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

                       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 March 31, 1997

                                         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 of             (I.R.S. Employer Identification No.)
 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 May 9, 1997.

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


<PAGE>



                                                  TV FILME, INC.

                                                       INDEX


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

ITEM 1.   Financial Statements

          Consolidated Balance Sheets as of December 31, 1996
          and March 31, 1997 (Unaudited)..........................         2

          Unaudited Consolidated Statements of Operations for
          the Three Months Ended March 31, 1996 and the Three
          Months Ended March 31, 1997.............................         3

          Unaudited Consolidated Statement of Changes in
          Stockholders' Equity at March 31, 1997..................         4

          Unaudited Consolidated Statements of Cash Flows for
          the Three Months Ended March 31, 1996 and the Three
          Months Ended March 31, 1997 ............................         5

          Notes to Unaudited Consolidated Financial Statements....         6

ITEM 2.   Management's Discussion and Analysis of Financial
          Condition and Results of Operations.....................        10


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

ITEM 1.   Legal Proceedings.......................................        14

ITEM 2.   Changes in Securities...................................        14

ITEM 3.   Default Upon Senior Securities..........................        14

ITEM 4.   Submission of Matters to a Vote of Security-Holders.....        14

ITEM 5.   Other Information.......................................        14

ITEM 6.   Exhibits and Reports on Form 8-K........................        14

SIGNATURES




<PAGE>



                         PART I - FINANCIAL INFORMATION
                         ------------------------------

ITEM 1.   FINANCIAL STATEMENTS.
          --------------------

<TABLE>
<CAPTION>

                         TV FILME, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS


                                                                                    DECEMBER 31,            MARCH 31,
                                                                                       1996                   1997
                                                                                    ------------           ----------
                                                                                                           (UNAUDITED)
                                                                                         (IN THOUSANDS)
<S>                                                                                 <C>                      <C> 

ASSETS
Current assets:
   Cash and cash equivalents.........................................                $116,355                 $106,173
   Accounts receivable, net..........................................                   3,607                    5,191
   Supplies..........................................................                   2,721                    3,423
   Prepaid expenses and other current assets.........................                   1,175                    1,592
   Pledged securities-current........................................                  16,159                   16,370
                                                                                     --------                 --------
       Total current assets..........................................                 140,017                  132,749
Property, plant and equipment, net...................................                  38,333                   46,383
Pledged securities...................................................                  17,353                   17,596
Debt issuance costs..................................................                   6,036                    6,173
Other assets.........................................................                   1,190                    1,155
                                                                                     --------                 --------
       Total assets..................................................                $202,929                 $204,056
                                                                                     ========                 ========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable.....................................................             $  11,106                $  10,275
  Short-term debt......................................................                 2,926                    2,926
  Payroll and other benefits payable...................................                 1,538                    1,773
  Accrued interest payable.............................................                   572                    5,142
  Accrued liabilities and taxes payable................................                   412                      775
  Payables to affiliates-current.......................................                   200                      200
                                                                                     --------                  -------
       Total current liabilities.....................................                  16,754                   21,091
Payables to affiliates-long term.....................................                     200                       --
Deferred installation fees...........................................                   8,227                    8,213
Senior Notes.........................................................                 140,000                  140,000
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, 10,166,176 and 10,166,176
     shares issued and outstanding...................................                     102                      102
     Additional paid-in capital......................................                  41,825                   41,825
     Deficit.........................................................                  (4,179)                  (7,175)
                                                                                     --------                 --------
       Total stockholders' equity....................................                  37,748                   34,752
                                                                                     --------                 --------
       Total liabilities and stockholders' equity....................                $202,929                 $204,056
                                                                                     ========                 ========
</TABLE>



                             See accompanying notes.


