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

                      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, 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                                      98-016214
(State or Other Jurisdiction of          (I.R.S. Employer Identification Number)
Incorporation or Organization)

               C/O ITSA-Intercontinental Telecomunicacoes Ltda.
                             SCS, Quadra 07-Bl.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 $0.01                     10,812,096 shares
      per share.                                        as of November 12, 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 September 30, 1997 (Unaudited)...........................      2

         Unaudited Consolidated Statements of Operations for the 
         Three and Nine Months Ended September 30, 1996 and the
         Three and Nine Months Ended September 30, 1997...............      3

         Unaudited Consolidated Statement of Changes in Stockholders'
         Equity at September 30, 1997.................................      4

         Unaudited Consolidated Statements of Cash Flows for the Nine
         Months Ended September 30, 1996 and the Nine Months
         Ended September 30, 1997.....................................      5

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

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

ITEM 3.  Quantitative and Qualitative Disclosure About Market Risk....     13


PART II. OTHER INFORMATION

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

ITEM 2.  Changes in Securities and Use of Proceeds....................     13

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

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

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

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

SIGNATURES

<PAGE>
<TABLE>
<CAPTION>


                                             TV FILME, INC. AND SUBSIDIARIES
                                                CONSOLIDATED BALANCE SHEETS

                                                                                   DECEMBER 31,           SEPTEMBER 30,
                                                                                       1996                    1997
                                                                                --------------------   ---------------------
                                                                                                           (UNAUDITED)
                                                                                              (IN THOUSANDS)

<S>                                                                                        <C>                       <C>    
ASSETS
Current assets:
     Cash and cash equivalents.........................................                    $116,355                  $92,136
     Accounts receivable, net..........................................                       3,607                    8,137
     Supplies..........................................................                       2,721                    5,074
     Prepaid expenses and other current assets.........................                       1,175                    3,191
     Accrued interest receivable.......................................                          --                      597
     Pledged securities-current........................................                      16,159                   16,645
                                                                                --------------------   ---------------------
           Total current assets........................................                     140,017                  125,780
Property, plant and equipment, net.....................................                      38,333                   60,175
Pledged securities.....................................................                      17,353                    8,755
Debt issuance costs....................................................                       6,036                    6,265
Other assets...........................................................                       1,190                    1,596
                                                                                --------------------   ---------------------
           Total assets................................................                    $202,929                 $202,571
                                                                                ====================   =====================

LIABILITIES AND STOCKHOLDERS' EQUITY
 Current liabilities:
     Accounts payable..................................................                     $11,106                  $15,201
     Short-term debt...................................................                       2,926                      804
     Payroll and other benefits payable................................                       1,538                    2,584
     Accrued interest payable..........................................                         572                    5,326
     Accrued liabilities and taxes payable.............................                         412                      912
     Payables to affiliates-current....................................                         200                      200
                                                                                --------------------   ---------------------
          Total current liabilities....................................                      16,754                   25,027
Payables to affiliates-long term.......................................                         200                       --
Deferred installation fees.............................................                       8,227                    7,695
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 10,812,096 shares
          issued and outstanding.......................................                         102                      108
     Additional paid-in capital........................................                      41,825                   45,582
     Deficit...........................................................                      (4,179)                 (15,841)
                                                                                --------------------   ---------------------
          Total stockholders' equity...................................                      37,748                   29,849
                                                                                --------------------   ---------------------
          Total liabilities and stockholders' equity...................                    $202,929                 $202,571
                                                                                ====================   =====================




                             See accompanying notes.


