News

GLA Specifies Partnership Plans

11/08/1998 7:00 PM Eastern

Details emerged last week about the partnership reshuffle
within Galaxy Latin America, the company that markets DirecTv's direct-to-home service in
Latin America.

Hughes Electronics Corp., GLA's majority shareholder,
strengthened its position in the platform as two local partners restructured their equity
involvement, largely due to financial pressures.

Mexico's MVS Multivision and Brazil's TVA are reducing
their stakes at the local and panregional levels, leaving Hughes and Venezuela's Cisneros
Group of Cos., another GLA investor, to take up the slack.

Pending final agreements, Hughes will take a 12.5 percent
stake in the local Brazilian operation, Galaxy Brasil. CGC will take another 12.5 percent
stake, leaving TVA with 75 percent of the company, which it previously fully owned, said
GLA chairman Kevin McGrath.

Internal restructuring at TVA, majority owned by publisher
Grupo Abril, will also impact the DTH side of its business. TVA's four foreign investors
-- The Walt Disney Co.'s ABC Inc., Falcon International Communications, Hearst Corp. and
Chase Manhattan International Finance Ltd. -- are set to exit the company. Given that
scenario, the 10 percent stake that TVA has in the regional GLA platform will pass to
parent Abril, which is considering reducing that stake, a GLA source said.

Hughes also aims to increase its equity stake in the
Mexican unit, Grupo Galaxy Mexicana, to 49 percent from 15 percent, reducing Multivision's
stake in that entity to 51 percent from 85 percent. GLA has also said it will buy out
Multivision's 10 percent stake in the panregional platform for an undisclosed amount.

News of the GLA realignment was well received by industry
observers.

"It shows Hughes' commitment to its DTH business
around the world. One of the crucial requirements of success for any DBS [direct-broadcast
satellite] business is financial strength," said Mickey Alpert, president of the
communications consultant Alpert & Assoc. "[Hughes'] local partners [in Mexico
and Brazil] still maintain a majority share and will have control in those countries, and
that's important," he added.

The decision by TVA and Multivision to scale back their
investments appears motivated by financial constraints. With economic gloom sweeping Latin
America, both companies have been struggling with the cable side of their media
businesses. Multivision has seen little growth in its wireless cable systems; TVA --
currently searching for new investors -- has lost market share in Brazilian cable in
recent years. Neither company could be reached for comment. McGrath said both trimmed
their stakes due to "financial pressures."

On the DTH front, DirecTv has faced tough competition in
Mexico and Brazil from the panregional News Corp.-backed Sky Latin America platform. Sky
partners the dominant broadcasters in those territories: Grupo Televisa S.A. in Mexico and
Organizaçoes Globo in Brazil. Sky has about 200,000 Mexican subscribers, double the
number that DirecTv has in that market. With a similar number of subscribers in Brazil,
Sky is slightly ahead of DirecTv in that territory.

On a panregional level, the two services are neck and neck,
with roughly half a million subscribers each.

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