                                        2

<PAGE>


<TABLE>
<CAPTION>

                                          TV FILME, INC. AND SUBSIDIARIES
                                       CONSOLIDATED STATEMENTS OF OPERATIONS


                                                    (UNAUDITED)

                                                                                            THREE MONTHS ENDED
                                                                                                MARCH 31,
                                                                                   ------------------------------------
                                                                                         1996                1997
                                                                                       ---------          ----------
                                                                                   (IN THOUSANDS, EXCEPT PER SHARE DATA)

<S>                                                                                       <C>             <C>    
Revenues.......................................................                           $5,852          $11,180

Operating costs and expenses:
   System operating - Note 2...................................                            1,583            3,698
   Selling, general and administrative.........................                            3,310            5,475
   Depreciation and amortization...............................                            1,098            2,304
                                                                                        --------          -------
       Total operating costs and expenses......................                            5,991           11,477
                                                                                        --------          -------
       Operating loss..........................................                             (139)            (297)
Other income (expense):
   Interest expense - Note 2...................................                            (374)           (4,908)
   Interest income.............................................                                -            2,948
   Other expense...............................................                               10               (1)
   Exchange and translation gains (losses).....................                               44             (738)
                                                                                      ----------        ---------
       Total other income (expense)............................                             (320)          (2,699)
                                                                                      ----------        ---------
Net income (loss)..............................................                        $    (459)       $  (2,996)
                                                                                       =========        =========

Net income (loss) per share....................................                        $   (0.06)       $   (0.27)
                                                                                        =========       =========

Weighted average number of shares of common stock
  and common stock equivalents.................................                            8,086           10,984
                                                                                         =========      =========
</TABLE>










                             See accompanying notes.


                                        3

<PAGE>


<TABLE>
<CAPTION>

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

                                                    (UNAUDITED)

                                     FOR THE THREE MONTHS ENDED MARCH 31, 1997


                                                                         
                                                                                           
                                                    COMMON STOCK           ADDITIONAL                       
                                             -------------------------      PAID-IN        ACCUMULATED
                                               SHARES        PAR VALUE      CAPITAL          DEFICIT        TOTAL
                                             ----------      ---------     ----------      -----------     -------
                                                                 (In thousands, except shares)

<S>                                          <C>              <C>            <C>             <C>           <C> 
BALANCE AT DECEMBER 31, 1996.............    10,166,176        $ 102         $41,825         $(4,179)      $37,748
Net loss for the period..................            -            -               -           (2,996)       (2,996)
                                             ----------        -----         -------         --------      -------
BALANCE AT MARCH 31, 1997................    10,166,176        $ 102         $41,825         $(7,175)      $34,752
                                             ==========        =====         =======         ========      =======

</TABLE>




                             See accompanying notes.


                                        4

<PAGE>


<TABLE>
<CAPTION>

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

                                                    (UNAUDITED)


                                                                                            THREE MONTHS
                                                                                           ENDED MARCH 31,
                                                                                -------------------------------------
                                                                                     1996                    1997
                                                                                -------------            ------------
<S>                                                                                <C>                    <C>
                                                                                           (IN THOUSANDS)
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss..................................................................         $  (459)               $  (2,996)
Adjustments to reconcile net loss to net cash provided by
   operating activities:
       Depreciation and amortization......................................           1,098                    2,304
       Provision for losses on accounts receivable........................             157                      599
       Interest income on pledged securities..............................               -                     (454)
       Amortization of debt issuance costs................................               -                      191
       Increase (decrease) in deferred installation fees..................           1,125                      (14)
       Changes in operating assets and liabilities:
           Increase in accounts receivable................................            (917)                  (2,183)
           Increase in supplies...........................................            (792)                    (702)
           Decrease (increase) in prepaid expenses and other current assets             79                     (417)
           (Increase) decrease in other assets............................            (298)                      45
           Decrease in accounts payable...................................            (135)                    (831)
           (Decrease) increase in payroll and other benefits payable......             (54)                     235
           Increase in accrued interest payable...........................               -                    4,570
           (Decrease) increase in accrued liabilities and taxes payable...             (93)                     363
                                                                                    -------               ---------
Net cash provided by operating activities.................................            (289)                     710
                                                                                    -------               ---------