                                       2

</TABLE>


<PAGE>
<TABLE>
<CAPTION>



                         TV FILME, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS

                                   (UNAUDITED)


                                                           THREE MONTHS ENDED SEPTEMBER 30,          NINE MONTHS ENDED SEPTEMBER 30,
                                                               1996                1997                 1996               1997
                                                          ---------------      --------------      ---------------   ---------------
                                                                             (IN THOUSANDS, EXCEPT PER SHARE DATA)

<S>                                                               <C>                <C>                  <C>               <C>    
Revenues................................................          $8,654             $13,691              $21,287           $37,108
Operating costs and expenses:
    System operating - Note 2...........................           2,676               4,771                6,092            12,921
    Selling, general and administrative.................           4,421               6,947               11,615            18,688
    Depreciation and amortization.......................           1,572               3,290                3,996             8,417
                                                          ---------------      --------------      ---------------   ---------------
        Total operating costs and expenses..............           8,669              15,008               21,703            40,026
                                                          ---------------      --------------      ---------------   ---------------
        Operating loss..................................             (15)             (1,317)                (416)           (2,918)
Other income (expense):
    Interest expense - Note 2...........................            (199)             (4,756)                (481)          (14,446)
    Interest income.....................................             314               1,991                  174             7,227
                                                          ---------------      --------------      ---------------   ---------------
        Interest expense, net...........................             115              (2,765)                (307)           (7,219)
    Other expense.......................................             (34)                  5                  (23)                4
    Exchange and translation gains (losses).............            (143)               (430)                (101)           (1,529)
                                                          ---------------      --------------      ---------------   ---------------
        Total other income (expense)....................             (62)             (3,190)                (431)           (8,744)
                                                          ---------------      --------------      ---------------   ---------------
Net income (loss).......................................             (77)            ($4,507)               ($847)         ($11,662)
                                                          ===============      ==============      ===============   ===============
Net income (loss) per share.............................          ($0.01)             ($0.41)              ($0.10)           ($1.06)
                                                          ===============      ==============      ===============   ===============
Weighted average number of shares of common stock
  and common stock equivalents..........................           9,868              10,978                8,680            10,982
                                                          ===============      ==============      ===============   ===============










                             See accompanying notes.


                                       3
</TABLE>


<PAGE>

<TABLE>
<CAPTION>


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

                                   (UNAUDITED)

                  For the nine months ended September 30, 1997


                                            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
Issuance of common stock for 
    payment of 1996 non-cash 
    compensation...................            23,120                  --                 --                 --                  --
Conversion of outstanding warrants 
    into common stock..............           622,800                   6              3,757                 --               3,763
Net loss for the period............                --                  --                 --            (11,662)            (11,662)
                                      ---------------    ----------------   ----------------     ---------------    ----------------
BALANCE AT SEPTEMBER 30, 1997......        10,812,096                $108            $45,582           ($15,841)            $29,849
                                      ===============    ================   ================     ===============    ================































                             See accompanying notes.


                                       4
</TABLE>


<PAGE>
<TABLE>
<CAPTION>



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

                                   (UNAUDITED)


                                                                NINE MONTHS ENDED SEPTEMBER 30,
                                                             ---------------------------------------
                                                                  1996                        1997
                                                             ------------                  ---------

                                                                         (IN THOUSANDS)

<S>                                                         <C>                       <C>          
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss..............................................      $      (847)              $    (11,662)
Adjustments to reconcile net loss to net cash
   provided by operating activities:
   Depreciation and amortization......................            3,996                      8,417
Provision for losses on accounts receivable...........              821                      2,414
Amortizaton of debt issuance costs....................               --                        590
Increase (decrease) in deferred installation fees.....            2,927                       (532)
   Changes in operating assets and liabilities:
      Increase in accounts receivable.................           (2,418)                    (6,944)
      Increase in supplies............................           (1,351)                    (2,353)
      Increase in prepaid expenses and other current
       assets.........................................             (327)                    (2,016)
      Increase in accrued interest receivable.........               --                       (597)
      Increase in other assets........................             (183)                      (485)
      Decrease in pledged securities..................               --                      8,112
      Increase in accounts payable....................            1,876                      4,095
      Increase in payroll and other benefits payable..              773                      1,046
      Increase in accrued interest payable............               --                      4,754
      Increase in accrued liabilities and taxes
        payable.......................................              807                        500
                                                            -----------               ------------
Net cash provided by operating activities.............            6,074                      5,339
                                                            -----------               ------------

