The last of the major Latin American nations to discover pay TV, Brazil is now witnessing a multichannel boom, driven by sturdy economic growth and renewed consumer confidence.
Cable and other wireless pay TV systems are chalking up around 40,000 new subscribers a month – impressive for a country whose total subscribers barely approach half a million, despite TV homes numbering 32 million.
The subscriber count is expected to reach 5 million to 6 million by the year 2000, with subscribers split three ways between cable, MMDS (“wireless cable”) and just-introduced DTH (direct-TV). Brazil recorded GDP growth of 4.9% in 1994 and is expected to do at least as well this year.
Pay TV growth should soon gain a further boost as the communications ministry – under newly elected president Fernando Henrique Cardoso – gears up to award another 100 MMDS concessions.
In previous years, when such concessions were typically parceled out to members and friends of the congress, many such franchises lay idle. Now concessioning will be grounded in merit and probably based on auctions, communications minister Sergio Motta declared last month.
Motta caused more of a stir by suspending the processing of 153 radio and TV concessions. Now he is drafting regulations to a new cable TV law, which will allow foreign investors to own up to 49% of any system, and he is expected to begin awarding the new licenses in the summer.
New technologies will also stimulate growth. TVA, owned by publishing giant Grupo Abril, is set to launch a DTH service (using high-powered Ku-band satellite transponders) that requires consumers only to have a small receiver dish.
TVA will extend this service in partnership with Hughes Communications, says CEO Walter Longo. Hughes is expected to launch a pan-Latin American DTH service called Galaxy late in the year, with Venezuelan net Venevision and Mexican paybox Multivision as other likely partners.
Close rival NET Brasil, a majority-owned division of media powerhouse Globo, had planned to offer Ku-band DTH via PanAmSat’s Pas-3 bird, which plunged into the Atlantic in December.
NET Brasil is still in talks with PanAmSat. Meanwhile the company is setting a world record for laying cable, claims Alberto Pecegueiro, former director of NET Brasil and now CEO of Globosat, a programmer that supplies NET Brasil with four homegrown channels.
“We’ve laid over 3,000 miles of cable in 1 1/2 years,” says Pecegueiro.
Though both companies question the validity of each other’s counting methods, TVA and NET Brasil appear to have at least 200,000 subscribers each, with few Brazilian systems unaffiliated to one or the other.
The dominance of TVA and NET owes partly to the deep pockets of their backers. (Sources say Globo lost at least $60 million and TVA perhaps twice that, following ill-conceived start-up projects).
Now TVA is partnered with Chase Manhattan and a Canadian investor group and Globo recently obtained a two-year $125 million loan from the World Bank’s Intl. Finance Corp. The high cost of credit in Brazil, with two terms up to 40%, necessitated these moves.