=====================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                ________________

                                    FORM 10-Q
(Mark One)

|X|      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

         For the quarterly period ended September 30, 1996

                                            OR

|_|      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

         For the transition period from _______________ to ______________

                                 TV FILME, INC.
             (Exact name of Registrant as Specified in its Charter)

                        COMMISSION FILE NUMBER : 0-28670

                  DELAWARE                              98-0160214
(State or Other Jurisdiction               (I.R.S. Employer Identification No.)
 of Incorporation or Organization)   

                C/O ITSA-INTERCONTINENTAL TELECOMUNICACOES LTDA.
                               SCS, QUADRA 07-B1.A
                               ED. EXECUTIVE TOWER
                                    SALA 601
                             70.300-911 BRASILIA-DF
                                     BRAZIL
          (Address, Including Zip Code, of Principal Executive Offices)

                               011-55-61-314-9908
              (Registrant's Telephone Number, Including Area Code)

     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days. [ x ] Yes [ ] No

         Indicate  the  number of  shares  outstanding  of each of the  issuer's
classes of Common Stock, as of the latest practicable date.

                  CLASS                                OUTSTANDING
                  -----                                -----------

         Common Stock, par value $.01                  10,166,176 shares
         per share.                                    as of November 11, 1996.

===============================================================================


<PAGE>



                                 TV FILME, INC.

                                      INDEX


PART I.  FINANCIAL INFORMATION                                          PAGE NO.
------------------------------

ITEM 1.     Financial Statements

            Consolidated Balance Sheets as of December 31, 1995
            and September 30, 1996 (Unaudited).....................        2

            Consolidated Statements of Operations for the Three
            and Nine Months Ended September 30, 1995 (Unaudited)
            and the Three and Nine Months Ended September 30,
            1996 (Unaudited) ......................................        3

            Consolidated Statement of Changes in Stockholders'
            Equity at September 30, 1996 (Unaudited) ..............        4

            Consolidated Statements of Cash Flows for the Nine
            Months Ended September 30, 1995 (Unaudited) and
            the Nine Months Ended September 30, 1996 (Unaudited) ..        5

            Notes to Consolidated Financial Statements 
            (Unaudited) ...........................................        6

ITEM 2.     Management's Discussion and Analysis of Financial
            Condition and Results of Operations ...................        9


PART II.  OTHER INFORMATION
---------------------------

ITEM 1.     Legal Proceedings .....................................       13

ITEM 2.     Changes in Securities .................................       13

ITEM 3.     Default Upon Senior Securities ........................       13

ITEM 4.     Submission of Matters to a Vote of Security-Holders ...       13

ITEM 5.     Other Information .....................................       13

ITEM 6.     Exhibits and Reports on Form 8-K ......................       13

SIGNATURES




<PAGE>



                         PART I - FINANCIAL INFORMATION

ITEM 1.   FINANCIAL STATEMENTS


                         TV FILME, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

                                                    DECEMBER    SEPTEMBER
                                                    31, 1995     30, 1996
                                                    --------    ---------
                                                               (UNAUDITED)
                                                 (IN THOUSANDS OF U.S. DOLLARS)
ASSETS
Current assets:
  Cash and cash equivalents .................       $     43    $ 19,618
  Accounts receivable, net ..................          1,781       3,378
  Supplies ..................................          1,632       2,983
  Prepaids and other current assets .........            497         824
                                                    --------    --------
    Total current assets ....................          3,953      26,803
Property, plant and equipment, net ..........         18,870      32,423
Other assets ................................            860       1,043
                                                    --------    --------
    Total assets ............................       $ 23,683    $ 60,269
                                                    ========    ========



LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable ..........................       $  6,876    $  8,752
  Short-term debt ...........................           --         1,322
  Payroll and other benefits payable ........          1,283       2,056
  Accrued liabilities and other taxes
  payable ...................................            161         968
  Payables to affiliates -- current .........          1,863         200
                                                    --------    --------
       Total current liabilities ............         10,183      13,298
Payables to affiliates -- long term .........            400         200
Deferred installation fees ..................          5,205       8,132
Stockholders' equity:
    Preferred stock, $.01 par value, 
    1,000,000 shares authorized, no
    shares issued ...........................            --          --
    Common stock, $.01 par value, 
    50,000,000 shares authorized, 
    6,193,996 and 10,166,176 shares 
    issued and outstanding ..................             62         102
    Additional paid-in capital ..............         10,070      41,553
    Accumulated deficit .....................         (2,237)     (3,016)
                                                    --------    --------
       Total stockholders' equity ...........          7,895      38,639
                                                    --------    --------
       Total liabilities and stockholders'
       equity ...............................       $ 23,683    $ 60,269
                                                    ========    ========











                             See accompanying notes.