CASH FLOWS FROM INVESTING ACTIVITIES
 Acquisitions:
   Property, plant and equipment......................          (17,481)                   (30,180)
                                                            -----------               ------------
Net cash used in investing activities.................          (17,481)                   (30,180)
                                                            -----------               ------------

CASH FLOWS FROM FINANCING ACTIVITIES
   Increase (decrease) in short-term debt.............            1,322                     (2,122)
   Proceeds from initial public offering,
      net of costs....................................           24,372                         --
   Debt issuance costs................................               --                       (819)
   Issuance of common stock and warrants..............            7,151                      3,763
   Decrease in payables to affiliates.................           (1,863)                      (200)
                                                            -----------               ------------
Net cash provided by financing activities.............           30,982                        622
                                                            -----------               ------------
Net change in cash and cash equivalents...............           19,575                    (24,219)
Cash and cash equivalents at beginning of period......               43                    116,355
                                                            -----------               ------------
Cash and cash equivalents at end of period............      $    19,618               $     92,136
                                                            ===========               ============

Cash paid during the period for:
   Interest...........................................   $          422               $      8,762
                                                         ==============               ============



                             See accompanying notes.


                                       5

</TABLE>

<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  (the "Initial  Public
Offering") of its common stock,  $.01 par value per share (the "Common  Stock"),
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 was owned by  certain  then
existing  shareholders of ITSA who were and 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-size   markets in Brazil.  The Company has  established  wireless  cable
operating  systems in the cities of  Brasilia,  Goiania and Belem.  Applications
have been made by 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.

     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,  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).

                                       6

<PAGE>

         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 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  $1,744,000  at  September  30, 1997.  Charges to  the
allowance during the three months ended September 30, 1997 were $538,000.

     E.  RECLASSIFICATIONS

         Certain  1996  amounts  have been  reclassified  to conform to the 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 and nine months ended
September 30, 1996 and 1997 were  approximately  $1,900,000  and  $4,500,000 and
$2,600,000 and  $7,900,000,  respectively.  Through  September 1997, the Company
purchased from Tevecap a program guide which it  distributed to its  subscribers
monthly. Amounts paid to Tevecap for the program guide during the three and nine
months ended September 30, 1996 and 1997 were $111,000 and $289,000 and $323,000
and $679,000,  respectively. As of October 1997, the Company no longer purchases
its program guide from Tevecap but has begun to produce and distribute  its  own
program guide.

         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.   The  $200,000  which  remained
outstanding as of September 30, 1997 is due in February 1998. Since there are no
outstanding  borrowings to Tevecap,  interest expense paid to Tevecap was $0 for
the nine  months  ended  September  30, 1997  compared to $400,000  for the nine
months ended September 30, 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
September  30,  1997  were  $10,800,000.  At  September  30,  1997,  issued  and
outstanding  letters  of credit  secured  by  affiliates  were  $3,600,000.  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 (such plan,  as  subsequently  amended in September  1997,  is
hereinafter referred to as 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  10,000 shares of Common Stock were granted in each of December 1996
and February  1997 at an exercise  price of $11.75.  Options to purchase  15,000
shares  of Common  Stock  were  granted  in July  1997 at an  exercise  price of
$10.125.

                                       7
<PAGE>


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 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
September 30, 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 September 30, 1997.

5.   STOCKHOLDERS' EQUITY

         During 1996, the Company issued warrants to purchase  794,764 shares of
Common Stock to certain  stockholders of the Company to replace warrants held by
these  stockholders  in  a  subsidiary  of  the  Company.   Such  warrants  were
exercisable  until  September 28, 1997 at an exercise  price of $6.52 per share.
The warrants were exercisable  either for cash, the cancellation of indebtedness
or on a cashless exercise basis.

