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Brazil Presentation August 2011

This presentation provides an overview of Brazil's economic scenario in 2011, including GDP, inflation, and major events. It also discusses the advertising market and media investment evolution, with a focus on the Globo group. Additionally, it explores the growth and regulation of the pay TV market in Brazil.

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Brazil Presentation August 2011

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  1. Brazil Presentation August 2011

  2. Our country 49% 51% Population: 192,278,400 USD 6,400 USD 2,320 USD 940 USD 500 (Avg Familiar Income) Households: 57,037,400 Mobile: 217 million (28M Internet access) Internet Access: 75,900,000 Source: Ibope EDTV 2011 / Mídia Dados 2011 / Anatel / Denatran

  3. Economic Scenario 2011 Forecast* Biggest growth since 1986 2010 Inflation The biggest economic concern this year . The target is 4.5% +7.5% +10.5% +11.3% R$ 1.75 +3.5% +2.2% +5.8% R$ 1.70 GDP (PIB) Industrial Production Inflation (IGP-M) 1 USD * Forecast - Focus Report (out’11) – Banco Central do Brasil

  4. Major Events 2012 Olympic Games held in London 2013 Confederation Cup held in Brazil 2014 World Cup held in Brazil and Brazilian Presidential Election President Election 2015 America's Cup held in Brazil 2016 Olympic Games held in Brazil

  5. Ad Market

  6. R$ MM Advertising Market Media investment evolution Brazilian advertising market should see an increase of 10% in 2011 against the 5.8% estimate for the global. Growth in Jan-Jun 2011 x Jan-Jun 2010: 2.7% Projection 10% +18% +4% +13% +9% +9% +15% +26% +18% +3% -5% Source: Projeto Inter-Meios – Net figures

  7. Organizações GLOBO The biggest communication group in Latin America • TV Globo • Editora Globo • Canais Globosat • Infoglobo • Sistema Globo de Rádio • Globo.com • Som Livre • Globo Filmes • Globo Marcas • Participation: • Net Serviços • Sky • Society: • Geo Eventos (RBS) • Clickon • Fundação Roberto Marinho • Canal Futura • Telecurso • Other Companies: • Amparo Agropecuária • Centropec • Globo Agropecuária • Mundi (travel) • Gazeus (online games)

  8. Advertising Market Media Share % Globo group 55% of the Ad Market Mass Media concentration increasing. Open TV - Biggest share in last 21 years! Pay TV share is almost the same since 2007. 15% Globo.com 51% Globosat 75% TV Globo 18% Ed.Globo 25% S. Globo R. 15% Infoglobo Source: Projeto Inter-Meios

  9. R$ MM Open TV Market Media investment evolution Growth in Jan-Jun 2011 x Jan-Jun 2010: 1.8% Projection 12% 8% 8% 7% +22% +8% +12% +9% +9% Source: Projeto Inter-Meios – Net figures

  10. Pay TV Market

  11. Strong TV Viewership • Total TV Households* • 54.2 MM • (95.1% of total HH) • Total Pay TV Households • 11.6 MM • > 20% of penetration • Reach projection: • 38.3 MM people Source: Ibope MW – 8 markets - Pay TV – Jan–Jul 2011 – Prime Time (18h-01h) • Pay TV Share20102011* • In Total TV: 7.1% 9.6% • In Total Pay TV: 32.6% 33.1% Source: Ibope MW / * 2011 Jan-Jul Source: * 2011 projection - Ibope EDTV 2010 / Anatel Jul 2011

  12. Legislation / New law PLC 116 The law 116 enables telecommunication operators in cable TV market without limit of participation, but keep them out of the process of content production. The law sets that three hours and a half of national content must be broadcasted through Pay-TV weekly during Prime Time. Half of such content must be generated by independent Brazilian producers National Cinema Agency (Ancine) will be in charge of all relevant controls: production, programming and content. 1 in 3 channels of the package should be Brazilian

