiliates for productions.

M&A transactions involving entertainment companies present unique legal challenges due to the intangible nature of the assets in question. Unlike traditional industries, where value lies in tangible infrastructure, entertainment businesses derive most of their worth from IP, particularly copyright-protected audiovisual works, underlying scripts, image rights, character rights, and related licensing arrangements.

A frequent complication arises from the need to comply with statutory requirements governing the transfer or licensing of copyright in Mexico. The Federal Copyright Law (“LFDA”) requires that any assignment or license of economic rights be in writing, clearly define the rights granted, specify the term and territory, and provide for remuneration. By default, such assignments or licenses are presumed to be non-exclusive and for a term of five years, unless otherwise expressly agreed. To be enforceable against third parties and to provide legal certainty, these agreements must be registered with the National Copyright Institute (“INDAUTOR”). However, registration is not a prerequisite for the existence or enforceability of rights between the parties.

For example, in the case of audiovisual works, there are some complexities under Mexican law. Unless otherwise agreed, the LFDA presumes that the producer holds the economic rights to audiovisual work as a whole, except for incorporated musical works, which remain subject to separate rights. Individual contributors (such as directors, screenwriters, and composers) retain rights over their respective contributions, provided this does not interfere with the normal exploitation of the work. Authors retain inalienable and perpetual moral rights, which prohibit any distortion, mutilation, or modification of the work that could harm the author’s honour or reputation without explicit consent. Consequently, in the sale of a film or TV library, parties should verify that any modifications, adaptations, or re-editing do not infringe upon an author’s moral rights, unless a statutory exception applies.

Existing licensing arrangements may also present complications. Certain licenses may be exclusive or irrevocable and may include revenue-sharing provisions that extend over long periods. They may also restrict exploitation to specific territories or distribution channels, potentially preventing the buyer from utilising new platforms such as digital streaming. An incomplete or vague license agreement may trigger default rules under the LFDA, which presume a non-exclusive transfer limited to five years within Mexico. The seller’s compliance with these formal requirements, including registration with INDAUTOR, helps avert future disputes over the exclusivity or duration of rights.

Moreover, any liens or encumbrances must be disclosed and discharged prior to closing or explicitly assumed and renegotiated. It is essential to note that, under Mexican law, the economic rights themselves are not subject to pledge or attachment; however, the fruits and products derived from their exercise may be subject to such. Failure to identify or clear these encumbrances can result in future disputes over ownership or exploitation rights. Thoroughly addressing these considerations enables potential buyers to better assess the value of the target assets and mitigate the potential risks associated with acquiring entertainment content.

The combination of cable companies with studios and streaming platforms may give rise to vertical antitrust considerations, particularly in markets where a limited number of players participate across multiple segments of the value chain. This structure can affect market dynamics by shaping access to distribution channels, pricing strategies, and the availability of diverse content, including that produced by independent or local creators.

Vertical integration, in which a single company participates in content production, distribution, and direct-to-consumer services, may raise concerns about potential foreclosure or the creation of preferential conditions. In certain scenarios, integrated firms may be positioned to prioritise their own content, limit third-party access, or design bundling schemes that influence competition. Depending on the circumstances, such practices could be evaluated under antitrust rules related to tying or exclusionary conduct.

At the same time, the market has undergone significant evolution. Large studios and networks now operate alongside global platforms and digital-native creators, who have a broader reach and lower distribution costs. Platforms such as YouTube, TikTok, and Netflix have altered traditional content strategies, leading many incumbents to explore partnerships or acquisitions, as seen in Disney’s integration with Hulu. Some legacy groups have undergone internal restructurings in response to these shifts, including Paramount.

In Mexico, vertical integration in content and distribution markets has been subject to regulatory review. In the 2021 TelevisaUnivision transaction, the IFT assessed the implications of a combined presence in content production, broadcast television, fixed broadband (through Izzi), and the streaming platform ViX, including potential effects on rival OTTs and independent producers. The transaction was cleared without remedies. In contrast, the IFT imposed conditions in the Disney–Fox case (file UCE/CNC-003-2021), requiring the divestiture of Fox Sports Mexico to address specific concerns in the sports content segment for pay TV and streaming.

The increasing role of data in digital markets also presents additional dimensions for antitrust assessment. Access to user data across services may be used to inform content decisions, personalise advertising, and develop competitive pricing strategies. These tools can strengthen market presence and will likely be part of future evaluations by Mexico’s new enforcement institutions, the Antimonopoly National Commission and the Digital Transformation Agency.