                                                         

<PAGE>



                         TV FILME, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS

                                   (UNAUDITED)


<TABLE>

<CAPTION>

                                                                        THREE MONTHS ENDED                   NINE MONTHS ENDED
                                                                            SEPTEMBER 30,                       SEPTEMBER 30,
                                                                     -------------------------           --------------------------
                                                                       1995             1996               1995              1996
                                                                     --------         --------           --------          --------
                                                                     (IN THOUSANDS OF U.S. DOLLARS, EXCEPT PER SHARE AND SHARE DATA)


<S>                                                                  <C>               <C>               <C>               <C>     
Revenues ...................................................         $  3,222          $  8,654          $  6,735          $ 21,287
Operating costs and expenses:
   System operating--Note 2 ................................              732             2,676             1,789             6,092
   Selling, general and administrative .....................            2,415             4,421             5,815            11,615
   Depreciation and amortization ...........................              598             1,572             1,196             3,996
                                                                     --------          --------          --------          --------
      Total operating costs and expenses ...................            3,745             8,669             8,800            21,703
                                                                     --------          --------          --------          --------
      Operating loss .......................................             (523)              (15)           (2,065)             (416)
Other income (expense):
   Interest income (expense), net--Note 2 ..................                8               115               338              (307)
   Other expense--Note 2 ...................................             --                 (34)             --                 (23)
   Exchange and translation losses .........................              (17)             (143)              (80)             (101)
                                                                     --------          --------          --------          --------
Net loss ...................................................         $   (532)         $    (77)         $ (1,807)         $   (847)
                                                                     ========          ========          ========          ========
Net loss per share .........................................         $  (0.07)         $  (0.01)         $  (0.22)         $  (0.10)
                                                                     ========          ========          ========          ========
Weighted average number of common stock
  and common stock equivalents
  outstanding ..............................................            8,086             9,868             8,086             8,680
                                                                     ========          ========          ========          ========

</TABLE>























                             See accompanying notes.


                                                         

<PAGE>



                         TV FILME, INC. AND SUBSIDIARIES
            CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

                                   (UNAUDITED)

                  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996


<TABLE>

<CAPTION>
                                                                                       
                                                             COMMON STOCK             Additional
                                                         -----------------------       Paid-in         Accumulated
                                                         SHARES        PAR VALUE       Capital           Deficit         Total
                                                         ------        ---------       ----------        -------         -----
                                                                     (IN THOUSANDS OF U.S. DOLLARS, EXCEPT SHARES)

                                                        
       
<S>                                                     <C>            <C>             <C>             <C>              <C>       
BALANCE AT DECEMBER 31, 1995 .....................       6,193,996      $       62      $   10,070      $   (2,237)      $    7,895
Issuance of common stock and warrants ............       1,097,180              11           7,140            --              7,151
Initial public offering of common
  stock, net of costs ............................       2,875,000              29          24,343            --             24,372
Equity adjustment from restructuring .............            --              --              --                68               68
Net loss for the period ..........................            --              --              --              (847)            (847)
                                                        ----------      ----------      ----------      ----------       ----------
BALANCE AT SEPTEMBER 30, 1996 ....................      10,166,176      $      102      $   41,553      $   (3,016)      $   38,639
                                                        ==========      ==========      ==========      ==========       ==========
</TABLE>











































                             See accompanying notes.


                                                         

<PAGE>



                         TV FILME, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                   (UNAUDITED)


                                                          NINE MONTHS
                                                      ENDED SEPTEMBER 30,
                                                      1995            1996
                                                      ------         -----
                                                 (IN THOUSANDS OF U.S. DOLLARS)

CASH FLOWS FROM OPERATING ACTIVITIES
Net loss ......................................      $ (1,807)     $   (847)
Adjustments to reconcile net loss to net
  cash provided by operating activities:
  Depreciation and amortization ...............         1,196         3,996
  Non-cash compensation .......................           312           --
  Increase in deferred installation fees ......         2,773         2,927
Changes in operating assets and liabilities:
  Increase in accounts receivable .............          (799)       (1,597)
  Increase in supplies ........................          (962)       (1,351)
  Increase in prepaids and other current 
    assets ....................................           (89)         (327)
  Decrease (increase) in other assets .........             9          (183)
  Increase in accounts payable ................         3,666         1,876
  Increase in payroll and other benefits 
    payable ...................................           920           773
  Increase in accrued liabilities and 
    other taxes payable .......................           213           807
                                                     --------      --------
Net cash provided by operating activities .....         5,432         6,074
                                                     --------      --------

