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

                       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 June 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                                    98-0160214
(State or Other Jurisdiction                (I.R.S. Employer Identification No.)
of 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 $.01                      10,189,296 shares
 per share.                                        as of August 11, 1997.

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


<PAGE>
<TABLE>
<CAPTION>



                                                       TV FILME, INC.

                                                            INDEX


PART I.  FINANCIAL INFORMATION                                                                             PAGE NO.
<S>        <C>                                                                                                <C> 


ITEM 1.     Financial Statements

            Consolidated Balance Sheets as of December 31, 1996
            and June 30, 1997 (Unaudited)......................................................................2

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

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

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

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

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

ITEM 3.     Quantitative and Qualitative Disclosure About Market Risk.........................................14


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


</TABLE>

<PAGE>



                         PART I - FINANCIAL INFORMATION

ITEM 1.   FINANCIAL STATEMENTS

<TABLE>
<CAPTION>

                         TV FILME, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

                                                           DECEMBER 31,   JUNE 30,
                                                               1996         1997
                                                            ----------   ----------- 
                                                                         (UNAUDITED)
                                                                 (IN THOUSANDS)
<S>                                                        <C>          <C>

ASSETS
Current assets:
   Cash and cash equivalents ............................   $ 116,355    $  98,587
   Accounts receivable, net .............................       3,607        6,817
   Supplies .............................................       2,721        3,537
   Prepaid expenses and other current assets ............       1,175        1,821
   Accrued interest receivable ..........................        --            245
   Pledged securities-current ...........................      16,159       16,645
                                                            ---------    ---------
       Total current assets .............................     140,017      127,652
Property, plant and equipment, net ......................      38,333       51,646
Pledged securities ......................................      17,353        8,755
Debt issuance costs .....................................       6,036        6,363
Other assets ............................................       1,190        1,155
                                                            ---------    ---------
       Total assets .....................................   $ 202,929    $ 195,571
                                                            =========    =========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ........................................   $  11,106    $  10,192
Short-term debt .........................................       2,926        2,926
Payroll and other benefits payable ......................       1,538        2,158
Accrued interest payable ................................         572          946
Accrued liabilities and taxes payable ...................         412          535
Payables to affiliates-current ..........................         200          200
                                                            ---------    ---------
       Total current liabilities ........................      16,754       16,957
Payables to affiliates-long term ........................         200            0
Deferred installation fees ..............................       8,227        8,021
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 10,189,296
     shares issued and outstanding ......................         102          102
     Additional paid-in capital .........................      41,825       41,825
     Deficit ............................................      (4,179)     (11,334)
                                                            ---------    ---------
       Total stockholders' equity .......................      37,748       30,593
                                                            ---------    ---------
       Total liabilities and stockholders' equity .......   $ 202,929    $ 195,571
                                                            =========    =========


</TABLE>







                             See accompanying notes.


                                        2

<PAGE>

<TABLE>
<CAPTION>


                                               TV FILME, INC. AND SUBSIDIARIES
                                            CONSOLIDATED STATEMENTS OF OPERATIONS

                                                        (UNAUDITED)




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

<S>                                                                 <C>               <C>               <C>               <C>   


Revenues ...................................................         $  6,781          $ 12,237          $ 12,633          $ 23,417
Operating costs and expenses:
   System operating - Note 2 ...............................            1,833             4,453             3,416             8,150
   Selling, general and administrative .....................            3,884             6,265             7,194            11,741
   Depreciation and amortization ...........................            1,326             2,823             2,424             5,127
                                                                     --------          --------          --------          --------
      Total operating costs and expenses ...................            7,043            13,541            13,034            25,018
                                                                     --------          --------          --------          --------
      Operating loss .......................................             (262)           (1,304)             (401)           (1,601)
Other income (expense):
   Interest expense - Note 2 ...............................              (48)           (4,782)             (422)           (9,690)
   Interest income .........................................                0             2,288                 0             5,236
   Other expense ...........................................                1                 0                11                (1)
   Exchange and translation gains (losses) .................               (2)             (361)               42            (1,099)
                                                                     --------          --------          --------          --------
      Total other income (expense) .........................              (49)           (2,855)             (369)           (5,554)
                                                                     --------          --------          --------          --------
Net income (loss) ..........................................         $   (311)         $ (4,159)         $   (770)         $ (7,155)
                                                                     ========          ========          ========          ========
Net income (loss) per share ................................         $  (0.04)         $  (0.38)         $  (0.10)         $  (0.65)
                                                                     ========          ========          ========          ========
Weighted average number of shares of
  common stock and common stock
  equivalents ..............................................            8,086            11,001             8,086            11,001
                                                                     ========          ========          ========          ========


</TABLE>







                                                  See accompanying notes.