CASH FLOWS FROM INVESTING ACTIVITIES
Acquisitions:
   Property, plant and equipment..........................................           (5,018)                (10,364)
                                                                                    --------              ---------
Net cash used in investing activities.....................................           (5,018)                (10,364)

CASH FLOWS FROM FINANCING ACTIVITIES
Debt issuance costs ......................................................                -                    (328)
Issuance of common stock and warrants.....................................            7,151                       -
Decrease in payables to affiliates........................................           (1,863)                   (200)
                                                                                    --------              ---------
Net cash provided by financing activities.................................            5,288                    (528)
                                                                                    --------              ---------
Net change in cash and cash equivalents...................................              (19)                (10,182)
Cash and cash equivalents at beginning of period..........................               43                 116,355
                                                                                    --------              ---------
Cash and cash equivalents at end of the period............................          $    24               $ 106,173
                                                                                    ========              =========
</TABLE>




                             See accompanying notes.



                                        5

<PAGE>




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

1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         A.       COMPANY BACKGROUND

                  In connection  with an initial  public  offering of its Common
Stock (the "Initial Public 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 Initial Public  Offering,  the Company
entered into a restructuring (the "Restructuring")  pursuant to which 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
Initial  Public  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 Initial Public
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.
Applications  have been made for the Company to operate systems in an additional
27 markets in Brazil.  Although  the  economic  situation in Brazil has improved
since July 1994, when the government  introduced an economic  stabilization plan
designed to reduce the rate of  inflation,  a return to high levels of inflation
and currency fluctuations could adversely affect the Company's operations.



                                        6

<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 ("SFAS 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  gains
(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 three 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 common 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  Initial  Public  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.

         D.       ALLOWANCE FOR DOUBTFUL ACCOUNTS

         The  Company  had an  allowance  for  doubtful  accounts of $666,000 at
December  31, 1996 and  $917,000  at March 31,  1997.  Charges to the  allowance
during the three months ended March 31, 1997 were $348,000.

         E.       RECLASSIFICATIONS

         Certain  1996  amounts  have  been  reclassified  to  conform  to  1997
presentation.

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  during the three months
ended  March 31,  1996 and 1997 were  $1,200,000  and  $2,600,000.  The  Company
purchases from Tevecap a program guide which it  distributes to its  subscribers
monthly.  Amounts  paid to Tevecap  during the three months ended March 31, 1996
and 1997 were $75,000 and $53,000, respectively.


                                        7

<PAGE>


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


                  The Company  purchased two licenses to operate  wireless cable
systems  from Abril S.A.  ("Abril")  for  $400,000  each,  payable in four equal
annual installments,  which do not bear interest, including $200,000 outstanding
as of March 31, 1997.  The  remaining  $200,000 is due in February  1998.  Since
there are no outstanding borrowings to Tevecap, interest expense paid to Tevecap
was $0 for the three  months  ended March 31, 1997  compared to $374,000 for the
three months ended March 31, 1996.

                  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 March  31,  1997  were  $6,500,000.  At March  31,  1997,  issued  and
outstanding  letters  of credit  secured  by  affiliates  were  $4,600,000.  The
maturity date of such letters of credit range from 270 days to 360 days.


3.       STOCK OPTION PLAN

                  In connection with the Initial Public  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 of the Board 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 Initial Public  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  Initial  Public
Offering.  Options to purchase an additional  10,000 shares of Common Stock were
granted in each of  December  1996 and  February  1997 at an  exercise  price of
$11.75.


