Brazil's Neo TV Makes Inroads Against Globo
BY MARCELO CAJUEIRO -- Multichannel News, 8/7/2000
Sao Paulo, Brazil-Though still very much a David-and-Goliath situation, Brazil's upstart cable-programming cooperative, Neo TV, has made inroads into a market dominated by MSO Globo Cabo S.A.
In its first year of operations, Neo TV has attracted 26 cable-operator members that serve roughly 660,000 subscribers, according to its general director, Boaventura Antonio.
"By negotiating collectively, we have been able to obtain substantially better prices," said Antonio. The cooperative has achieved a 26 percent reduction in the cost of a basic programming package for its members, he said.
Neo TV was created to negotiate volume discounts on programming for Brazil's smaller, independent cable operators, enabling them to bypass the dominance of Organizaçoes Globo, the country's media giant and Globo Cabo's largest shareholder.
Organizaçoes Globo-led pay TV operations, which also include the Sky Brazil direct-to-home platform and the "Net" group of owned-and-affiliated systems, account for some 61 percent of Brazil's 3 million pay TV subscribers, according to independent media-research company PTS.
By contrast, Neo TV's 26 members represent some 22 percent of the country's 1.8 million cable subscribers.
"Neo TV is the driving force against the concentration of the pay TV market in Brazil," said Leila Loria, director general of No. 2 MSO TVA, a founding member of Neo TV. The cooperative's next project is to negotiate volume discounts from cable-equipment suppliers.
Globo Cabo's market dominance and the slew of exclusive pay TV channels produced by its corporate sibling Globosat have given it the upper hand in dictating programming fees. Globo Cabo distributes packages of program networks to its own cable systems as well as to independently owned systems that use the Net brand name.
Unlike Globo Cabo's Net franchisees, Loria said, Neo TV allows its members to operate under their own brand names and select the channels they want to buy. All Net franchisees must use the "Net" name and offer one of the three available programming packages, she said.
Globo Cabo will not make programming deals with members of Neo TV, Loria added.
Despite Globo's stiffer rules, some of Brazil's leading independent cable operators have aligned themselves with the MSO. One example is upstart cabler TV Cidade, which decided to become a Globo franchisee after considering Neo TV membership.