CASH FLOWS FROM INVESTING ACTIVITIES 
Acquisitions:
     Property, plant and equipment ............       (10,866)      (17,481)
                                                     --------      --------
Net cash used in investing activities .........       (10,866)      (17,481)
                                                     --------      --------

CASH FLOWS FROM FINANCING ACTIVITIES
     Increase in short-term debt ..............          --           1,322
     Proceeds from initial public offering,
         net of costs .........................          --          24,372
     Issuance of common stock and warrants ....         3,300         7,151
     Decrease in payables to affiliates .......          (200)       (1,863)
     Decrease in receivables from affiliates ..           764           --
                                                     --------      --------
Net cash provided by financing activities .....         3,864        30,982
                                                     --------      --------
Net change in cash and cash equivalents .......        (1,570)       19,575
Cash and cash equivalents at beginning 
  of period ...................................         1,659            43
                                                     --------      --------
Cash and cash equivalents at end of period ....      $     89      $ 19,618
                                                     ========      ========













                             See accompanying notes.


                                                         

<PAGE>



                         TV FILME, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         A.       COMPANY BACKGROUND

                  In connection  with an initial  public  offering of its Common
Stock which was consummated on August 2, 1996 (the  "Offering"),  TV Filme, Inc.
(the  "Company")  was formed in April 1996 to become the holding  company of and
successor to  ITSA-Intercontinental  Telecomunicacoes  S.A. and its subsidiaries
("ITSA"). The transfer of ITSA to the Company has been accounted for in a manner
similar  to a pooling  of  interests.  ITSA was  formed in May 1994 as a holding
company  for  and  successor  to TV  Filme  Servicos  de  Telecomunicacoes  S.A.
("TVFSA").  The  transfer  of TVFSA to ITSA has been  accounted  for in a manner
similar to a pooling of interests.

                  In connection  with the Offering,  the Company  entered into a
Restructuring (the "Restructuring")  pursuant to which, immediately prior to the
Offering,  all of the preferred stock of ITSA was converted into common stock of
ITSA,  based on the  conversion  rates at the date of issuance of the  preferred
stock.  Each share of common  stock of ITSA was  exchanged  for 1,844  shares of
Common  Stock of the  Company.  As all of the  preferred  stock of ITSA has been
converted and there were no preferred  dividends  paid or due as a result of the
conversion,  all  preferred  and  common  stock  issuances  of  the  predecessor
companies have been reflected as issuances of Common Stock of the Company. Prior
to the  consummation of the Offering and the  Restructuring,  TVFSA operated the
Company's  wireless  cable system in Brasilia,  and held the licenses to operate
the Company's wireless cable systems in Brasilia,  Goiania and Belem. ITSA owned
substantially all of TVFSA, TV Filme Goiania Servicos de Telecomunicacoes  Ltda.
("TV Filme Goiania") and TV Filme Belem Servicos de Telecomunicacoes Ltda.
("TV Filme Belem").

                  Pursuant to the Restructuring,  (i) 51% of the voting stock of
TVFSA was  transferred to an entity,  all of which is owned by certain  existing
shareholders of ITSA who are Brazilian nationals, with ITSA retaining 49% of the
voting stock and 83% of the  economic  interests  in TVFSA;  (ii) the  operating
assets of the wireless cable system of Brasilia were  transferred  from TVFSA to
TV Filme Brasilia  Servicos de  Telecomunicacoes  Ltda.  ("TV Filme  Brasilia"),
which is  substantially  owned by ITSA;  and (iii) TVFSA  entered  into  various
agreements with ITSA and its subsidiaries pursuant to which, among other things,
TVFSA has authorized  ITSA to operate the existing  wireless cable systems under
its current licenses.  As a result of the  Restructuring  and the Offering,  the
Company  owns 100% of ITSA,  which holds 49% of the voting  stock and 83% of the
economic interests of TVFSA and 100% of TV Filme Brasilia,  TV Filme Goiania and
TV Filme Belem.

                  Accordingly,  the  consolidated  financial  statements  of the
Company include ITSA and its  subsidiaries on a historical  basis since May 1994
as though  they have been part of the Company  for all  periods  presented.  All
significant  intercompany  transactions  and balances  have been  eliminated  in
consolidation.

                  The  Company   develops,   owns  and   operates   subscription
television  systems in mid-sized markets in Brazil.  The Company has established
wireless cable operating systems in the cities of Brasilia, Goiania and Belem.