4.       LONG-TERM DEBT

         On December 20, 1996, the Company issued $140 million  principal amount
of 12-7/8% Senior Notes due December 15, 2004 (the "Senior Notes"). The proceeds
of the Senior Notes were loaned to ITSA and evidenced by an  intercompany  note.
Interest is payable  semi-annually in arrears on June 15 and December 15 of each
year,  commencing  on June  15,  1997.  Of the  $140  million  loaned  to  ITSA,
approximately  $33.5  million was used to purchase U.S.  government  securities,
scheduled interest and principal payments on which is in an amount sufficient to
provide  for  payment  in full when due of the  first  four  scheduled  interest
payments on the Senior Notes.  Debt issuance costs are capitalized and amortized
over the period of the debt under the effective yield method.

         The Senior Notes are  redeemable  on or after  December 15, 2000 at the
option  of the  Company,  in whole or in part from  time to time,  at  specified
redemption prices declining annually to 100% of the 


                                        8

<PAGE>

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


principal  amount on or after  December 15, 2003,  plus  accrued  interest.  The
Senior Notes contain  certain  covenants  that,  among other  things,  limit the
ability of the Company to incur  additional  indebtedness  and pay  dividends or
make  certain  other  distributions.  Upon a change of  control,  the Company is
required to make an offer to purchase the Senior Notes at a purchase price equal
to 101% of the  aggregate  principal  amount  thereof,  plus  accrued and unpaid
interest,  if any. In accordance  with the covenants of the Senior Notes and the
Company's current level of leverage,  at March 31, 1997 it is unable to make any
dividend payments.

The Company  believes that the recorded  value of the Senior Notes  approximates
the fair value at March 31, 1997.


                                       9

<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.  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
                                                                                      MARCH 31,
                                                    -------------------------------------------------------------------------
                                                                            % OF                                 % OF
                                                           1996           REVENUE               1997            REVENUE
                                                           ----           -------               ----            -------
                                                                     (In thousands, except share and other data)

<S>                                                         <C>           <C>                <C>                   <C>       
Revenues...........................................         $ 5,852       100%               $ 11,180              100%      
Operating costs and expenses:                                                                                          
     System operating..............................           1,583        27%                  3,698               33%      
     Selling, general and administrative...........           3,310        57%                  5,475               49%      
     Depreciation and amortization.................           1,098        19%                  2,304               21%
                                                    ----------------------------------     ----------------------------------
         Total operating costs and expenses........           5,991       102%                 11,477              103%
                                                    ----------------------------------     ----------------------------------      
            Operating loss.........................            (139)      (2%)                  (297)              (3%)      
     Interest expense..............................            (374)      (6%)                (4,908)             (44%)      
     Interest income...............................               -         0%                  2,948               26%      
     Other expense.................................              10         0%                    (1)                0%      
     Exchange and translation gains (losses).......              44         1%                  (738)                7%
                                                    ----------------------------------     ----------------------------------      
     Total other income (expense)..................           (320)       (5%)                (2,699)             (24%)      
                                                    ----------------------------------     ----------------------------------
Net loss...........................................        $  (459)       (8%)               $(2,996)             (27%)  
                                                    ==================================    ===================================
Net loss per share.................................        $ (0.06)                          $ (0.27)             
                                                    ===================                   ===================
Weighted average number of common stock                                                       
 and common stock equivalents outstanding..........           8,086                           10,984
                                                    ===================                   ===================
Other Data:
     EBITDA (a)....................................         $   959                          $  2,007
                                                    ===================                   ===================
     Number of subscribers at end of period........          47,066                            92,097
                                                    ===================                   ===================
</TABLE>

-------------------
(a) EBITDA is defined as  operating  loss plus  depreciation,  amortization  and
non-cash  charges.  While EBITDA  should not be  construed  as a substitute  for
operating  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 

                                       10

<PAGE>

requirements and debt service.  EBITDA, however, is not necessarily a measure of
the Company's ability to fund its cash needs.