Nowadays, representations and warranties in M&A deals are carefully structured to mitigate risks associated with talent contracts, which often involve prominent figures and complex contractual frameworks. Purchasers typically commence with comprehensive due diligence to uncover, among other key findings, exclusivity clauses, renewal mechanisms, and payment structures with residual payments. This examination shapes the breadth and specificity of the R&Ws that are negotiated and their respective disclosure schedules, helping to pre-empt post-closing complications.

Sellers are expected to offer robust R&Ws that confirm:

• the validity and enforceability of all talent agreements;
• compliance with labour, IP, and social security laws; and
• the absence of any current or threatened disputes with talent.

These representations are sometimes qualified by materiality thresholds and knowledge qualifiers, limiting liability to breaches deemed significant and within the knowledge of designated executives.

To manage exposure further, deal structures commonly include mechanisms such as:

• survival periods for talent-related R&Ws, usually spanning 12 to 36 months; and
• indemnification provisions with capped liability and basket thresholds for claims.

In more complex or high-stakes transactions, parties are increasingly adopting representations and warranties insurance to backstop liability, especially when sellers resist post-closing risk.

Additionally, to secure funding availability for potential liabilities and indemnities, purchasers frequently arrange retention amounts or escrow mechanisms linked to unresolved or pending talent commitments. These instruments provide safeguards when talent agreements contain deferred payments, performance incentives, or exclusivity terms that might face challenges. This evolution demonstrates increasing refinement in Mexican entertainment M&A methodology, recognising that talent represents more than contracts – it frequently constitutes the primary asset generating value.

Advising on entertainment M&A transactions also requires careful analysis of talent contracts and legacy IP rights, as both may represent significant legal and financial liabilities. For example, provisions regarding moral rights and the right of publicity, which require special consideration under Mexican law, as their legal nature and enforceability differ from those in other jurisdictions. In this context, the right of publicity is considered a personality right, and its commercial use requires the express consent of the individual. In contrast, moral rights are inalienable, unwaivable, and perpetual; and, while they do not create ongoing financial obligations, they impose strict limitations on the modification, attribution, and use of the work, which can survive an acquisition and restrict the buyer’s ability to exploit the content.

Additionally, legacy IP rights may raise ongoing mandatory obligations, particularly in the context of labour relationships and collective rights management. Unlike in jurisdictions such as the United States, where residuals and royalties are often governed by union-negotiated collective bargaining agreements (eg, Screen Actors Guild – American Federation of Television and Radio Artists or Writers Guild of America), Mexican law imposes non-waivable royalties by statute for the public communication or transmission of copyrighted works and performances. Pursuant to the LFDA, these royalties must be paid to authors regardless of contractual terms and may be collected through authorised collective management organisations, and such remuneration is mandatory and inalienable. As a result, there is an obligation to compensate authors and performers for any public exploitation of their works, and these obligations cannot be waived or bypassed through private agreements.

Accordingly, cross-border transactions require particular attention to the treatment of property and moral rights, as the latter, under Mexican law, are perpetual, inalienable, unwaivable, and imprescriptible. Counsels must analyse the interplay between jurisdictions and ensure that legacy content exploitation does not trigger moral rights claims, particularly where the buyer anticipates adaptations, remakes, or re-edits. Successful integration of legacy content into new corporate portfolios depends on careful due diligence, jurisdiction-specific analysis, structuring, and, if necessary, renegotiation of key contracts to ensure continuity and commercial viability.

Mexico lacks standardised accounting for streaming revenues in Mexico regarding profit-sharing, which creates transparency issues and may lead to disputes. In this context, growing awareness in the industry is leading to audit and reporting clauses aligned with international best practices.

The legal framework does not impose statutory requirements for transparency or audit rights in profit-sharing arrangements, so private contract negotiations typically govern these matters. Unlike some European jurisdictions where transparency clauses are mandated by law, in Mexico, platforms often retain exclusive control over performance metrics, revenue calculations, and exploitation data.