                                                         

<PAGE>


                         TV FILME, INC. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                                   (UNAUDITED)



         B.       METHOD OF PRESENTATION

                  The consolidated financial statements of the Company have been
prepared in accordance  with  generally  accepted  accounting  principles in the
United  States  in  U.S.  dollars.  Amounts  in  Brazilian  currency  have  been
remeasured  into U.S.  dollars in accordance  with the  methodology set forth in
Statement of Financial  Accounting  Standards  No. 52 as its applies to entities
operating  in  highly  inflationary  economies.  Supplies,  property,  plant and
equipment,  intangibles  and deferred  installation  fees and the related income
statement  accounts are  remeasured at exchange  rates in effect when the assets
were acquired or the liabilities were incurred. All other assets and liabilities
are  remeasured  at year end  exchange  rates,  and all other income and expense
items are  remeasured  at average  exchange  rates  prevailing  during the year.
Remeasurement adjustments are included in exchange and translation losses.

                  In management's  opinion, all adjustments  (consisting only of
normal recurring  accruals)  considered  necessary for a fair  presentation have
been included.  Operating  results for the first nine months are not necessarily
indicative of the results that may be expected for a full year.

         C.       NET LOSS PER SHARE

                  Net loss per share  is calculated  using the weighted  average
number of shares of stock outstanding during the period together with the number
of shares  issuable upon the exercise of options and warrants  issued during the
twelve  months prior to the filing of the  Offering.  The  computation  of fully
diluted  pro  forma  net  loss per  share  of  common  stock  was  antidilutive;
therefore, the amounts reported for primary and fully diluted loss per share are
the same.

2.       RELATED PARTY TRANSACTIONS

                  Substantially  all  programming is supplied by a subsidiary of
Tevecap  S.A.  ("Tevecap"),   a  stockholder  of  the  Company,  pursuant  to  a
programming  contract.  Amounts  paid to such  affiliate  for the three and nine
months  ended  September  30,  1995 and 1996  were  $363,000  and  $764,000  and
$1,922,000 and $4,468,000, respectively.

                  Receivables in 1995 from Tevecap and Abril S.A. ("Abril"), the
majority  shareholder of Tevecap,  bear interest at the Brazilian interbank rate
("CDI") then in effect plus 0.8%.  The rate in effect during the periods  ranged
from 3.24% to 4.41% per month during 1995.  Interest income from such affiliates
was $339,000 for the nine months ended September 30, 1995.

     Included in  payables to  affiliates  at  September  30, 1996 is a $400,000
payable to Abril  which does not bear  interest.  Payments  on this  payable are
required  at the rate of  $200,000  per year.  Other  payables  to Tevecap  bear
interest at the CDI plus 0.8%, which ranged from 2.18% to 3.36% per month during
the first nine months of 1996; these payables were paid in full during the three
months ended September 30, 1996.  Interest  expense paid to Tevecap was $476,000
for the nine months ended  September  30, 1996  compared to $23,000 for the nine
months ended September 30, 1995.




                                                         

<PAGE>


                         TV FILME, INC. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                                   (UNAUDITED)



                  The Company  purchases  equipment  and  supplies  from vendors
under irrevocable letters of credit. Abril and a subsidiary of Tevecap guarantee
such  obligations  from time to time.  Total issued and  outstanding  letters of
credit at September 30, 1996 were $7,524,000.  At September 30, 1996, issued and
outstanding  letters of credit secured by affiliates  were  $4,732,000.  Of this
amount,  $1,322,000 is classified as short-term  debt. The maturity date of such
letters of credit range from 30 days to 360 days.

                  Immediately  prior to the  consummation  of the  Offering,  in
connection  with the  Restructuring,  the Company issued  3,962,756,  1,456,760,
254,472,  254,472  and  1,069,520  shares of  Common  Stock to  Warburg,  Pincus
Investors,  L.P.  ("Warburg,  Pincus"),  Tevecap,  Mr.  Hermano  Studart Lins de
Albuquerque,  Mr. Carlos Andre Studart Lins de  Albuquerque  and Mrs. Maria Nise
Studart Lins de  Albuquerque,  respectively,  with a value at the initial public
offering  price of $10.00  per share of  $39,627,560,  $14,567,600,  $2,544,720,
$2,544,720 and  $10,695,200,  respectively.  Such shares were issued in exchange
for all of their  shares of common  stock of ITSA,  which have the same value as
the shares of Common Stock received in the exchange.

                  Immediately  prior to the  consummation  of the  Offering,  in
connection  with the  Restructuring,  the  Company  issued  warrants to purchase
567,952 shares of Common Stock to Warburg,  Pincus, warrants to purchase 208,372
shares of Common  Stock to Tevecap and  warrants to  purchase  18,440  shares of
Common  Stock to two other  shareholders  of the Company in exchange  for all of
their warrants to purchase shares of common stock of ITSA.