         In September 1997,  577,172 of the warrants were exercised for cash for
a total  purchase  price of  $3,763,161.  In  addition,  the  remaining  217,592
warrants  were  exchanged  for  an  aggregate  of  45,628 shares of Common Stock
on  a  cashless  exercise  basis.  Such  warrants  were  converted  into  shares
of Common Stock based on the difference  between the exercise price of $6.52 per
share and the average  closing price of the Common Stock on the Nasdaq  National
Market during the five trading days preceding the date of exercise ($8.25).






                                       8
<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  and  rapid  growth  of the  Company's
business 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 SEPTEMBER 30,
                                                       -----------------------------------------------------------------------------
                                                            1996            % OF REVENUE             1997             % OF REVENUE
                                                       ---------------      --------------      ---------------     ----------------

                                                               (IN THOUSANDS, EXCEPT SUBSCRIBER, PER SHARE AND SHARE DATA)

<S>                                                             <C>                   <C>               <C>                    <C> 
Revenues                                                        $8,654                100%              $13,691                100%
Operating costs and expenses:
    System operating                                             2,676                 31%                4,771                 35%
    Selling, general and administrative                          4,421                 51%                6,947                 51%
    Depreciation and amortization                                1,572                 18%                3,290                 24%
                                                       ---------------      --------------      ---------------     ---------------
        Total operating costs and expenses                       8,669                100%               15,008                110%
                                                       ---------------      --------------      ---------------     ---------------
        Operating loss                                             (15)                (0%)              (1,317)               (10%)
Other income (expense):
    Interest expense                                               (199)               (2%)              (4,756)               (35%)
    Interest income                                                 314                 4%                1,991                 15%
                                                        ---------------     --------------      ---------------     ---------------
        Interest expense, net                                       115                 1%               (2,765)               (20%)
    Other expense                                                   (34)               (0%)                   5                  0%
    Exchange and translation gains (losses)                        (143)               (2%)                (430)                (3%)
                                                        ---------------     --------------      ---------------     --------------- 
        Total other income (expense)                                (62)               (1%)              (3,190)               (23%)

                                                        ---------------     --------------      ---------------     ---------------
Net income (loss)                                                  ($77)               (1%)             ($4,507)               (33%)
                                                        ===============     ==============      ===============     ===============
Net income (loss) per share                                      ($0.01)                                 ($0.41)
                                                        ===============                         ===============
Weighted average number of shares of
    common stock and common stock
    equivalents                                                   9,868                                  10,978
                                                        ===============                         ===============

Other Data:
    EBITDA (a)                                                   $1,557                                  $1,973
                                                        ===============                         ===============
    Number of subscribers at end of period                       70,591                                 114,913
                                                        ===============                         ===============

</TABLE>


                                       9
<PAGE>
<TABLE>
<CAPTION>
                                                                                NINE MONTHS ENDED SEPTEMBER 30,
                                                       -----------------------------------------------------------------------------
                                                            1996            % OF REVENUE             1997             % OF REVENUE
                                                       ---------------      --------------      ---------------      ---------------

                                                               (IN THOUSANDS, EXCEPT SUBSCRIBER, PER SHARE AND SHARE DATA)

