SAO PAULO, Brazil -- Brazil's pay TV industry
languished in the doldrums in the first quarter of the year, as economic blues and changes
in the industry produced flat subscriber growth.
There were 2.5 million pay TV subscribers through the end
of the quarter -- the same number as at the end of December -- according to the
independent market research company Pay TV Survey.
Previously, Brazil had been experiencing strong growth. In
the first three quarters of 1997, the average quarterly growth rate was 10 percent, said
Otavio Jardanovski, Pay TV Survey's director.
However, a downturn began in the last quarter of 1997, when
growth nose-dived to 1.5 percent, Jardanovski said. Like many in the industry, he
attributed the slowdown to two main factors: an economic crisis in Brazil triggered by
financial instability in Asia and tighter subscriber auditing across the industry.
"The slow down started exactly with the Asian crisis.
Cable operators are also carrying a huge number of delinquent subscribers, so they decided
to clean them up ... It started in October (and) November last year, but it has been an
ongoing process," he said.
A leading cable company, Multicanal, for one, has been
aggressively cracking down on its auditing of subscribers. For example, the operator
unplugs customers who fail to pay their monthly bills within 60 days, instead of allowing
a 90-day window as in the past. The company reported 570,000 subscribers at the end of the
first quarter, a 10.7 percent decrease since the third quarter of 1997, when it reported
638,000 subscribers.
Management focus has also been distracted this year by the
takeover of Multicanal by NET, owned by Globocabo.
Programmers see a silver lining in all of this.
"Multicanal and others are doing the right thing. They
have to take strong measures in their relationship with subscribers. Of course this is
causing some impact, but we expect growth to be back to normal in two months," said
Enrique Martinez, vice president of affiliate sales, Discovery Communications Inc., Latin
America and Iberia.
Leila Lorio, CEO of the direct-to-home satellite TV
provider DirecTV Brazil, agreed.
"The pay TV industry itself is adopting more realistic
and selective practices, which will mean that the market will, from the second quarter on,
grow in a more healthy way," she said. "The effects of the Asian crisis last
October are still being felt. With higher interest rates, there are many people failing to
pay their debts in all sectors of the economy. The first quarter is always weak for our
economy, with Carnival and school summer holidays."
Jo Dallas contributed to this story.
