In conversations with equity analysts, Net Serviços has acknowledged its outstanding debts to programmers and expressed a desire to reach an agreement in order to generate more revenue that will offset the contraction in its subscriber base. According to Leonardo Pereira, CFO and director of investor relations, Net ?has outstandings with a number of programming suppliers? and is seeking to work out a definitive solution, ideally one which matches payment and revenue in currency terms. In other words, it wants content to be priced in Brazilian Reals, with price adjustments pegged to expansion of the subscriber base. This isn?t a question of ?the good guys and the bad guys?, Leonardo Pereira said in an interview with PAY-TV News. ?The programmers have always been our partners and will continue to be.? Past agreements worked out to minimize the impact of exchange-rate fluctuation were important, but their effects weren?t long-term. Net now needs a definitive solution, since the BRL?s volatility is clearly not a temporary problem. ?Of course we?re aware many programming suppliers also have dollar-denominated costs, but programming has to be a foreseeable cost for us,? he said. Hitherto Net has managed somehow to offset net subscriber losses by adjusting its own prices. Average revenue per user is about 80 BRL, higher than ever before in Net?s history. But it won?t be able to go on using the same tactic of raising prices if the subscriber base continues to shrink, which is a possibility. ?We need more flexible packaging at more affordable prices so as to be able to target other segments of the middle-to-upper income group of households,? he said.
New packages
Net?s pursuit of more flexible packaging, along with other issues, is being coordinated by a programming committee comprising board members who represent the major shareholders, in collaboration with Net Brasil. The operator hasn?t ruled out the possibility of giving up exclusive rights to channels seen as less interesting by subscribers or even removing them from the lineup. ?But Globosat?s programming and TV Globo?s archive material are key assets and must be preserved,? Leonardo Pereira said. He expects negotiations on programming to take some time. ?It?s not something you can sort out in a few days or even a month.? Negotiations on pricing, payment and other terms are proceeding on one front and negotiations on outstanding debts are a separate process, he said.
