Brazils TVA Exits Programming Business

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Rio De Janeiro, Brazil -- TVA, Brazil's second-largest
cable company, said it will withdraw from the programming side of the pay TV business and
has sold or intends to sell equity stakes in all of its networks.

Two weeks ago, the company announced that it sold its 50
percent stake in sports channel ESPN Brasil to partner ESPN International, which now owns
100 percent of the network.

The company is also looking for buyers for its only wholly
owned network, Eurochannel, as well as its 25 percent stake in movie channel HBO Brasil.

TVA currently has 350,000 of Brazil's 1.8 million cable
subscribers. The company is controlled by local publishing giant Grupo Abril, which owns
more than one-half of the company. Falcon International Communications, Hearst Corp. Walt
Disney Co.'s ABC and Chase Manhattan International Finance Ltd. are TVA minority
investors.

The company is under economic pressure and has made no
bones about its inability to invest in programming. TVA has opted to focus on
distribution, touting itself as a carrier of video, voice and data services, rather than a
creator of content.

"The main focus of our investments now is the '@@jato'
service, which is in operation in Sao Paulo and will be launched in Rio in January,"
TVA spokesman Marco Dabus said. @@jato is TVA's recently launched broadband
Internet-access service.

The company this year dropped production agreements it had
with two international programmers, Bravo Networks and Gaylord Entertainment Co. TVA
parent Grupo Abril directly owns a 50 percent stake in MTV Brasil with MTV Networks Inc.
There has been no indication that the MTV partnership will be affected.

Under the now-defunct agreements, TVA produced a portion of
the channels' content in exchange for exclusive distribution rights in Brazil.

According to some industry sources, the Civita family,
which owns Abril, is disappointed with the pay TV sector as a whole and willing to shift
its investments back to the print media. Abril, Brazil's largest publishing group, has
recently bought two local publishing companies and is currently negotiating to buy part of
a third.

It's unclear whether the Civita family wants to sell
Abril's entire stake in TVA. However, the company has stated that it is searching for new
investment partners – specifically telecommunications companies -- to manage the
business. They would replace TVA's current U.S. partners, which have expressed a desire to
sell out.

Meanwhile, the sale of Eurochannel and the stake in HBO
Brasil are seen as the next stages of TVA's exit from programming. Eurochannel features
European films and documentaries, which are edited by TVA to suit the taste of Brazilian
audiences. HBO Brasil is a partnership between TVA, Sony Entertainment Television, Time
Warner Inc., Buena Vista International Television, and Venezuela's Ole Communications.

TVA and ESPN declined to comment on the value of their
transaction.

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