Argentina Media Ends Year on Busy Note

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Buenos Aires, Argentina -- The reshuffling in this
country's media sector continued in recent weeks, with one major investor upping its
stakes and another possibly entering the market.

Spain's Telefónica Media, the international media unit of
the Spanish telco Telefónica S.A., and Dallas-based investment fund Hicks, Muse, Tate
& Furst Inc. said two weeks ago that they have reached the first in a series of
agreements that would create a major shake-up among their jointly held media assets.

Separately, Goldman Sachs & Co. said it is negotiating
to buy 18 percent of Argentine media conglomerate Grupo Clarín.

Meanwhile, market players are watching the division of
assets held by Telefónica and CEI Citicorp Holdings S.A., which is controlled by Hicks,
Muse.

Two weeks ago, CEI said it reached a preliminary deal to
sell its stakes in Atco and AC Inversora to Telefónica for $240 million. That would give
Telefónica effective control of the companies, which control leading broadcast-TV and
radio stations.

For its part, Telefónica confirmed its purchase of 100
percent of Atco-owned broadcast station Telefe, as well as a string of provincial TV
stations and radio assets. To do so, it needed to acquire an additional stake held by
private local investor Grupo Vigil.

Torneos y Competencias S.A., a sports-oriented media
company, also confirmed that Telefónica would purchase its stakes in Atco and AC
Inversora. Both Telefónica and CEI both own stakes in Torneos y Competencias.

Hicks, Muse hopes to make CEI an efficient vehicle to
develop a regional broadband cable network -- backed by panregional programming --
by trimming its heavy deal burden.

"We expect our core cable business to grow even more
attractive in the next three to five years," explained, Paul Savoldelli, Hicks,
Muse's managing director for Latin America. He declined to comment on the specifics of
current CEI-Telefónica negotiations.

According to sources close to those talks, this deal is
only the first of several that should conclude before year-end.

Though both sides have yet to agree to a final price and
structure, it is clear CEI intends to gain control of leading Argentine cable operator
CableVisión, in which it and Telefónica each own 36 percent. The other investor is
Liberty Media International Inc.

One possible scenarios would have Telefónica trade its
stake in Cablevisión for CEI's 26 percent indirect stake in Telefónica Argentina S.A., a
leading telco.

Despite Telefónica's expected departure from CableVisión,
few expect the company to remain on the sidelines of Latin America's most developed pay-TV
market for long. In fact, there is speculation that Telefónica is the shadow investor
behind Goldman Sachs' possible stake in Clarín.

Goldman and Clarín declined to comment on the talks, other
than confirming that they have taken place. But Argentine newspapers report Goldman Sachs
will pay some $500 million for the 18 percent stake. Analysts estimate Grupo Clarín's
worth at $2.8 billion, a figure based on the $500 million stake considered by Goldman and
its reported annual revenue of $2.2 billion.

If the deal pans out, Goldman Sachs would gain a stake in
some of Argentina's most valuable media assets, including 1.8 million-subscriber MSO
Muticanal. In addition, Clarín owns leading broadcast-TV and radio properties, as well as
the country's No. 3 Internet-service provider. Clarín, its flagship newspaper, is
the world's largest Spanish-language daily.

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