Nonetheless, audit and transparency clauses should always be included in contracts involving profit-sharing to mitigate information asymmetries and ensure accountability from the revenue-reporting party. While not legally required in Mexico, their inclusion is becoming more common, especially in deals involving international platforms or co-productions. Recommended elements in audit clauses include:

• Scope of audit: The specific financial records and data that may be audited must be defined (eg, revenues, deductions).
• Frequency and audit period: The time frame during which records may be audited should be clearly established (eg, annually or biannually after receiving a financial report).
• Notice requirements: The contract should specify the required advance notice period before initiating an audit.
• Use of independent auditors: The terms should indicate whether the auditor must be independent and mutually agreed upon by the parties.
• Access to supporting data: The auditor must be granted access not only to financial summaries but also to supporting documentation, such as detailed accounting records or sublicensing agreements.
• Confidentiality provisions: The clause should include a confidentiality obligation, ensuring that any information reviewed during the audit process remains protected and is not disclosed to third parties, except as required by law or as necessary to enforce rights under the agreement.

Dispute resolution mechanisms: Mechanisms should be provided to address disagreements arising from audit findings, such as arbitration or expert determination.

In Mexico, non-compete and non-solicitation clauses are treated differently depending on whether they apply to companies or individuals. Clauses between companies, particularly in the context of mergers and acquisitions (M&A) or joint ventures, may be valid if they meet specific antitrust standards and are proportionate to the transaction. Clauses imposed on individuals after the end of an employment relationship, by contrast, face severe constitutional and statutory limitations.

For companies, non-compete clauses are generally enforceable if they comply with the criteria developed by Mexican antitrust authorities: (i) they must bind only the parties and their economic group; (ii) cover only the relevant products or services of the transaction; (iii) be limited in duration, usually not exceeding three years; and (iv) apply only in the geographic areas where the seller had operations. Courts have upheld these clauses where they are justified by legitimate business interests and reasonably tailored to protect the value of the transaction.

In contrast, post-employment non-compete or non-solicitation clauses imposed on individuals are generally unenforceable. Article 5 of the Mexican Constitution guarantees the right to freely engage in any lawful profession or trade and prohibits agreements that restrict this right. The Federal Labour Law reinforces this by recognising work as a social right and duty. As a result, restrictive covenants that limit a former employee’s ability to work or be hired are typically null and void, regardless of the industry.

In the entertainment sector, where talent mobility and project-based work are common, this distinction is particularly relevant. Companies may protect sensitive information through confidentiality clauses and, in some cases, through carefully drafted exclusivity agreements that are in effect during the term of a contract. However, any post-employment restriction on individuals must be designed with constitutional limitations in mind and will rarely be enforceable.

Technologies such as AI, Virtual Reality (VR) and Augmented Reality (AR) are creating new business models and opportunities, but they also introduce legal and contractual challenges that must be addressed.

Talent and Likeness Rights

The use of AI to replicate voices, images, or performances of artists requires clear agreements on consent, compensation, and the scope of use. This is especially relevant in Mexico, where moral rights are strongly protected under copyright law.

Data Protection and Privacy

VR and AR experiences often collect large amounts of user data. Contracts must address how this data is processed in compliance with Mexican data protection laws. These considerations are particularly important when the data is used to train AI models, and must be carefully incorporated into entertainment contracts.

Distribution and Monetisation

New platforms and formats enabled by these technologies are changing how content is distributed and monetised. Contracts are evolving to cover streaming, interactive experiences, and other digital distribution methods, ensuring that revenue sharing and reporting are clearly defined.

Dispute Resolution

As these technologies cross borders, contracts increasingly contain detailed dispute resolution clauses. Note that clauses agreeing to the application of foreign law or courts may be considered null and void under recent Supreme Court case law.

Entertainment companies, content creators, and technology providers operating in Mexico should update their standard agreements and policies, as technology and law evolve.

The choice of business structure affects the liability, tax treatment, and operational flexibility. Proper entity formation, insurance, and contract management are critical to protect the company and its stakeholders.

Business Structure: Common Entity Types

Sociedad Anónima (“S.A.”)

S.A. is a corporate-type structure, and it is the most commonly used form of commercial entity in Mexico; the General Law regulates it for Commercial Corporations (Ley General de Sociedades Mercantiles) (“LGSM”). It may have either fixed or variable capital. Its stock is represented by shares, which are owned by shareholders. Shares may or may not be negotiable.

Sociedad de Responsabilidad Limitada (“S. de R.L.”)

S. de R.L. is a partnership-type structure, and it is the second most commonly used form of commercial entity in Mexico; the LGSM also regulates it. It may also have either fixed or variable capital. Such capital is represented by equity interests (partes sociales), which partners own. Equity interests have restricted transferability.

