Banks Bound Into Brazilian Pay TV

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Brazil's largest private bank, Bradesco, is one of
several large financial institutions that are wading heavily into Brazil's pay TV and
communications businesses.

In December, Bradesco paid nearly $200 million for
one-third of the voting shares in Multicanal, one of Brazil's largest cable MSOs,
with 640,000 subscribers. Following a flurry of share transactions leading up to the deal,
Bradesco bought the equity stake from Globopar, holding company for MSO Globocabo, which
now owns the remaining two-thirds of Multicanal's voting shares.

The Bradesco investment is part of the growing trend of
Brazilian banks entering the pay TV arena, said Walter Longo, president of pay TV trade
body Abraforte and of Unimark/Longo, a marketing and distribution company. In addition to
the Bradesco deal, he also mentioned a string of banks interested in the country's
ongoing pay TV franchise auction.

'Grupo Safra is bidding, and Bank of America is
creating a consortium,' he said.

There's also interest from the Bozzano Simonsen bank,
he said. Some 1,500 licenses in hardwire and wireless cable are expected to be awarded
over the next few years.

The ability of cable networks to provide data-transmission
services has lured interest from the banking sector, Longo said.

'Banks want to be in the superhighway business. They
want to be involved in cable, telephony and the Internet, and they want to be leaders in
the new wave of home banking services,' he said

Bradesco's investment in Multicanal was motivated by
its desire to become a 'data-transmissions provider,' he added.

Industry analyst Douglas Oaten, however, viewed
Bradesco's motivation as purely financial.

'It's a company interested in good business, and
this business [pay TV] is a good business,' he said.

Bradesco has a track record of investing in companies,
building them up and fattening their share-price, with a view toward selling, Oaten said.
Globocabo's decision to increase its stake in Multicanal came as little surprise, he
added.

'It likes to take control of major operations,'
he said.

Bradesco and Globopar, which together own 100 percent of
Multicanal's voting shares, have also been strategic partners in several other
ventures. These include Vicunha Comunicaçóes, a consortium that won the B-band
cellular-telephony licenses in Bahia and Sergipe; and TT2, a consortium that plans to bid
for a B-band cellular license in Rio de Janeiro.

José Eduardo Mendonça contributed to this article.

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