Brazils TV Cidade Eyes Possible Allies


Rio De Janeiro, Brazil -- TV Cidade, probably the most
powerful newcomer to the Brazilian cable-systems business, will decide next month whether
to ally itself on the programming front with one of the dominant players in the market --
Globocabo or TVA -- or to go independent.

It will be an important decision because TV Cidade's
thinking could do much to sway the allegiance of other newcomers to the market. These
newcomers -- which have won new licenses in Brazil's largest pay TV licensing process
-- include SMC/Adelphia, Horizon Cable, Brazil Telecom and Powerlice.

"We have three options: go independent, make a deal
with Globocabo or get together with TVA. We still do not know what we will be doing,"
said Silvia Jafet, TV Cidade's programming director.

Traditionally, program buying in Brazil has been divided
along sectarian lines. Cable operators in many cases either bought programming from TVA or

But this way of doing business has been eroded in recent
years, with the development of a more free-market, nonexclusive approach to program

If TV Cidade decides to go independent, it may create a
consortium with other new players in the market. Under this scenario, the idea would be to
buy programming directly from local and foreign programmers. Jafet said TV Cidade's
deadline for a decision is late April.

TV Cidade has emerged as one of the most ambitious new
license holders in Brazilian pay TV, having won 12 new licenses in the first round of
concession awards. Company executives made no bones about its ambition to become the
second-largest MSO in Brazil -- behind Globocabo, but ahead of TVA.

Globocabo controls 65 percent of Brazil's 2.6 million
pay TV subscribers, while TVA and others have 29 percent, according to September 1998 data
from Brazilian independent media-research company Pay TV Survey.

TV Cidade has opened a temporary office in Salvador, where
its employees have started calculating the number of homes that they want to pass. It will
also open an office shortly in Niterói. Construction in both areas is due to begin in
April, and sales are scheduled to start in June or July. The company plans to invest $250
million in its 12 new operations.