                                                            3

<PAGE>
<TABLE>
<CAPTION>



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

                                                             (UNAUDITED)

                                                FOR THE SIX MONTHS ENDED JUNE 30, 1997


                                                             COMMON STOCK               ADDITIONAL
                                                       -----------------------------      PAID-IN       ACCUMULATED
                                                           SHARES         PAR VALUE       CAPITAL         DEFICIT           TOTAL
                                                       --------------  -------------    -----------     -----------     ------------
                                                                            (IN THOUSANDS, EXCEPT SHARES)

<S>     <C>                                            <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            --              --              --               --
Net loss for the period ..........................            --              --              --            (7,155)          (7,155)
                                                        ----------      ----------      ----------      ----------       ----------
BALANCE AT JUNE 30, 1997 .........................      10,189,296      $      102      $   41,825      $  (11,334)      $   30,593
                                                        ==========      ==========      ==========      ==========       ==========














                                                         See accompanying notes.

</TABLE>

                                                                    4

<PAGE>


<TABLE>
<CAPTION>

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

                                                            (UNAUDITED)


                                                                                            SIX MONTHS ENDED JUNE 30,
                                                                                   -----------------------------------------
                                                                                            1996                 1997
                                                                                          --------             --------
                                                                                                  (In thousands)
<S>                                                                                <C>              <C>  

CASH FLOWS FROM OPERATING ACTIVITIES
Net loss......................................................................      $      (770)     $          (7,155)
Adjustments to reconcile net loss to net cash provided
    by operating activities:
     Depreciation and amortization............................................             2,424                 5,127
Provision for losses on accounts receivable...................................               524                 1,223
Amortization of debt issuance costs...........................................                 -                   390
Increase (decrease) in deferred installation fees.............................             2,150                 (206)
     Changes in assets and liabilities:
       Increase in accounts receivable........................................           (1,887)               (4,433)
       Increase in supplies...................................................             (755)                 (816)
       Decrease (increase) in prepaid expenses and other current assets.......                97                 (646)
       Increase in accrued interest receivable................................                --                 (245)
       (Increase) decrease in other assets....................................             (182)                     1
       Decrease in pledged securities.........................................                --                 8,112
       Increase (decrease) in accounts payable................................                86                 (914)
       Increase in payroll and other benefits payable.........................               423                   620
       Increase in accrued interest payable...................................                 -                   374
       Increase in accrued liabilities and taxes payable......................               988                   123
                                                                                      ----------            ----------
Net cash provided by operating activities.....................................             3,098                 1,555
                                                                                      ----------            ----------

CASH FLOWS FROM INVESTING ACTIVITIES
Acquisitions:
     Property, plant and equipment............................................          (10,530)              (18,406)
                                                                                      ----------            ----------
Net cash used in investing activities.........................................          (10,530)              (18,406)
                                                                                      ----------            ----------

CASH FLOWS FROM FINANCING ACTIVITIES
Debt issuance costs...........................................................                 -                 (717)
Issuance of common stock and warrants.........................................             7,151                     0
Increase (decrease) in payables to affiliates.................................               295                 (200)
                                                                                      ----------            ----------
Net cash provided by financing activities.....................................             7,446                 (917)
                                                                                      ----------            ----------
Net change in cash and cash equivalents.......................................                14              (17,768)
Cash and cash equivalents at beginning of period..............................                43               116,355
                                                                                      ----------            ----------
Cash and cash equivalents at end of period....................................        $       57           $    98,587
                                                                                      ==========            ==========

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


</TABLE>




                                                    See accompanying notes.


                                                               5

<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 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 six 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  $1,092,000  at June 30, 1997.  Charges to the
allowance during the three months ended June 30, 1997 were $449,000.

         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 and six
months ended June 30, 1996 and 1997 were approximately $1,400,000 and $2,600,000
and $2,700,000 and $5,300,000,  respectively. The Company purchases from Tevecap
a program guide which it distributes to its subscribers monthly. Amounts paid to
Tevecap  during  the  three and six  months  ended  June 30,  1996 and 1997 were
$105,000 and $181,000 and $118,000 and $303,000, 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.  The $200,000 which remained
outstanding  as of June 30,  1997 is due in  February  1998.  Since there are no
outstanding  borrowings to Tevecap,  interest expense paid to Tevecap was $0 for
the six months ended June 30, 1997 compared to $400,000 for the six months ended
June 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  June  30,  1997  were  $6,400,000.  At June  30,  1997,  issued  and
outstanding  letters  of credit  secured  by  affiliates  were  $4,300,000.  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 June 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.

