Direct-to-Home Grows in Brazil Despite Slow Pay TV Market

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Rio De Janeiro, Brazil -- Direct-to-home satellite has been
the only considerable growth sector in Brazilian pay TV, according to a recent report from
independent research firm Pay TV Survey focusing on the last quarter of 1998.

The number of pay TV subscribers in Brazil reached 2.69
million by December, compared with 2.58 million in September, PTS reported.

But this slight rise in total subscribers was due to the
performance of the country's Ku-band DTH sector, which is home to two fierce competitors:
NetSat's Sky Brasil, partially owned by media mammoth Organizaçoes Globo, and Galaxy
Latin America's DirecTV.

Brazilian publishing giant Grupo Abril last month agreed to
sell its stake in DirecTV's local and Latin American operations

Brazil's Ku-band subscriber base rose 13.32 percent between
September and December 1998, to 509,000 subscribers, or 19 percent of the country's pay TV
market.

Over the same period, the number of cable subscribers
increased by just 1.54 percent to 1.8 million homes. But cable still dominates Brazilian
pay TV with 67 percent of the market.

The country's wireless cable market fell 8.62 percent in
the last quarter of 1998, to 316,000 subscribers, or 12 percent of all pay TV subscribers.
The C-band satellite-subscriber base slid 2.98 percent over the period to 67,000
subscribers, or just 2 percent of the market.

"The survey shows that Brazil's pay TV market is
growing very slowly. The Ku-band sector is the only one expanding and, even so, at a
slower-than-expected pace," said Marcelo Assumpçao development manager of TVA
Network, a division of TVA, Abril's cable company.

The TPS report added that Globo's cable entity, known as
Net, and its affiliates account for 65 percent of pay TV subscribers. TVA and its
affiliates have a 28 percent stake of the total pie, and independent operators have a 7
percent share.

Ku-band DTH expansion has been aided by its ability to
operate in virtually all of Brazil, while cable and MMDS operations are limited to about
100 licensed towns. C-band subscribers are being encouraged to switch to Ku-band services.

Despite modest growth last year, the number of Brazilian
pay TV subscribers is expected to rise in 2000 thanks to the auction of new cable and MMDS
licenses.

Late last year, telecommunications regulator Anatel
auctioned off 93 cable and 35 MMDS licenses. The agency sold another 20 MMDS licenses in
April.

Among the new license holders, ESC90 -- a consortium
comprised of utility company Ecelsa and local entrepreneurs -- is the only one in
operation. The consortium has launched cable services in Vitória, capital of Espíritu
Santo state, and it is using Net's brand name and programming.

Two cable companies -- TV Cidade S.A. and Canbrás
Communications Corp.-- and MMDS operator TV Filme Inc. received new licenses, and they are
expected to launch new pay TV operations this year.

The bulk of the new license holders, however, plan to be up
and running next year.

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