DirecTV Brasil Loses Carriage Battle

1/30/2000 7:00 PM Eastern

Rio de Janeiro, Brazil -- Direct-to-home platform DirecTV
Brasil appears to have lost a legal battle to carry the country's top-rated broadcast

Brazil's telecommunications regulator, Anatel, has ruled
that broadcaster TV Globo does not have to provide its signals to DirecTV Brasil, the
local arm of panregional DTH platform Galaxy Latin America. TV Globo parent Organizaçoes
Globo is a major shareholder in rival DTH service Sky Brasil.

DirecTV Brasil's claim has been referred to the
government's antitrust agency, Cade, which will likely confirm the Anatel ruling, an
Anatel spokesman said.

Both DirecTV and Sky declined comment.

The decision represents a blow to GLA and a victory for
Sky. TV Globo commands about one-half of broadcast-TV viewing, thanks largely to its
successful telenovelas, or soap operas. Sky transmits TV Globo in the country's
three largest markets: Sao Paulo, Rio de Janeiro and Belo Horizonte.

GLA accused Organizaçoes Globo of unfair competition for
not providing it with TV Globo's signal, claiming that Sky's subscriber base is growing
rapidly because it includes the broadcast network in its basic-programming package.

Anatel officials rejected GLA's arguments, saying that
there is no proof that Sky's carriage of TV Globo has given it a leg up. The officials
said Sky is growing just as quickly in markets where it does not transmit TV Globo.

"We concluded that the growth of Sky is due to its
aggressive price policy. Anatel understands that TV Globo's position has not impacted the
sector," the Anatel spokesman said.

In September -- the most recent date for which figures were
available -- Sky had 408,000 subscribers (including those temporarily disconnected), while
DirecTV had 265,000 subscribers and a further 70,000 when C-band customers were added,
according to independent media-research firm Pay TV Survey.

Despite the country's economic slowdown over the past two
years, both satellite services have grown at impressive rates thanks to their nationwide
coverage. Sky, however, is growing at a faster pace, and it seized the DTH market lead in

Industry executives said they believe Anatel ruled against
GLA for several reasons, noting that as Brazil's largest media company, Organizaçoes
Globo itself is a political force to be reckoned with.

At the same time, some noted that because GLA has an
exclusive premium-channel agreement with Home Box Office's HBO Latin America Media
Services Inc., it probably wasn't likely to win much sympathy from regulators.

"DirecTV based its claim on the fact that Sky has the
exclusivity of TV Globo's signal. Then, they signed an exclusive-rights deal with
HBO," one industry source said. By signing the deal with HBO in September, GLA
effectively "threw [its] case down the drain."

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