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 CONSOLIDATED 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 June 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 June 30, 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  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 JUNE 30,
                                              -------------------------------------------------
                                                                 % of                    % of
                                                  1996         REVENUE       1997      REVENUE
                                              ----------      ----------   -------   ----------

                                         (In thousands, except subscriber, per share and share data)
<S>                                           <C>              <C>     <C>          <C>  


Revenues ...................................   $  6,781         100%    $ 12,237         100%
Operating costs and expenses:
         System operating ..................      1,833          27%       4,453          36%
         Selling, general and administrative      3,884          57%       6,265          51%
         Depreciation and amortization .....      1,326          20%       2,823          23%
                                               ---------------------    ---------------------
           Total operating costs and
              expenses .....................      7,043         104%      13,541         111%
                                               ---------------------    ---------------------
              Operating loss ...............       (262)         (4%)     (1,304)        (11%)
         Interest expense ..................        (48)         (1%)     (4,782)        (39%)
         Interest income ...................          0           0%       2,288          19%
         Other expenses ....................          1           0%           0           0%
         Exchange and translation gains
          (losses) .........................         (2)          0%        (361)         (3%)
                                               ---------------------    ---------------------
Net loss ...................................   $   (311)         (4%)   $ (4,159)        (34%)
                                               ==============================================
Net loss per share .........................   $  (0.04)                $  (0.38)
                                               ========                 ========

Weighted average number of common
  stock and common stock equivalents
  outstanding ..............................      8,086                   11,001
                                               ========                  =======
Other Data:
         EBITDA(a) .........................   $  1,064                    1,519
                                               ========                  =======
         Number of subscribers at
         end of period .....................     59,036                  103,770
                                               ========                  =======


</TABLE>


                                                        10

<PAGE>


<TABLE>
<CAPTION>



                                                                                         SIX MONTHS ENDED JUNE 30,
                                                                   -----------------------------------------------------------------
                                                                                            % of                              % of
                                                                         1996             REVENUE          1997              REVENUE
                                                                       --------           -------        --------            -------
                                                                   (In thousands, except subscriber, per share and share data)

<S>                                                                 <C>             <C>                <C>               <C>    


Revenues .....................................................       $  12,633              100%        $  23,417              100%
Operating costs and expenses:
         System operating ....................................           3,416               27%            8,150               35%
         Selling, general and administrative .................           7,194               57%           11,741               50%
         Depreciation and amortization .......................           2,424               19%            5,127               22%
                                                                     ----------------------------       ----------------------------

           Total operating costs and
             expenses ........................................          13,034              103%           25,018              107%
                                                                     ----------------------------       ----------------------------
             Operating loss ..................................            (401)              (3%)          (1,601)              (7%)

         Interest expense ....................................            (422)              (3%)          (9,690)             (41%)
         Interest income .....................................               0                0%            5,236               22%
         Other expenses ......................................              11                0%               (1)              (0%)
         Exchange and translation gains
            (losses) .........................................              42               (0%)          (1,099)              (5%)
                                                                     ----------------------------      -----------------------------
Net loss .....................................................       $    (770)              (6%)       $  (7,155)             (31%)
                                                                     ============================       ============================
Net loss per share ...........................................       $   (0.10)                         $   (0.65)
                                                                     ==========                         ==========
Weighted average number of common
  stock and common stock equivalents
  outstanding ................................................           8,086                             11,001
                                                                     ==========                         ==========
Other Data:
         EBITDA(a) ...........................................       $   2,023                          $   3,526
                                                                     ==========                         ==========
         Number of subscribers at
         end of period .......................................          59,036                            103,770
                                                                     ==========                         ==========

</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 June
30,  1997  compared  to the same  period  in 1996,  revenues  increased  by $5.5
million, or 80%, primarily due to an increase of 45,000 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 $0.4 million.  For the six months
ended June 30, 1997 compared to the same period in 1996,  revenues  increased by
approximately  $10.8 million,  or 85%, primarily due to an increase of 44,000 in
the  average  number  of  subscribers. The  effect  of  the Brasilia revenue tax
increase for this period was $0.8 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 June
30,  1997  compared  with the same  period in 1996,  system  operating  expenses
increased by approximately


                                       11

<PAGE>



$2.6 million,  or 143%,  primarily due to additional  programming costs directly
associated  with the increase in the Company's  installed  subscriber base ($1.3
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 ($0.8 million).  For the six months ended
June 30, 1997  compared to the same period in 1996,  system  operating  expenses
increased  by  approximately  $4.7  million,  or 139%,  also  due to  additional
programming  costs  directly  associated  with  the  increase  in the  Company's
installed subscriber base ($2.5 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 ($1.6 million).

