Globo Cabo getting $650 mil bailout

Solons fear coin may buy company's political support

RIO DE JANEIRO — Investors are forking over 1 billion reais ($430 million) to help Latin America’s only publicly traded cable operator, Globo Cabo, cut debts of $650 million.

Media conglom and controlling shareholder Globo, private bank Bradesco, media group RBS and government bank BNDES, which hold stakes in Globo Cabo via subsidiaries, will help raise the capital.

Microsoft, another leading shareholder with a minority stake, has not yet confirmed its participation.

Analysts welcomed the news Thursday and said it will allow Globo Cabo to survive the crisis in the pay TV sector. All Brazilian feevee systems suffered from last year’s economic slowdown and local currency depreciation.

“The operation will give Globo Cabo the muscle to keep going and create a condition in which they can eventually grow,” said Petronio Cancado, market analyst with Unibanco.

Announcement generated some controversy, however.

Leaders of left-leaning opposition parties criticized the move by BNDES to invest $122 million in Globo Cabo.

Politicos fear Globo, which owns Brazil’s leading TV broadcaster as well as large newspaper and radio chains, will support the government’s candidate in October’s presidential election.

Globo has a tradition of supporting government candidates.

A Globo Cabo source denied that BNDES involvement was politically motivated.

“The bank moved to protect its interest in Globo Cabo. As a shareholder, BNDES wants to see Globo Cabo grow,” said the source, noting BNDES has investments in other MSOs, such as TV Cidade and Horizon.

Globo Cabo also announced its fourth-quarter and year-end results, which showed that the company’s subscriber base fell by 2.8% last year to 1.4 million homes.

While it managed to increase net revenue by 9% to $494 million for the full year, company’s net loss ballooned by 61% to $302 million.

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