<S>                                                           <C>                    <C>               <C>                     <C> 
Revenues                                                      $21,287                100%              $37,108                 100%
Operating costs and expenses:
    System operating                                            6,092                 29%               12,921                  35%
    Selling, general and administrative                        11,615                 55%               18,688                  50%
    Depreciation and amortization                               3,996                 19%                8,417                  23%
                                                       ---------------      --------------      ---------------      ---------------
        Total operating costs and expenses                     21,703                102%               40,026                 108%
                                                       ---------------      --------------      ---------------      ---------------
        Operating loss                                           (416)                (2%)              (2,918)                (8%)
Other income (expense):
    Interest expense                                             (481)                (2%)             (14,446)               (39%)
    Interest income                                               174                  1%                7,227                 19%
                                                       ---------------      --------------      ---------------      ---------------
        Interest expense, net                                    (307)                (1%)              (7,219)               (19%)
    Other expense                                                 (23)                (0%)                   4                  0%
    Exchange and translation gains (losses)                      (101)                (0%)              (1,529)                (4%)
                                                       ---------------      --------------      ---------------      ---------------
        Total other income (expense)                             (431)                (2%)              (8,744)               (24%)
                                                       ---------------      --------------      ---------------      ---------------
Net income (loss)                                               ($847)                (4%)            ($11,662)               (31%)
                                                       ===============      ==============      ===============      ===============
Net income (loss) per share                                    ($0.10)                                  ($1.06)
                                                       ===============                          ===============
Weighted average number of shares of
    common stock and common stock
    equivalents                                                 8,680                                   10,982
                                                       ===============                          ===============

Other Data:
    EBITDA (a)                                                 $3,580                                   $5,499
                                                       ===============                          ===============
    Number of subscribers at end of period                     70,591                                  114,913
                                                       ===============                          ===============

</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 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.  For the three  months  ended
September  30, 1997 compared to the same period in 1996,  revenues  increased by
$5.0  million,  or 58%,  primarily  due to an  increase of 48,000 in the average
number of  subscribers.  This  increase was offset,  in part,  by an increase in
taxes on revenues from approximately 2.7% to 7.7% in Brasilia (effective January
1, 1997) which  represented  a net revenue  reduction  of $0.5  million for this
period. For the nine months ended September 30, 1997 compared to the same period
in 1996,  revenues increased by approximately  $15.8 million,  or 74%, primarily
due to an increase of 43,000 in the average number of subscribers. The effect of
the Brasilia revenue tax increase for this period was $1.3 million.

         SYSTEM  OPERATING  EXPENSES.   System  operating  expenses  consist  of
programming  costs  (including  costs  associated  with developing and producing
proprietary programming content), costs for the programming guide distributed to
subscribers,  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.  For the three  months ended
September  30,  1997  compared  with the same period in 1996,  system  operating
expenses  increased by  approximately  $2.1  million,  or 78%,  primarily due to





                                       10
<PAGE>



additional  programming  costs  directly  associated  with the  increase  in the
Company's  installed  subscriber base ($0.8 million),  costs associated with the
development of the Company's proprietary programming initiatives ($0.2 million),
programming  guide expenses ($0.2 million) and  compensation  and benefits ($0.5
million).  For the nine months  ended  September  30, 1997  compared to the same
period in 1996,  system  operating  expenses  increased  by  approximately  $6.8
million,  or 112%,  also due to  additional  programming  and  production  costs
directly associated with the increase in the Company's installed subscriber base
($3.5  million),   costs  associated  with  the  development  of  the  Company's
proprietary  programming  initiatives ($0.4 million),  higher  programming guide
expenses as a result of an increase in  circulation  as well as in the per issue
cost of the programming guide ($0.4 million) and compensation and benefits ($2.0
million).

         SELLING,  GENERAL AND  ADMINISTRATIVE  EXPENSES.  For the three  months
ended September 30, 1997 compared to the same period in 1996,  selling,  general
and administrative ("SG&A") expenses increased by approximately $2.5 million, or
57%,  primarily  due to growth in the average  number of installed  subscribers.
This growth was  supported by an increase in  advertising  and  promotion  ($0.6
million) and resulted in increases in compensation  and benefits ($0.2 million),
provision for doubtful accounts ($1.2 million), bank fees ($0.4 million) and all
other SG&A expenses ($0.1 million). For the nine months ended September 30, 1997
compared to the same period in 1996,  SG&A expenses  increased by  approximately
$7.0  million,  or 61%,  also due to growth in the average  number of  installed
subscribers  which was  supported by an increase in  advertising  and  promotion
($1.4  million) and resulted in increases  in  compensation  and benefits  ($1.4
million),  provision  for  doubtful  accounts  ($1.6  million),  bank fees ($0.4
million) and all other SG&A expenses ($2.2 million).