         SELLING,  GENERAL AND  ADMINISTRATIVE  EXPENSES.  For the three  months
ended June 30, 1997  compared to the same period in 1996,  selling,  general and
administrative  ("SG&A") expenses  increased by approximately  $2.4 million,  or
61%,  primarily due to growth in the average number of subscribers.  This growth
was supported by an increase in  advertising  and promotion  ($0.6  million) and
resulted in increases in compensation and benefits ($0.5 million), provision for
doubtful  accounts ($0.3  million),  bank fees ($0.2 million) and all other SG&A
expenses ($0.8 million).  For the six months ended June 30, 1997 compared to the
same period in 1996, SG&A expenses increased by approximately  $4.5 million,  or
63%, also due to growth in the average  number of  subscribers  which growth was
supported  by an  increase in  advertising  and  promotion  ($0.9  million)  and
resulted in increases in compensation and benefits ($1.1 million), provision for
doubtful  accounts ($0.7  million),  bank fees ($0.2 million) and all other SG&A
expenses ($1.6 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 June 30,  1997  compared to the same
period in 1996, depreciation and amortization expense increased by $1.5 million,
or 113%.  For the six months ended June 30, 1997  compared to the same period in
1996,  depreciation and amortization expense increased by $2.7 million, or 112%.
In each  case,  the  increase  is  primarily  due to  growth  in the  number  of
subscribers in each of the Company's three operating systems.

         OPERATING  LOSS.  For the three and six month  periods  ended  June 30,
1997,  the  Company  generated  a loss of  approximately  $1.3  million and $1.6
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 six
month  periods ended June 30, 1996 to the three and six month periods ended June
30, 1997,  primarily as a result of accrued interest  associated with the Senior
Notes.

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

         INCOME  TAXES.  The  Company  did not have  taxable  income  during the
six-month  period  ended June 30, 1997 and  expects to  generate  losses for the
foreseeable  future.  Effective January 1, 1997,  Brazilian  effective tax rates
increased from 30.5% to approximately 33.0%.

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


                                       12

<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

         The pay  television  business  is a  capital  intensive  business.  The
Company made capital  expenditures  of  approximately  $18.4  million in the six
months ended June 30, 1997. Such capital  expenditures were financed principally
through the proceeds  from  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 June 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 June 30, 1997,  approximately  $6.4 million was outstanding under
letters of credit with  maturities  ranging from 270 days to 360 days,  of which
approximately  $4.3 million was guaranteed by affiliates of TV Filme. As of June
30, 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 June 30, 1997 in the
amount of $105.4  million.  Net cash  provided by operating  activities  for the
three months ended June 30, 1997 was approximately $0.8 million.

         For the second half of 1997, the Company anticipates that its aggregate
capital  expenditures in its existing  operating  markets will be  approximately
$16.0 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, and applications have been made for the
Company to operate  wireless  cable systems in 26 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  analog wireless cable  operating  system
after the granting of a new license in the Company's  application  markets could
be up to  approximately  $15.0  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 least the next twelve months
and has invested its available cash  predominantly  in U.S.  dollar  denominated
short-term marketable  securities.  As of June 30, 1997, of the  Company's  $124
million in cash,  cash  equivalents and pledged  securities,  $107.6 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


                                       13

<PAGE>



with  revenue  increases.  Accordingly,  inflation  may have a material  adverse
effect on the Company's results of operations and financial condition.

         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 raises 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.

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.

          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

          3.1(ii) Amended and Restated Bylaws.

          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 June 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:  August 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. AQUIRRE
                               Alvaro J. Aquirre
                               Chief Financial Officer (Principal Financial and
                               Accounting Officer)




                                       15

<PAGE>


                                  EXHIBIT INDEX


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

3.1(ii)               Amended and Restated Bylaws
27.                   Financial Data Schedule




                                       16