3.       STOCK OPTION PLAN

     In  connection  with the  Offering,  the Board of  Directors of the Company
adopted and the  stockholders of the Company approved the 1996 Stock Option Plan
(the "Plan"). The Plan provides for the grant of stock options to officers,  key
employees, consultants and directors of the Company. The Plan is administered by
the  Compensation  Committee  and the total number of shares of Common Stock for
which options may be granted pursuant to the Plan is 936,432, subject to certain
adjustments reflecting changes in the Company's capitalization.  The Plan allows
the granting of incentive  stock  options,  which may not have an exercise price
below the  greater  of par value or the market  value on the date of grant,  and
non-qualified  stock options,  which have no  restrictions  as to exercise price
other than the  exercise  price  cannot be below par value.  All options must be
exercised  no later  than 10 years from the date of grant.  Options to  purchase
407,000  shares  of Common  Stock  were  granted  upon the  consummation  of the
Offering,  297,000 of which are exercisable at $10.00 per share,  and 110,000 of
which are exercisable at $11.00 per share, and which generally vest 20% per year
for five  years  beginning  on the  first  anniversary  of  consummation  of the
Offering.
                                                         

<PAGE>
                                                
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITION AND RESULTS OF OPERATIONS

         THIS FORM 10-Q CONTAINS FORWARD-LOOKING  STATEMENTS WHICH INVOLVE RISKS
AND  UNCERTAINTIES.  THE COMPANY'S ACTUAL RESULTS MAY DIFFER  SIGNIFICANTLY FROM
THE  RESULTS  DISCUSSED  IN  THE  FORWARD-LOOKING   STATEMENTS.   THE  FOLLOWING
DISCUSSION  SHOULD  BE READ  IN  CONJUNCTION  WITH  THE  CONSOLIDATED  FINANCIAL
STATEMENTS, INCLUDING THE NOTES THERETO, INCLUDED ELSEWHERE IN THIS FORM 10-Q.

RESULTS OF OPERATIONS

     Although the  Company's  financial  statements  are  presented  pursuant to
United States generally  accepted  accounting  principles in U.S.  dollars,  the
Company's transactions are consummated in both reais and U.S. dollars. Inflation
and  devaluation  in Brazil  have had,  and may  continue  to have,  substantial
effects on the Company's  results of operations  and  financial  condition.  The
Company  does not seek to hedge  currency  risks  in the  financial  markets  or
otherwise. See "--Inflation and Exchange Rates."

         As a result of the  development  of the  Company's  business and system
launches during the periods presented,  the period-to-period  comparisons of the
Company's results of operations are not necessarily meaningful and should not be
relied upon as an indication of future performance.

<TABLE>

<CAPTION>
                                                                        THREE MONTHS ENDED                   NINE MONTHS ENDED
                                                                            SEPTEMBER 30,                       SEPTEMBER 30,
                                                                     --------------------------         --------------------------
                                                                       1995              1996              1995              1996
                                                                     --------          --------         ---------          --------
                                                                      (IN THOUSANDS OF U.S. DOLLARS, EXCEPT SHARE AND OTHER DATA)


<S>                                                                  <C>               <C>               <C>               <C>     
Revenues ...................................................         $  3,222          $  8,654          $  6,735          $ 21,287
                                                                     --------          --------          --------          --------
Operating costs and expenses:
         System operating ..................................              732             2,676             1,789             6,092
         Selling, general and administrative ...............            2,415             4,421             5,815            11,615
         Depreciation and amortization .....................              598             1,572             1,196             3,996
                                                                     --------          --------          --------          --------
         Total operating costs and expenses ................            3,745             8,669             8,800            21,703
                                                                     --------          --------          --------          --------
                  Operating loss ...........................             (523)              (15)           (2,065)             (416)
Other income (expense):
         Interest income (expense), net ....................                8               115               338              (307)
         Other expense .....................................             --                 (34)             --                 (23)
         Exchange and translation losses ...................              (17)             (143)              (80)             (101)
                                                                     --------          --------          --------          --------
Net loss ...................................................         $   (532)         $    (77)         $ (1,807)         $   (847)
                                                                     ========          ========          ========          ========
Net loss per share .........................................         $  (0.07)         $  (0.01)         $  (0.22)         $  (0.10)
                                                                     ========          ========          ========          ========
Weighted average number of common
  stock and common stock equivalents
  outstanding ..............................................            8,086             9,868             8,086             8,680
                                                                     ========          ========          ========          ========
Other Data:
         EBITDA(a) .........................................         $    388          $  1,557          $   (556)         $  3,580
                                                                     ========          ========          ========          ========
           Number of subscribers at
            end of period ..................................           27,024            70,591            27,024            70,591
                                                                     ========          ========          ========          ========
</TABLE>

