Broadcasting
Pay Television
Comment
Brazil's legal system distinguishes between broadcasting and pay television. Broadcasting consists of the transmission of sounds and images by means of electromagnetic signals (Hertzian waves), which are transmitted terrestrially, and received directly and freely by the public. Broadcasting is regulated by Law 4,117 of August 27 1962 and supervised by the Communications Ministry.
'Pay television' (including cable television, multichannel multipoint distribution service and direct-to-home satellite) is defined as a telecommunications service and is subject to both the provisions of Law 9,472 of July 16 1997(1) and supervision by the Brazilian Telecommunications Agency (ANATEL).
There are no restrictions on foreign capital contributions in connection with the participation of company producers of audiovisual programmes. However, foreign capital contribution restrictions apply to television companies.
Article 222 of the Constitution of 1988 determines that the ownership of broadcast radio and television companies is exclusive to native Brazilians or those who have been naturalized Brazilians for more than 10 years.
Corporate entities may not contribute to the capital of broadcasters, with the exception of political parties and companies whose capital belongs exclusively and nominally to Brazilians. Moreover, participation may occur only through non-voting capital and cannot exceed 30% of the capital stock. Thus, the Constitution prohibits foreign capital to broadcasters, although a constitutional amendment proposal aims to modify Article 222 to allow foreign capital companies to acquire 30% of the total voting capital of Brazilian broadcasters.
Pay television services are provided by cable, multichannel multipoint distribution service (MMDS) and direct-to-home satellite (DTH) services.
Cable
Cable television is regulated by Law 8,977 of January 6 1995, which stipulates that the provisions of Brazilian telecommunications legislation must be complied with. MMDS and DTH services are considered to be special telecommunications services and are regulated by Decree 2,196 of April 8 1997, which approves the Special Telecommunications Service Regulation.
In accordance with Law 8,977 cable television is a telecommunications service consisting of the distribution of video and/or audio signals to subscribers by means of coaxial cable or optical fibre. The exploitation of cable television services is granted by means of concessions for 15 years, which are renewable for successive and equal periods. Concessions are granted exclusively to private corporate entities that have their principal place of business and administration in Brazil, with at least 51% of their voting capital owned by (i) native Brazilians or those who have been naturalized Brazilians for more than 10 years, or (i) companies that have their principal place of business and administration in Brazil, whose control is in the hands of native Brazilians or those who have been naturalized Brazilians for more than 10 years.
A bill of law aims to modify Law 8,977 to permit cable television operators to be controlled by foreign capital companies.
MMDS
Service Rule 2/94, reviewed in 1997 and approved by Ordinance 254/97 of the Communications Ministry, defines 'MMDS' as a special type of telecommunications service which uses a microwave band to transmit signals that are received at specific points within an area. According to ANATEL, MMDS is a community-interest service that is provided under the private regime.
The MMDS system may be used to provide various telecommunications services including the transmission of television signals. Up to 31 television channels can be transmitted within a specific range of the electromagnetic spectrum and digital technology increases the number of channels that may be transmitted via MMDS.
Authorizations to provide the MMDS service are granted for 10 or 15 years to companies organized under Brazilian law with their principal place of business and administration in Brazil, and in which the majority of the voting quotas or shares belong to individuals who reside in Brazil or to companies organized under Brazilian law and with their principal place of business and administration in Brazil.
DTH satellite
The provision of pay television services via DTH satellite is regulated by the Communications Ministry through Ordinance 321/97, which approves Service Rule 8/97.
Service Rule 8/97 defines 'DTH satellite service' as a special type of telecommunications service for the distribution of television and/or audio signals via satellites to subscribers located within the satellite's area of reach.
Authorizations to provide the DTH satellite service are granted as for the MMDS service.
Although foreign capital contributions for broadcast radio and television companies is prohibited, domestic legislation permits foreign capital for (i) MMDS and DTH satellite service providers (through subsidiary companies organized under Brazilian law with their principal place of business and administration in Brazil), and (ii) cable service provider companies (up to 49% of the voting capital).
The current limitations on foreign capital contributions in broadcasting and cable television are being discussed in Congress and may be modified within the next few months.
For further information on this topic please contact Ricardo Barretto or André de Godoy Fernandes at Barretto Ferreira, Kujawski, Brancher e Gonçalves – Sociedade de Advogados by telephone (+55 11 3066 5999) or by fax (+55 11 3167 4735) or by email ([email protected] or [email protected]).
Endnotes
(1) This law revoked Law 4,117/62 except in respect of the provisions relating to broadcasting.