News

Brazils Neo TV Seeks Negotiating Clout

6/20/1999 8:00 PM Eastern

Rio De Janeiro, Brazil -- A new cooperative buying group in
Brazil is looking to increase its negotiating clout with programmers in the country,
aiming to go after the huge "C" class of consumers with more affordable offers.

The group, known as Neo TV, aims to negotiate more
favorable network-licensing fees and to break the practice among larger programmers of
selling networks as bundled packages, rather than individually.

Cristina Mizumoto, commercial director of TV Alphaville, a
small operator near the city of Sao Paulo, noted that when smaller operators negotiate
affiliate agreements for one individual network from large programming groups, they are
usually forced to buy two or three other networks, as well, pushing up expenses.

And those expenses are tremendous: Some cable operators
spend up to 50 percent of their total budgets on programming -- a figure that needs to be
reduced to 28 percent to 30 percent, said Adriano Barbosa, programming and marketing
director of TV Filme Inc., a midsized wireless cable operator.

Today's high programming costs in Brazil are due in no
small part to January's devaluation of the local currency, the real. The real's
tumble caused programming costs to increase up to 30 percent in some cases.

If they are able to negotiate more favorable terms, Neo TV
members said they'll create cheaper programming packages targeting Brazil's
underdeveloped C-class subscriber base.

Pay TV programming packages in Brazil can cost up to $50
per month. Neo TV members are seeking to create packages costing roughly between $20 and
$30.

Neo TV launched in May, and it bands together many of the
country's independent cable operators that have recently become cable-concession
holders through Brazil's pay TV-licensing process.

It also includes Brazil's No. 2 cable company, TVA,
which is owned by Brazilian publishing giant Grupo Abril.

But even TVA pales against the power of the largest pay TV
player in the market, Globocabo. That company is owned by Brazilian media conglomerate
Organizaçoes Globo.

Directly or through affiliates, Globocabo controls about
two-thirds of all pay TV subscribers in Brazil, and it is the medium's largest
producer of programming.

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