Sociedad Anónima Promotora de Inversión (“S.A.P.I.”)

S.A.P.I. is a form of stock corporation (it is, in fact, a sub-type of S.A.) regulated by the Mexican Securities Market Law (Ley del Mercado de Valores), but is not subject to the supervision of the National Banking and Securities Commission (Comisión Nacional Bancaria y de Valores, the “CNBV”). It may also have either fixed or variable capital. It is a type of corporation originally created to promote and encourage investment by national and foreign investors, allowing some exceptions from the established general rules. Among these exceptions are the imposition of restrictions on the transfer of shares, causes for partners’ exclusion, the issuance of shares with limited corporate or economic rights, as well as the establishment of rights and obligations to grant options and preferential rights for the acquisition or sale of shares.

Insurance

Productions must obtain various types of insurance, including general liability, errors and omissions, workers’ compensation, and, if working with unions, additional coverage as required by CBAs.

Contracts and Agreements

• Use clear, written contracts for all cast, crew, vendors, and locations.
• Ensure a proper chain of title for IP (eg, option/purchase agreements, work-for-hire agreements).
• Address profit participation, credit, and dispute resolution in operating agreements and production contracts to ensure effective management.

Guilds and Unions

Many artists (as individuals) are part of the Mexican guilds, such as ANDA or ANDI; however, entertainment production companies are not generally part of these unions. Production companies may be members of these companies and assign the management of certain rights, but they may also exercise their rights individually or through contracts, and this is how they generally operate.

Free Ad-Supported Streaming Television (“FAST”) channels present distinct legal and business considerations compared to traditional AVOD and SVOD models in Mexico.

Business and Monetisation Model

FAST offers scheduled, linear programming (like traditional TV) for free, monetised entirely by ads. This is ideal for repurposing content libraries, unlike SVOD (subscription-based, premium content) or AVOD (on-demand, ad-supported).

Licensing & Rights

FAST requires specific “channelisation” rights for linear scheduling, and deals are typically non-exclusive. This contrasts with the often exclusive or time-limited rights sought for SVOD and many AVOD agreements. Clear delineation of windows and geographic scope is crucial.

Advertising & Revenue Share

Ad sales on FAST mimic broadcast, often programmatic and at lower CPMs. Revenue splits must reflect different ad loads, viewer behaviour, and lower direct engagement. Contracts require clarity on inventory control, brand safety, and metric transparency.

Data Privacy

While AVOD/SVOD collect detailed user data, FAST’s linear nature can limit granular individual tracking, impacting personalisation and data monetisation. Compliance with Mexico’s LFPDPPP remains essential.

Market Opportunity

Particularly in Mexico, FAST’s free model offers a significant growth channel for existing IP, appealing to cost-conscious audiences and expanding viewership.

Netflix and other studios are leading the way in modernising talent compensation for interactive entertainment. They’re moving towards predictable, upfront payments (fixed fees or buyouts), which offer creators immediate financial security.

This approach simplifies traditional, complex accounting, allowing studios to focus on producing innovative content. New performance-based incentives are also key, tying bonuses to clear metrics like viewer engagement, completion rates, and critical acclaim. This provides transparent goals for talent, aligning their success directly with audience interaction.

The main goal is to meticulously define the scope of work, which may be translated into developing multiple versions of the same work (alternative scenes and dialogues for script writers, performing scenes with emotional variants for actors, multiple versions and transitions for editors, sound designers and CFX artists). Additionally, clearly defining IP rights over the interactive elements, either by licensing the contribution or assigning it via a buyout. This should include derivatives, which include footage, audio, or narrative elements from the interactive project in future, non-interactive derivative works (eg, a linear “best path” cut, marketing materials).

Since traditional “residuals” based on reruns or sales are less applicable to subscription streaming, and traditional “profit participation” is being phased out, performance-based bonuses become crucial. Engagement metrics (eg, user completion rates, interaction rates, user time spent, re-engagement), critical acclaim and awards, and evergreen (longevity) content are now more important elements for compensation. This would change from role to role.

However, these pose the challenge of having clear and practical clauses, even considering future technology uses, and clarifying whether there is a guarantee of release or use. The core of these compensation models lies in providing predictable, upfront financial security.

Ultimately, these streamlined models give studios the flexibility to maximise content reach and value globally, efficiently delivering groundbreaking entertainment without cumbersome, project-specific negotiations. This clarity benefits both the studio and the talent by setting clear expectations from the outset.