     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,  net  of  sales  taxes.  Revenues  increased  from
approximately  $5.9  million  for the  three  months  ended  March  31,  1996 to
approximately $11.2 million for the three months ended March 31, 1997, primarily
due to an increase of approximately  43,000 in the average number of subscribers
in the Company's operating systems,  offset, in part, by approximately  $325,000
decrease in revenues due to a 5% sales tax increase in Brasilia at the beginning
of 1997.  Average monthly revenue per subscriber was $39.42 for the three months
ended March 31, 1997  compared  to $40.45 for the three  months  ended March 31,
1996.

         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 customer service costs.  System operating expenses
increased from  approximately  $1.6 million for the three months ended March 31,
1996 to  approximately  $3.7  million for the three months ended March 31, 1997,
primarily  due to an increase in  programming  expenses  of  approximately  $1.3
million and an increase  in  compensation  and  benefits of  approximately  $0.8
million.  Programming  and  subscriber  magazine  expenses  are charged on a per
subscriber basis and, therefore, will normally increase as subscribers increase.
During the three months ended March 31, 1997,  subscriber magazine expenses were
approximately  $50,000  due to a one-time  credit from the  publisher.  Had this
credit  not  been  given,   subscriber   magazine   expenses   would  have  been
approximately $400,000.

         SELLING,  GENERAL AND  ADMINISTRATIVE  EXPENSES.  Selling,  general and
administrative  expenses ("SG&A")  increased from approximately $3.3 million for
the three  months  ended March 31, 1996 to  approximately  $5.5  million for the
three  months ended March 31, 1997,  but as a percentage  of revenues  decreased
from approximately 56.6% to approximately  49.0%. In general,  SG&A increased in
line with the increase in subscribers,  including  increases in compensation and
benefits,  commissions,  advertising,  promotion and the provision for losses on
accounts receivable. All of these increases were directly associated with higher
revenues and higher subscriber levels during the three months ended in March 31,
1997.

         DEPRECIATION AND AMORTIZATION.  Depreciation and amortization  expenses
consist  primarily of  depreciation  of decoder  boxes,  headend  facilities and
capitalized installation costs. These costs are capitalized and depreciated over
a five  year  period.  Depreciation  and  amortization  expense  increased  from
approximately  $1.1  million  for the  three  months  ended  March  31,  1996 to
approximately $2.3 million for the three months ended March 31, 1997,  primarily
due to increases in the number of installed subscribers in each of the Company's
three operating systems.

         OPERATING LOSS.    For the three month period ended March 31, 1997, the
Company generated an operating loss of approximately $0.3 million, 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.

         INTEREST  EXPENSE.  Interest expense increased by $4.5 million from the
three month  period  ended March 31, 1996 to the three month  period ended March
31, 1997,  primarily as a result of accrued interest  associated with the Senior
Notes.


                                       11

<PAGE>


         INTEREST  INCOME.  Interest income  increased  by $2.9 million from the
three month  period  ended March 31, 1996 to the three month  period ended March
31, 1997,  primarily as a result of investing a portion of the proceeds from the
Initial Public Offering and the Senior Notes.

         EXCHANGE AND TRANSLATION GAINS (LOSSES). Exchange and translation gains
(losses) have arisen primarily as a result of converting short-term  investments
and borrowings  denominated in REAIS to U.S. dollars in accordance with SFAS No.
52.  These  amounts can  fluctuate  significantly  as a result of changes in the
exchange rate of the REAL relative to the U.S. dollar.  Exchange and translation
gains  (losses)  increased by $0.8 million from the three months ended March 31,
1996 to the  three  months  ended  March  31,  1997 as a  result  of  additional
short-term investments in Brazil.

         INCOME TAXES.  The Company did not have taxable income during the three
month  period  ended  March 31,  1997 and  expects  to  generate  losses for the
foreseeable  future.  Effective January 1, 1997,  Brazilian  effective tax rates
increased to approximately 33.0% from 30.5%.

