Brazils DTH Base Grows As Cable Homes Decline

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Rio De Janeiro, Brazil -- Brazil's direct-to-home
subscriber base rose in the second quarter of the year, while the number of cable homes
declined, continuing a trend that has seen net growth in the country's pay TV
industry, according to independent researcher Pay TV Survey.

The number of pay TV subscribers in Brazil totaled 2.8
million at the end of June, up 1.2 percent from March, according to PTS. Despite the
modest growth, industry executives and analysts were optimistic, forecasting a significant
rise in the country's pay TV subscriber base next year.

"In 2000, we foresee an even more significant
expansion of the pay TV sector, as a number of new cable and [wireless] operators will
enter the market," PTS analyst Otavio Jordanovsky said.

PTS figures revealed that the number of cable subscribers
in Brazil slipped 0.4 percent from March to June, to 1.8 million. The wireless
cable-subscriber base fell 2.4 percent to 297,028, while the number of C-band satellite
subscribers declined 0.4 percent to 69,000.

Analysts attributed the weak performance of these sectors
to Brazil's economic slowdown and the devaluation of the country's currency this
past January.

Despite the troubles, Ku-band satellite operators performed
well in the second quarter of the year. The combined subscriber base of NetSat's Sky
Brasil, Galaxy Brasil's DirecTV and Tecsat totaled 634,560 in June, up 8.1 percent
from March.

Brazil's DTH expansion is attributed to the
service's nationwide availability. Cable and wireless operators are limited to towns
where they hold government licenses, which the National Telecommunications Agency (Anatel)
has been notoriously slow in issuing.

Units of Brazilian media conglomerate Organizaçoes
Globo's Net Brasil unit accounted for 60 percent of Brazil's pay TV base. Those
units include MSO Globo Cabo S.A. and the NetSat DTH platform.

Abril Group's TVA and its affiliates -- TVA Sul, TV
Filme Inc. and Canbrás Communications Corp. -- held 17 percent of the country's
subscribers in the same period. This past May, TVA sold its stake in Galaxy Brasil to
partners Hughes Electronics Corp. and Venezuela's Cisneros Group of Cos.

Galaxy Brasil -- which controls the Ku-band DirecTV and
C-band Digisat services -- accounted for 12 percent of the country's pay TV
subscribers, while independents had an 11 percent share of the subscriber base.

The number of cable and MMDS licenses in Brazil rose to 220
from just 99 in 1998. Next year, analysts expect operators to hold more than 500 licenses
if the auctioning process stays on track.

Among the new cable players is TV Cidade, which plans to
have about 400,000 subscribers by 2004. Existing MSOs are also expected to contribute to
the rise in the total number of Brazilian subscribers over the coming year.

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