         DEPRECIATION AND AMORTIZATION  EXPENSES.  Depreciation and amortization
expenses consist primarily of depreciation of decoder boxes,  headend facilities
and installation  costs. These costs are capitalized and depreciated over a five
year period.  For the three months ended September 30, 1997 compared to the same
period in 1996, depreciation and amortization expense increased by $1.7 million,
or 109%.  For the nine months  ended  September  30,  1997  compared to the same
period in 1996, depreciation and amortization expense increased by $4.4 million,
or 111%. In each case,  the increase is primarily due to growth 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, 1997, the Company  generated a loss of  approximately  $1.3 million and $2.9
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.

         INTEREST  EXPENSE.  Interest expense  increased from the three and nine
month periods ended September 30, 1996 to the three and nine month periods ended
September 30, 1997,  primarily as a result of accrued  interest  associated with
the Senior Notes.

         INTEREST  INCOME.  Interest  income  increased  from the three and nine
month periods ended September 30, 1996 to the three and nine month periods ended
September  30,  1997,  primarily  as a result of interest  income  derived  from
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
losses  increased from the three and nine months ended September 30, 1996 to the
three  and nine  months  ended  September  30,  1997 as a result  of  additional
short-term investments in REAIS.

         INCOME  TAXES.  The  Company  did not have  taxable  income  during the
nine-month period ended September 30, 1997 and expects to  generate  losses  for
the foreseeable   future.   Brazilian   marginal   corporate   tax    rates  are
approximately 33.0%.

         NET LOSS. As explained above,  net losses in the periods  presented are
primarily  attributable to the significant  expenses incurred in connection with
the further  development  of the  Company's  business and net interest  expenses
associated with the Senior Notes.

                                       11

<PAGE>


LIQUIDITY AND CAPITAL RESOURCES

         The pay television business is a capital intensive business.  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) venture  capital,
(ii) capital markets financings, (iii) 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 (iv) 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  September  30,  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 September 30, 1997,  approximately  $10.8 million was outstanding
under  letters of credit with  maturities  ranging from 270 days to 360 days, of
which approximately $3.6 million was guaranteed by affiliates of TV Filme. As of
September 30, 1997, the Company had importation lines of credit in the aggregate
amount of $23.6 million with three  commercial  banks,  of  which  approximately
$12.8 million was available on such date.  The Company  currently  believes that
importation  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  September  30, 1997 in the amount of $100.3  million.  Net cash  provided by
operating  activities  for  the  three  months  ended  September  30,  1997  was
approximately $3.8 million.

         The Company made capital expenditures of approximately $30.2 million in
the nine months  ended  September  30,  1997.  Such  capital  expenditures  were
financed through the proceeds from offerings of equity and debt in 1996 and from
cash  generated from the Company's  operations.  For the fourth quarter of 1997,
the Company anticipates that its aggregate capital  expenditures in its existing
operating  markets will be  approximately  $7.0 million  comprised  primarily of
subscriber  installation equipment. In addition to expanding its subscriber base
in its existing systems, the Company is seeking to launch additional systems. In
September 1997, the Brazilian  Ministry of Communications  announced the bidding
process by which  additional  pay-TV  licenses  will be awarded  throughout  the
country.  This award  process  commenced  in  October  1997 and is  expected  to
continue,  market-by-market,  throughout  most of 1998.  The Company  intends to
actively pursue such licenses as they become available for bid;  however,  there
can be no assurance as to the grant of any such concessions and licenses and the
timing of any such  grants  generally.  The  Company  also from time to time may
selectively pursue the acquisition of existing pay television systems, although,
it is 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 least
the next twelve months and has invested its available cash predominantly in U.S.
dollar denominated short-term marketable  securities.  As of September 30, 1997,
of  the  Company's   $118.0  million  in  cash,  cash  equivalents  and  pledged
securities,  $101.4  million  (86%)  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.