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

LIQUIDITY AND CAPITAL RESOURCES

         The pay  television  business  is a  capital  intensive  business.  The
Company made capital  expenditures of  approximately  $10.4 million in the three
months ended March 31, 1997. Such capital expenditures were financed principally
through  offerings of equity and debt. From 1993 through the first part of 1996,
the Company raised an aggregate of approximately  $16.8 million through a series
of private equity placements to Tevecap and Warburg,  Pincus Investors,  L.P. In
August 1996, TV Filme completed the Initial Public Offering with net proceeds to
the Company of $24.4 million and in December 1996 TV Filme completed the sale of
the Senior Notes. In the past, working capital  requirements have been primarily
met by (i) vendor financing which generally  requires payment within 360 days of
shipment,  some of which has been  supported  by  irrevocable  letters of credit
guaranteed by Abril 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 Initial Public Offering. As
a result of the Initial  Public  Offering  and the Senior  Notes  offering,  the
Company does not expect to continue  borrowing from Abril or its affiliates.  As
of March 31, 1997,  the Company has a payable to Abril of $200,000 in connection
with the Company's  purchase of the Belem and Goiania licenses from Abril.  Such
amount is due in February 1998.

         As of March 31, 1997,  approximately $6.5 million was outstanding under
letters of credit with  maturities  ranging from 270 days to 360 days,  of which
approximately $4.6 million was guaranteed by affiliates of TV Filme. As of March
31, 1997, the Company had importation lines of credit in the aggregate amount of
$7.0 million with two commercial banks, of which  approximately $4.1 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 Initial  Public  Offering  and the Senior
Notes  offering,  the Company had positive  working capital at March 31, 1997 in
the amount of $111.1 million.  Net cash provided by operating activities for the
three months ended March 31, 1997 was approximately $0.7 million.

         For the remaining nine months of 1997, the Company anticipates that its
aggregate  capital  expenditures  in its  existing  operating  markets  will  be
approximately  $18.0  million,  comprised  primarily of subscriber  installation
equipment. In addition to expanding its subscriber base in its existing systems,



                                       12

<PAGE>



the Company is seeking to launch additional systems,  and applications have been
made for the Company to operate wireless cable systems in 27 additional  markets
in  Brazil;  however,  there  can be no  assurance  as to the  grant of any such
concessions and licenses and the timing of any such grants  generally.  Based on
current market and operating conditions,  the Company estimates that the average
cost of launching and deploying any additional  wireless cable operating  system
after the granting of a new license in the Company's  application  markets could
be up to  approximately  $12.0  million,  including  construction  of a  headend
facility, subscriber-related capital costs and funding initial development costs
and marketing  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 pay  television  systems,  although it currently has no
understanding,  commitment or agreement  with respect to any such  acquisitions.
The Company  believes that its current cash and internally  generated funds will
be  sufficient  to fund its cash  requirements  for at the least the next twelve
months  and has  invested  its  available  cash  predominantly  in  U.S.  dollar
denominated  short-term  marketable  securities.  As of March 31,  1997,  of the
Company's  $140.0  million in cash,  cash  equivalents  and pledged  securities,
$116.2 million was invested in U.S. dollar denominated securities. In the longer
term, the Company's funding needs are subject to a variety of factors, including
the number and size of new system launches or acquisitions,  the  implementation
of  alternative  transmission   technologies  and  the  offering  of  additional
communications services. Accordingly, there can be no assurance that the Company
will be able to meet its funding needs in the longer term.

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  Company.  The
Company collects substantially all of its revenues in REAIS, but pays certain of
its  expenses,  including  a  substantial  portion  of its  equipment  costs and
substantially all 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.
Accordingly,  devaluation of the REAL may have a material  adverse effect on the
Company's results of operations and financial condition.



                                       13

<PAGE>




                          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 March 31, 1997.




                                       14

<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:  May 14, 1997


                                   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)



                                       15

<PAGE>


                                  EXHIBIT INDEX
                                  -------------



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

27.                     Financial Data Schedule




                                       16