Parting Ways in Argentina

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Buenos Aires, Argentina -- Two of Latin America's
best-performing pay TV channels were expected to be dropped from one of the region's
biggest MSOs on Jan. 1.

HBO Olé and Cinemax would no longer be part of the lineup
on CableVisión/TCI2, the Argentine operator said in late December.

"HBO Latin America has decided to remove the signals
HBO Olé and Cinemax from the basic programming [tier] as of January 1999 despite repeated
negotiations and efforts made to keep them on our programming lineup,'' CableVisión said
in a press release. The statement did not specify why HBO had decided to pull out.

HBO Latin America couldn't be reached for comment.

The expected loss of HBO and Cinemax would be the latest
chapter in a tense relationship between premium programmers and Argentine MSOs, which have
yet to introduce wide-scale tiering, due mainly to the cost of rolling out addressable
set-top boxes and fear of alienating subscribers.

CableVisión's announcement follows weeks of
behind-the-scenes negotiations between it and HBO Latin America, reportedly to agree on
new carriage fees. Grupo Clarin's Multicanal, Argentina's other major MSO, was reportedly
involved in similar talks with HBO Latin America. Multicanal had not made an official
announcement regarding the situation of the two channels on its lineup, and its officials
couldn't be reached for comment.

One panregional programming source, meanwhile, said
CableVisión had a corporate mandate to reduce programming costs to a total of 22 percent
of its overall operating costs, from a current 28 percent. The MSO is owned by
Tele-Communications International Inc. (TINTA), now part of TCI Ventures Group; Spain's
Telefónica Internacional de España S.A.; and Argentina's CEI CitiCorp Holdings S.A.

Prior to last month's announcement, Greg Armstrong, TINTA's
managing director for Latin America, said, "CableVisión is looking for ways to
reduce programming costs.'' He did not elaborate and couldn't be reached for follow-up
comment.

Big acquisitions over the last few years by CableVisión
and Multicanal to acquire new media properties in Argentina are seen by market followers
as a reason behind the need to cut programming costs.

What's more, the recent consolidation of operators into two
main camps -- CableVisión and Multicanal, which account for about half of the country's
subscribers -- has given the MSOs greater bargaining power. Programmers need to get on
either of the major MSOs to secure a reasonable distribution in Argentina.

Armstrong, also before the announcement, said that
CableVisión received a letter from HBO saying that it would remove HBO Olé and Cinemax
on Jan. 1 if it did not reach a favorable agreement with the cable operator. He said
similar letters were sent to other MSOs in Argentina. Armstrong added that the ultimatum
was tied to carriage fees and migrating the channels to premium from basic.

Despite the failed negotiations, CableVisión recently said
it was interested in launching premium-priced movie channels in Buenos Aires and the
surrounding metropolitan area during the first six months of this year. For now,
CableVisión will offer Latin American Pay Television Group's premium movie channels,
Movie City and Cinecanal 2, free to subscribers with addressable set-tops during January
and February.

CableVisión on Jan. 1 will add movie channel Hallmark
Entertainment Network, documentary channel Mundo Olé and music channel The Box as of Jan.
1, the statement added.

However, "Hallmark is not replacing HBO. HBO has left
and CableVisión has decided to restructure its programming lineup,'' CableVisión
spokeswoman Silvia Eurnekian said.

Jo Dallas contributed to this article.

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