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MSFT goes to Rio
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August 17, 1999: 7:16 a.m. ET
Microsoft sets $126M Brazilian TV deal in latest overseas investment
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LONDON (CNNfn) - Microsoft agreed Tuesday to pay $126 million for an 11 percent stake in Globo Cabo, Brazil's leading cable-TV company, in its biggest investment in the Internet market in Latin America to date.
The world's dominant software company is joining forces with Brazil's Marinho family in several digital ventures, starting with the stake in Globo Cabo, which is controlled by a Marinho family investment firm.
The plan is to link Microsoft's Internet technology with Globo's broadband cable network and Portuguese-language content. The two companies will combine their Web gateways and cooperate on developing other Internet ventures, such interactive television services.
The deal will also give the software giant seats on Globo Cabo's board and the right to raise its stake over the next three years.
Globo dominates pay and broadcast TV in Brazil, reaching 4.5 million homes, and the Marinho family also controls the television network Rede Globo and pay-TV services including news and sports channels.
Internet use in Brazil is growing rapidly, with more than 1 million of the nation's 170 million people signing up last year, according to market research.
Brazil is not the only country where Microsoft has been investing in cable assets.
NTL (NTLI), in which Microsoft holds a small stake, agreed to buy the residential cable operations of Cable & Wireless Communications (CWZ) in a $10 billion deal in July. Microsoft also owns 29.9 percent of Telewest (TWT), a rival to NTL. Industry analysts expect an eventual merger of Telewest and NTL in a bid to create a dominant cable company in Britain.
Microsoft is also one of the bidders for parts of the world's largest cable TV network, owned by Deutsche Telekom (FDTE). Telekom is being forced to split up its network by regulators, and is auctioning minority stakes in various regional operations. Telekom will announce the winners of the stakes on August 20.
In addition, Microsoft has invested in Dutch cable company UPC, which has been buying cable assets across Europe.
Microsoft (MSFT) stock fell 3/8 to 85-5/16 in New York Monday. Nasdaq-traded Globo (GLCBY) stock rose 9/16 to 6-11/16, also on Monday.
-- from staff and wire reports
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