Brazilian trio launch cable channels
Companies try to adapt to local interests
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Spanish firm Telefonica bowed its service here two years ago. But the other two are playing a mean game of catch-up.
Mexican giant Telmex bowed its Embratel satellite platform on Dec. 15 and local telco Oi expects to preem a satellite service next year.
There are also rumors that Oi is negotiating to buy Liberty-controlled satcaster Sky Brasil, the market leader here with about 1.7 million subscribers. But talks are apparently on hold due to the worldwide credit crush.
The telcos' interest in pay TV is driven by the lucrative lure of triple-play services. They need the video capability to compete against local cablers that already offer packages covering phone, Internet broadband and video.
They have chosen satellite because local regulations prevent them controlling cablers where they operate phone lines. But Congress is debating a bill lifting this restriction.
"Once the regulatory barrier is lifted, I expect to see telcos entering the cable TV business, which will allow them to cut the costs of their triple-play packages," says Otavio Jardanovski, general director of pay TV researching firm PTS.
Jardanovski says fiber-optic cables are a cheaper way to distribute triple-play services. Telcos with satellite operations offer video via satellite, and Internet and phone connections via fiber-optical cable nets, making their costs higher than cablers'.
Despite the regulatory restrictions, some telcos already have a foot in the cable sector. Since 2004 Telmex has had a minority stake in local media giant Globo's NET, the country's No. 1 cabler with about 2.7 million subs. It is common knowledge that Globo will give up NET's control to Telmex as soon as the regs allow.
Telefonica is expected to gain full control of TVA, which has about 390,000 subs, when the regs change. The telco already controls TVA's pay TV operations.
Oi has 60,000 cable subs in Minas Gerais state, acquired in a deal approved by regulatory communications agency Anatel.
Brazil's overall favorable economy and lower prices, prompted by increased competition, allowed the pay TV sector to expand fast in 2007 and in the first three quarters of this year, hitting about 6 million subs in September.
Embratel and Oi's new satellite platforms are expected to further stimulate growth, Jardanovski says, but the economic crisis will negatively impact the industry.
"The country's total pay TV subscription base grew this year about 4% per quarter. We will see a cut in the growth rate in the fourth quarter and next year," he says.