---------------
(a) EBITDA is defined as operating income (loss) plus depreciation, amortization
and non-cash compensation.  While EBITDA should not be construed as a substitute
for operating income (loss) or a better measure of liquidity than cash flow from
operating  activities,  which are  determined in  accordance  with United States
GAAP,  it is included  herein to provide  additional  information  regarding the
ability  of the  Company  to meet  its  capital  expenditures,  working  capital
requirements and any future debt service.  EBITDA, however, is not necessarily a
measure of the  Company's  ability to fund its cash  needs,  because it does not
include  capital  expenditures,  which the  Company  expects to  continue  to be
significant.

                                                        

<PAGE>



     REVENUES.  The Company's revenues primarily consist of monthly fees paid by
subscribers for the programming package, as well as installation fees recognized
for the period. Revenues increased from approximately $3.2 million for the three
months  ended  September  30, 1995 to  approximately  $8.7 million for the three
months ended  September 30, 1996 and increased from  approximately  $6.7 million
for the nine months ended September 30, 1995 to approximately  $21.0 million for
the nine months ended September 30, 1996, primarily due to an aggregate increase
of 41,797 and 36,260, respectively,  in the average number of subscribers in the
Company's  operating systems.  Average monthly revenue per subscriber was $39.12
and $39.76, respectively, for the three and nine months ended September 30, 1996
compared to $40.41 and $39.70, respectively, for the three and nine months ended
September 30, 1995.

         SYSTEM   OPERATING   EXPENSES.   System   operating   expenses  include
programming  costs,  a portion of costs of  compensation  and  benefits  for the
Company's employees,  vehicle rental costs, transmitter site rentals, repair and
maintenance  expenditures  and service  call costs.  System  operating  expenses
increased from  approximately  $0.7 million for the three months ended September
30, 1995 to approximately  $2.7 million for the three months ended September 30,
1996 and  increased  from  approximately  $1.8 million for the nine months ended
September  30, 1995 to  approximately  $6.1  million  for the nine months  ended
September  30, 1996,  primarily  due to an increase in  programming  expenses of
approximately $1.7 million and approximately $3.9 million,  respectively, and an
increase  in  compensation  and  benefits  of  approximately  $0.1  million  and
approximately $0.3 million, respectively, primarily to employees in the customer
service and  engineering  departments.  During the three and nine  months  ended
September  30, 1996,  programming  expenses were affected by the increase in the
number of subscribers over the periods,  since programming  expenses are charged
on a per subscriber basis.

     SELLING,  GENERAL  AND  ADMINISTRATIVE   EXPENSES.   Selling,  general  and
administrative  ("SG&A") expenses  increased from approximately $2.4 million for
the three months ended September 30, 1995 to approximately  $4.4 million for the
three months ended September 30, 1996, but as a percentage of revenues decreased
to  approximately  51.1% from 75.0%.  SG&A  increased  from  approximately  $5.8
million for the nine months  ended  September  30, 1995 to  approximately  $11.6
million for the nine months ended  September  30, 1996,  but as a percentage  of
revenues decreased to approximately 54.6% from 86.3%.  Compensation and benefits
increased by  approximately  $0.7 million from the three months ended  September
30,  1995 to the  three  months  ended  September  30,  1996  and  increased  by
approximately  $2.5 million from the nine months ended September 30, 1995 to the
nine months ended September 30, 1996,  primarily due to additions to management,
additional  employees in the sales department and more commissions paid to sales
employees.  The Company added employees  primarily in the sales  department,  to
service  the  Company's  expanded  subscriber  base and  growth,  including  the
expansion into the Goiania and Belem markets.  Advertising expenses increased by
approximately $0.3 million from the three months ended September 30, 1995 to the
three months  ended  September  30, 1996 and  increased  by  approximately  $0.7
million from the nine months ended  September  30, 1995 to the nine months ended
September 30, 1996.

     DEPRECIATION  AND  AMORTIZATION.  Depreciation  and  amortization  expenses
consist  primarily of  depreciation  of decoder  boxes,  headend  facilities and
capitalized  installation costs. Since inception,  the Company's direct costs of
obtaining subscribers generally have exceeded installation revenue.  These costs
are  capitalized  and  depreciated  over a five year  period.  Depreciation  and
amortization  expense  increased from  approximately  $0.6 million for the three
months ended September 30, 1995 to approximately $1.6 million


                                                        

<PAGE>



for the three months ended  September 30, 1996 and increased from  approximately
$1.2 million for the nine months ended September 30, 1995 to approximately  $4.0
million for the nine months ended September 30, 1996, primarily due to increases
in the number of installed  subscribers in each of the Company's three operating
systems.