  13. Pay TV Market Subscribers Evolution +26% +1% +7% +8% +10% +17% +18% +18% +31% +19% This projection considers the trend of Brazilian economic growth with the expansion of Pay TV in class B2 and C, the entry of telecom companies, the biggest offer of triple-play, increasing the market share from 10 to 30% in the households with television +15% +15% Growth projection +15% +18% +20% +25% Source: Anatel * Estimate: PTS n.171– Pay TV Survey Report – May’2011

  14. Pay TV Market Subscribers by Technology Market Share by Groups (subscribers) Globo Group 70% Source: PTS (Jun 2011) / Anatel (Jun2011)

  15. R$ Pay TV Market Media investment evolution Growth in Jan-Jun 2011 x Jan-Jun 2010: 9.86% Projection 17% 13% 15% 15% +2.5% +25% +21% +42% +23% Source: Projeto Inter-Meios – Net figures

  16. Globosat More than 30 Pay TV channels Good products developed for the viewers and the advertising market Fonte: Ibope MW – 8 mercados Pay TV – Target: A AB 18-49 – Prime Time (18h – 1h) – Jan-Jun 2011

  17. Seasonality – Total Pay TV 6 5 3 2 4 1 Q1 Q2 Q3 Q4 1) Government Taxes 2) School Holidays 3) Mothers Day 4) School Holidays 5) Fathers Day 6) Christmas / Salary Bonus Source: Ibope Monitor – 2010 Net Advertising Investments with Estimated Discount – R$

  18. Instability Pay TV still lives in an instable environment due to lack of committed and absent costumers => Pay TV as a complementary media. When do advertisers make decisions to buy advertising? In 2 extreme moments: Seasonality ANUAL (NOV – DEZ) DAILY (aprox. 20-30 days before) Source: Carmen

  19. Primary Day Parts PRIME TIME : 18h – 01h SUPER PRIME TIME : 21h – 23h Ros

  20. Discount Policy Average Discount applied, by media (%) Conversion Factor 2010 2009 MEDIA DISCOUNT TV -54 -55 Radio -62 -63 Pay TV -82 -82 Magazine -61 -58 Newspaper -77 -74 Movie theatre -78 -77 Internet -71 -60 Source: M&M – Agências & Anunciantes – May’2011

  21. Ratecards and CPR Source: Jove Data – Ago’2011 – 30”Prime Time - * Dom-Seg 22h / Ibope MW – 8 mercados Pay TV – Prime Time ratings – Apr-Jul 2011

  22. Selling Strategy • FOX • Production of capsules, special and integrated promos • Structured Digital and sometimes integrated with channels • Fox is the leader on sales and helps all the other channels • Turner • Two big channels with large audiences TNT and Warner • Many difficulties in selling Glitz, TCM and Boomerang • Market has already noticed Space as a growing channel • Production of capsules and integrated promos in a simple way • Discovery • Good image in the market due to the positioning of the channels without impact on sales (based in Discovery Channel) • High level on product integration (Nestlé, J&J, Peugeot)

  23. Selling Strategy • Globosat • Very aggressive using the same strategy of RedeGlobo (Brazilian content, share of audience and incentives) • Good products developed by the viewers and the ad market • Owns all the sports rights ( soccer and etc ) • Special projects, different formats, brand content • MTV • Totally produced for Brazil • Extremely flexible in the negotiation and production of the different formats • Brand content and big events (Video Music Brasil) • SPT • Recognized for presenting special projects • Offer creative solutions in developing different formats • Easy to work with, flexible and a good partner

  24. Top 3 Competitors

  25. Share of Audience – Rating Distribuition Pay TV Dynamics 2011 (jan-jul) 2010 Source: Ibope MW – 8 mercados Pay TV - Ratings basedon A AB 18-49 – AllDay / 2011: Jan – Jul

  26. Pay TV Ranking Fonte: IBOPE MW – 8 maercados Pay TV – Jan-Set2011

  27. Thank you!

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