                                       12
<PAGE>



         Generally,  inflation in Brazil has been  accompanied 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
significant  portion of its equipment costs,  substantially all interest expense
and most 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  is able to
raise prices, the value of the Company's revenues (as expressed in U.S. dollars)
will 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.

RECENT DEVELOPMENTS

         The recent economic and financial  turmoil in Southeast Asia has had an
impact on many emerging markets,  including Brazil. As a result of these events,
the Brazilian government has taken significant measures to protect the country's
currency, the Real, as well as the gains achieved over the last several years by
Brazil's  economic  stabilization  plan, the Real Plan. Among other actions,  on
October 27, 1997, Brazil's Central Bank significantly raised short-term interest
rates, and, on November 10, 1997, the Brazilian government announced a series of
austerity  measures,  generally  including  budget cuts,  restrictions on public
indebtedness,  tax increases,  export  incentives and  restrictions  on imports.
These  measures,  which are  expected  to have a  negative  impact  on  Brazil's
economic  growth,  are  designed  to improve  the  country's  fiscal and current
account  deficits  and relieve  pressure on the Real.  There can be no assurance
that such  measures  will be  successful  or that the  expected  slowdown of the
Brazilian  economy will not adversely impact the Company's  business and results
of operations.

ITEM 3.       QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

         This requirement is not currently applicable to the Company.

                           PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS.

         None.

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS.

         On  September  29,  1997,  the Company  issued an  aggregate of 622,800
shares of its Common Stock as a result of the exercise of outstanding  warrants.
The sale of the 622,800 shares of Common Stock was effected in reliance upon the
exemption  from the  registration  requirements  provided by Section 4(2) of the
Securities Act of 1933, as amended,  on the basis that such transactions did not
involve a public  offering.  There were no  underwriters  employed in connection
with the sale of the 622,800 shares of Common Stock.  The proceeds  derived from
the  sale of such  shares  will be used by the  Company  for  general  corporate
purposes. See footnote 5 to the Company's financial statements included herein.

ITEM 3.  DEFAULT UPON SENIOR SECURITIES.

         None.

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

         The Company  held its Annual  Meeting of  Stockholders  on September 9,
1997.  Proposals  presented for a stockholder  vote were (i) the election of two
Class I Directors, and (ii) the ratification of the appointment of Ernst & Young
Auditores Independentes S.C. as  independent  auditors  for  the Company for the
fiscal year 1997.








                                       13
<PAGE>


         Each of the incumbent  Class I directors  nominated by the Company were
elected with the following voting results:

                                                  VOTES               VOTES
                                                   FOR               WITHHELD
                                                  -----              --------
Hermano Studart Lins de Albuquerque             7,458,962               0
David E. Libowitz                               7,458,962               0

         The  appointment of Ernst & Young  Auditores  Independentes S.C. as the
Company's  independent  auditor's for the fiscal year 1997 was approved with the
following voting results:

          VOTES            VOTES
          CAST             CAST                                       BROKER
          FOR             AGAINST            ABSTENTIONS             NON-VOTES
          -----           -------            -----------             ---------
       7,458,962            0                     0                      --


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 on Form 8-K were filed by the  Company  during the  quarter
ended September 30, 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:   November 13, 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. AGUIRRE
                                    --------------------------------------------
                                    Alvaro J. Aguirre
                                    Chief Financial Officer (Principal Financial
                                    and Accounting Officer)



















                                       15
<PAGE>


                                  EXHIBIT INDEX



NO.                    DESCRIPTION
---                    -----------

27                     Financial Data Schedule