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Globosat in the black

Local feevee content keys comeback

RIO DE JANEIRO — Leading Brazilian pay TV programmer GloboSat passed a crucial landmark last year: it was cash-flow positive for the first time. General director Alberto Pecegueiro attributed that development to increased ad revenue and pay-per-view sales in Brazil and expansion to Portugal.

After three years of virtual stagnation, Brazil pay TV was revived in 2000, Pecegueiro says.

“The growth helped us to increase our total revenue to 500,000 reais ($250 million) in 2000 from 370 million reais ($185 million) in 1999.”

A subsid of media giant Organizacoes Globo, GloboSat programs channels for Brazil and Portugal, and produces PPV programming.

Since local rival TVA closed its programming division, GloboSat became the only significant producer of local pay TV content in Brazil. Its main competitors are HBO Brasil, Discovery and Turner, which produce very little locally.

However, GloboSat can only sell its channels to MSOs controlled or affiliated with Globo. Those systems, including Sky Brazil, have 2.32 million subs. Other systems, including TVA and satcaster DirecTV (which is battling Globo for access to Globo’s free-to-air channel, TV Globo), represent an additional 1 million subs.

“This exclusive policy is harmful for them, for the subscribers and for the market in general,” says Leila Loria, general director for TVA.

Rival execs estimate that GloboSat has racked up about $600 million in accumulated losses over the past 10 years, most of it due to infrastructure expenses and the purchase of pricey soccer rights.

Globo execs would not confirm that figure, but did allow that the substantial investments in GloboSat have been a burden. Even so, they maintain that the programmer plays a key role in strengthening other pay TV subsids such as cabler Globo Cabo and satcaster NetSat, which operates Sky Brazil.

Last year, GloboSat expanded its sports franchise by purchasing a 25% stake in ESPN Brasil, and inked another deal for a new sports feevee, ESPN Fox Sports, which will bow in June or July.

GloboSat already has its own sports channel, Sportv, which carries the matches of Brazil’s top soccer leagues. ESPN Brasil will likely air the lesser matches for which Sportv does not have the room.

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