     OPERATING  LOSS.  For the three and nine month periods ended  September 30,
1996, the Company generated an operating loss of approximately $0.02 million and
approximately  $0.4  million,   respectively,   primarily  due  to  expenses  in
connection with the development of the Company's  business,  as explained above.
The Company may continue to generate operating losses as it expands its existing
systems and develops additional systems.

     OTHER INCOME (EXPENSE),  NET.  Interest income (expense),  net increased by
approximately  $0.01 million for the three months ended  September 30, 1996 from
the three months ended September 30, 1995 as a result of higher interest expense
associated with short-term  borrowings from Abril and certain of its affiliates,
offset by interest income derived from the investment of the net proceeds of the
Offering.  Interest  income  (expense),  net increased by  approximately  $(0.5)
million from the nine month period  ended  September  30, 1995 to the nine month
period ended September 30, 1996 as a result of short-term  borrowings from Abril
and  certain  of  its   affiliates  and   lower-interest   income  derived  from
investments.


     Exchange  and  translation  losses  have  arisen  primarily  as a result of
short-term  investments  and borrowings  denominated  in reais,  and to a lesser
extent from the translation of financial  statements from reais to U.S.  dollars
in accordance with Statement of Financial  Accounting Standards No. 52, with the
U.S.   dollar  as  the   functional   currency.   These  amounts  can  fluctuate
significantly  as a result of changes in the exchange  rate of the real relative
to the U.S. dollar.

         INCOME  TAXES.  The  Company  did not have  taxable  income  during the
nine-month  period ended  September 30, 1996 and expects to generate  losses for
the foreseeable future. Effective January 1, 1996, Brazilian effective tax rates
declined from approximately 48% to approximately 30.5%.

     NET  LOSS.  As  explained  above,  net  loss in the  periods  presented  is
primarily   attributable  to  the  expenses  incurred  in  connection  with  the
development of the Company's business.

LIQUIDITY AND CAPITAL RESOURCES

     The subscription  television business is a capital intensive business.  The
Company made capital  expenditures  of  approximately  $17.5 million in the nine
months  ended  September  30,  1996.  Such capital  expenditures  were  financed
principally  through  vendor  financings,   loans  from  affiliates  and  equity
offerings.  In the past, working capital requirements have been primarily met by
(i)  vendor  financing  which  generally  require  payment  within  360  days of
shipment,  some of which has been  supported  by  irrevocable  letters of credit
guaranteed by Abril (the majority  shareholder of Tevecap,  a shareholder of the
Company)  and  certain  of its  affiliates  and (ii)  borrowings  from Abril and
certain of its  affiliates.  As of September  30,  1996,  the Company had repaid
working  capital  borrowings  from Abril and certain of its  affiliates in their
entirety with a portion of the net proceeds  from the  Offering.  As a result of
the Offering,  the Company does not expect to continue  borrowing  from Abril or
its affiliates.  As of September 30, 1996, the Company has a payable to Abril of
$400,000  in  connection  with the  Company's  purchase of the Belem and Goiania
licenses from Abril. Such amount is due in two installments in February 1997 and
1998.


                                                        

<PAGE>



     As of September 30, 1996,  approximately $7.5 million was outstanding under
letters of credit with  maturities  ranging  from 30 days to 360 days,  of which
approximately  $4.7 million was  guaranteed by  affiliates.  As of September 30,
1996,  the Company had a $5.0 million line of credit with a commercial  bank, of
which  approximately  $2.0  million  was  available  on such date.  The  Company
currently  believes that lines of credit,  additional vendor financing and other
credit  facilities  are  available  on  acceptable  terms.  As a  result  of the
Offering,  the Company had positive working capital at September 30, 1996 in the
amount of $13.6 million.  Net cash provided by operating activities for the nine
months ended September 30, 1996 was approximately $6.0 million.

     For the last quarter of 1996,  the Company  anticipates  that its aggregate
capital  expenditures in its existing operating markets will be approximately $9
million,  comprised primarily of subscriber installation equipment.  The Company
believes that the proceeds of the Offering,  together with internally  generated
funds and vendor financing, will be sufficient to fund its cash requirements and
anticipated capital  expenditures in its existing operating markets for at least
the next 12 months.  In the  longer  term,  the  Company's  liquidity  needs are
subject to a variety of factors,  including  launching or acquiring new systems,
increasing existing channel offerings, implementing alternative technologies and
offering  additional  communications  services.  Accordingly,  there  can  be no
assurance  that  the  Company  will be able to meet its  liquidity  needs in the
longer term.

