By Helen Popper
BUENOS AIRES (Reuters) - Argentina's biggest media group is resisting pressure from President Cristina Fernandez to dismantle its broadcasting empire to comply with an anti-monopoly law that critics call an assault on free speech.
Three years since the combative leader hailed the reform law as the start of a new era of media diversity, she has given Grupo Clarin until December 7 to start selling off dozens of operating licenses or have them auctioned by the state instead.
"We're going to have to brace ourselves for some pretty wacky stuff ... (the) lies, libel and nonstop slander are related to this: December 7," the left-leaning president said in a speech last month.
"Other companies and media groups, which also filed for court injunctions, have withdrawn them all and they're now accepting the (regulator's) authority," said Fernandez, who gives few interviews or news conferences and often lambastes opposition news outlets such as Clarin's top-selling daily newspaper and cable news channel TN.
Fernandez used to have harmonious ties with Grupo Clarin and its chief executive, Hector Magnetto. All that changed in 2008 when Clarin's news outlets turned against her government over its handling of tax protests by farmers.
Since then, Magnetto has become one of Fernandez's favorite punching bags. Military police raided the offices of Clarin's Cablevision cable TV company late last year and "Clarin Lies" has become a slogan among her supporters.
The dispute has battered Clarin shares, which are down more than 40 percent in the last year, and rattled investors critical of Fernandez's increasingly heavy-handed policies in Latin America's third-largest economy.
Last month, the government aired a four-minute television spot warning Clarin that state auctions would be held to sell its "excess" licenses if the company failed to fall into line.
The media group responded with a rival spot saying "nothing will happen" but Clarin spokesman Martin Etchevers described the government's spot as "a clear threat."
"The political objective is to silence every last independent media outlet and ... probably to benefit some of the friendly companies that have absorbed a big chunk of the media in Argentina in the last few years," he told Reuters Television.
Clarin has challenged the law's most controversial clause, Article 161, on the grounds that it violates the constitution by forcing companies to sell off previously acquired radio, television or cable TV operating licenses.
The courts have yet to rule in the case, but the government says a Supreme Court decision in May means a temporary court injunction shielding Clarin from complying with the reform law will expire for good on December 7.
Clarin disputes that interpretation, however.
"If by that date, the underlying case hasn't been resolved, the injunction can be extended," Etchevers said, adding that the media law gives companies a year to divest of excess licenses that breach the limits imposed by the media reform.
Fernandez this week appointed a political ally, congressman Martin Sabbatella, to head the AFSCA watchdog in charge of enforcing the legislation and her supporters say Clarin must follow other media groups and present a divestment plan.
"For years, Clarin functioned in Argentina's nascent democracy like a kind of super-power," said Fernandez ally Agustin Rossi, head of the ruling Peronist party bloc in the lower house of Congress. "They used to say that if you didn't have a deal with Clarin, you couldn't be president."
"In a certain way, that illegitimate power is prolonged by the fact that they're the ones who aren't obeying the law. The law was approved three years ago. It's not like they found out yesterday," he added.
The overhaul of Argentina's broadcasting regulations, which dated from the last dictatorship, was welcomed by many leftist groups and academics.
As well as limiting the number of licenses any one company can hold, it allocates airspace for non-government groups such as churches and community associations and seeks to promote Argentine-made films and television series.
But opponents say the AFSCA has made scant progress on applying less controversial elements, confirming their fears that the shake-up was a thinly veiled attempt to punish Clarin and other powerful opposition voices.
"The worst thing about the law is that it's divided society in the name of democratic debate," said Sen. Norma Morandini, a long-time journalist and member of a leftist opposition party. "This is the most dangerous thing because rival camps don't exist in democracy, they exist in war."
(Additional reporting by Claudia Gaillard; Editing by Kieran Murray and Doina Chiacu)