Program-Consolidation Process May Escalate

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Buenos Aires, Argentina -- As Argentina's programming
universe gets bigger, it's also getting smaller, with the Cisneros Group of Cos.
expected to extend its investments in the country's pay TV sector.

CGC's Ibero-American Media Partners LP is in talks to
buy 15 percent of the Argentine media assets held by the triple alliance of CEI Citicorp
Holdings S.A., Telefónica Internacional de España S.A. (TISA) and Tele-Communications
International Inc. (TINTA), according to local industry sources.

The $500 million Ibero-American also includes Dallas-based
investment firm Hicks, Muse, Tate & Furst, and it aims to invest in an array of media
properties in Latin America and the Iberian peninsula.

Neither CEI nor CGC representatives in Argentina could be
reached for comment. But various industry sources familiar with the situation said they
expected the two companies to reach an agreement.

News of the talks came after a flurry of consolidation on
the programming side. Most recently, Torneos y Competencias, a sports programmer owned by
CEI and TINTA, said it would buy Pramer S.R.L., which produces a whopping 16 pay TV
channels.

In addition to CGC's media holdings throughout Latin
America, its Cisneros Television Group owns a 90 percent stake in Buenos Aires-based
Imagen Satelital, which produces six pay TV channels.

People who follow the industry said an agreement with CEI,
TISA and TINTA is important for CTG. The MSO holdings of the three include about 1.4
million subscribers, or around one-quarter of the country's subscriber base, and they
would guarantee distribution for CTG's Imagen Satelital channels.

"Cisneros has been looking to invest more in Argentine
media because it wants to be a leader in Latin America, but it has not found enough local
partners to further its aim," said an independent industry source.

CGC is also focusing on Argentina because of its stake in
Galaxy Latin America, the direct-to-home satellite service that it is waiting to launch
here in partnership with local media powerhouse Grupo Clarín.

Still, industry observers speculated that CEI's offer
to sell will not include all of its programming investments. "They will probably try
to limit the partnership to the MSOs before conceding TyC and Pramer, which already has
too many partners," said a source at Clarín.

Interest from CEI, TISA and TINTA in a CGC partnership is
thought to be purely financial. "They do not have enough money to create the No. 1
multimedia group that they want, and Cisneros has showed that it is willing to pay
generous sums," according to another source. CGC paid more than $100 million for
Imagen Satelital, the value of which was estimated by some cable-industry sources at as
low as $60 million.

The CEI group is still negotiating to buy Editorial
Atlántida, as its important magazine and television assets, including broadcast network
Telefé, would contribute to the group's stated aim of expanding into the print-media
and broadcast-TV businesses.

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