         In addition to expanding its subscriber  base in its existing  systems,
the Company is seeking to launch additional systems,  and applications have been
made for the  Company to operate  wireless  cable  systems in an  additional  19
markets. Based on current market and operating conditions, the Company estimates
that the cost of launching any additional operating system after the granting of
a new license could be up to approximately $12 million,  including  construction
of a headend  facility,  subscriber-related  capital  costs and funding  initial
development costs and operating losses,  depending on factors particular to each
such  market.  The  Company  also from time to time may  selectively  pursue the
acquisition of existing subscription  television systems,  although it currently
has  no  understanding,  commitment  or  agreement  with  respect  to  any  such
acquisitions.  In  addition,  the Company  has  requested  from the  Ministry of
Communications  the right to  transmit  15  additional  channels  in each of its
markets as permitted  under recently  promulgated  wireless  cable  regulations.
Finally, the Company may implement alternative transmission  technologies in the
future. If such new systems are launched, acquisitions are consummated, existing
channel  offerings are increased or alternative  technologies  are  implemented,
substantial  additional funds may be required.  The Company intends to fund such
future cash  requirements  through the issuance of debt and/or additional equity
capital,  joint ventures or other  arrangements.  There can be no assurance that
the Company will be able to obtain such debt or equity  capital on  satisfactory
terms, or at all, to meet its future financing needs.

INFLATION AND EXCHANGE RATES

         Inflation  and exchange rate  variations  have had, and may continue to
have,  substantial  effects on the Company's results of operations and financial
condition. In periods of inflation,  many of the Company's expenses will tend to
increase.  Generally,  in periods of  inflation,  a company is able to raise its
prices  to  offset  the  rise in its  expenses  and may set its  prices  without
government   regulation.   However,  under  Brazilian  law  designed  to  reduce
inflation, the rates which the Company may charge to a particular subscriber may
not  be  increased  until  the  next  anniversary  of the  subscriber's  initial
subscription  date.  Thus, the Company is less able to offset expense  increases
with  revenue  increases.  Accordingly,  inflation  may have a material  adverse
effect on the Company's results of operations and financial condition.

     Generally,  the effects of  inflation in Brazil have been offset in part by
devaluation of the Brazilian  currency relative to the U.S. dollar.  Devaluation
of the real may also have an adverse effect on the


                                                        

<PAGE>



Company.  The Company collects  substantially  all of its revenues in reais, but
pays certain of its expenses,  including a significant  portion of its equipment
costs and a portion of its programming costs, in U.S. dollars. To the extent the
real  depreciates  at a rate greater  than the rate at which the Company  raises
prices,  the value of the Company's  revenues (as expressed in U.S. dollars) may
be adversely  affected.  This effect on the  Company's  revenues may  negatively
impact the Company's ability to fund U.S. dollar-based expenditures. The Company
does not currently seek to hedge exchange rate risks in the financial markets or
otherwise,  as it believes  that the costs of such hedging  outweigh the related
risks.  Accordingly,  devaluation of the real may have a material adverse effect
on the Company's results of operations and financial condition.

                           PART II - OTHER INFORMATION

Item 1.   LEGAL PROCEEDINGS.

          None.

Item 2.   CHANGES IN SECURITIES.

          None

Item 3.   DEFAULT UPON SENIOR SECURITIES.

          None

Item 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS.

          None

Item 5.   OTHER INFORMATION.

          None

Item 6.   EXHIBITS AND REPORTS ON FORM 8-K.

          (a)     EXHIBITS

          27.     Financial Data Schedule


          (b)     REPORTS ON FORM 8-K

          No reports of Form 8-K were filed by the  Company  during the  quarter
ended September 30, 1996.



                                                        

<PAGE>



                                   SIGNATURES

     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.

DATED:  November 14, 1996


                                   TV FILME, INC.
                                   --------------------------------------------
                                    (Registrant)



                                   /S/ HERMANO STUDART LINS DE ALBUQUERQUE
                                   --------------------------------------------
                                   Hermano Studart Lins de Albuquerque
                                   Chief Executive Officer (Principal Executive
                                   Officer)



                                   /S/ ALVARO J. AQUIRRE
                                   --------------------------------------------
                                   Alvaro J. Aquirre
                                   Chief Financial Officer (Principal Financial
                                   and Accounting Officer)



                                                        

<PAGE>


                                  EXHIBIT INDEX



                                                                 SEQUENTIALLY
NO.                               DESCRIPTION                   NUMBERED PAGES
---                               -----------                   --------------

27.                               Financial Data Schedule