UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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Form 20-F

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|o                                           | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
|------------------------------------------- | ----------------------------------------------------------------------------------------------
|OR                                         
|ý                                           | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934          
|For the fiscal year ended December 31, 2003
|OR                                         
|o                                           | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934      

for
the transition period from              to

Commission
File Number: 333-07112

Multicanal S.A.(Exact name of registrant as specified in its charter)

Multichannel S.A.(Translation of registrant's name into English)

Argentina(Jurisdiction of incorporation or organization)

Avalos 2057
(1431) Buenos Aires
Argentina(Address of principal executive offices)

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Securities
registered or to be registered pursuant to Section 12(b) of the Act:

None

Securities
registered or to be registered pursuant to Section 12(g) of the Act:

None

Securities
for which there is a reporting obligation pursuant to Section 15(d) of the Act:

91/4%
Notes Due 2002, 101/2% Notes Due 2007, Series C 101/2% Notes due 2018 and Series E 13.125% Notes due 2009 (together, the "Notes").

Indicate
the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by the annual report: 202,963,617 Class A common
shares, par value one peso per share, and 168,671,486 Class B common shares, par value one peso per share.

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.

Yes ý    No o

Indicate by check mark which financial statement item the registrant has elected to follow:

Item
17 o    Item 18 ý

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TABLE OF CONTENTS

|          |  | Forward Looking Statements                                                   |  | 1 
|--------- |  | ---------------------------------------------------------------------------- |  | --
|Item 1.   |  | Identity of Directors, Senior Management and Advisors                        |  | 1 
|Item 2.   |  | Offer Statistics and Expected Timetable                                      |  | 1 
|Item 3.   |  | Key Information                                                              |  | 2 
|          |  | Selected Financial Data                                                      |  | 2 
|          |  | Exchange Rates                                                               |  | 5 
|          |  | Risk Factors                                                                 |  | 6 
|Item 4.   |  | Information on the Company                                                   |  | 22
|          |  | History and Development of the Company                                       |  | 22
|          |  | Business Overview                                                            |  | 22
|          |  | Organizational Structure                                                     |  | 40
|          |  | Property, Plants and Equipment                                               |  | 41
|Item 5.   |  | Operating and Financial Review and Prospects                                 |  | 42
|          |  | Overview                                                                     |  | 42
|          |  | Operating Results                                                            |  | 50
|          |  | Liquidity and Capital Resources                                              |  | 54
|          |  | Off-balance Sheet Arrangements                                               |  | 58
|          |  | Contractual Obligations                                                      |  | 58
|Item 6.   |  | Directors, Senior Management and Employees                                   |  | 58
|          |  | Directors and Senior Management                                              |  | 58
|          |  | Compensation and Board Practices                                             |  | 61
|          |  | Employees                                                                    |  | 61
|          |  | Share Ownership                                                              |  | 61
|Item 7.   |  | Major Shareholders and Related Party Transactions                            |  | 62
|          |  | Major Shareholders                                                           |  | 62
|          |  | Related Party Transactions                                                   |  | 63
|Item 8.   |  | Financial Information                                                        |  | 63
|          |  | Legal Proceedings                                                            |  | 64
|Item 9.   |  | The Offer and Listing                                                        |  | 69
|          |  | Markets                                                                      |  | 69
|Item 10.  |  | Additional Information                                                       |  | 69
|          |  | Memorandum and Articles of Association                                       |  | 69
|          |  | Enforceability of Civil Liabilities                                          |  | 70
|          |  | Material Contracts                                                           |  | 71
|          |  | Exchange Controls                                                            |  | 71
|          |  | Taxation                                                                     |  | 71
|          |  | Documents on Display                                                         |  | 75
|Item 11.  |  | Quantitative and Qualitative Disclosures About Market Risk                   |  | 76
|Item 12.  |  | Description of Securities Other than Equity Securities                       |  | 77
|Item 13.  |  | Defaults, Dividend Arrearages and Delinquencies                              |  | 77
|Item 14.  |  | Material Modifications to the Rights of Security Holders and Use of Proceeds |  | 79
|Item 15.  |  | Controls and Procedures                                                      |  | 79
|Item 16A. |  | Audit Committee Financial Expert                                             |  | 79
|Item 16B. |  | Code of Ethics                                                               |  | 79
|Item 16C. |  | Principal Accountant Fees and Services                                       |  | 80
|Item 17.  |  | Financial Statements                                                         |  | 80
|Item 18.  |  | Financial Statements                                                         |  | 80
|Item 19.  |  | Financial Statements and Exhibits                                            |  | 81

(i)

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Forward Looking Statements

From time to time we make forward-looking statements in our periodic reports to the Securities and Exchange Commission on Forms 20-F and
6-K, in our annual report to shareholders, in offering circulars and prospectuses, in press releases and other written materials, and in oral statements made by our officers, directors or
employees to analysts, institutional investors, representatives of the media and others. This Form 20-F contains forward-looking statements. Examples of such forward-looking
statements include:



Words
such as "believe," "anticipate," "plan," "expect," "intend," "target," "estimate," "project," "predict," "forecast," "guideline," "should" and similar expressions are intended to
identify forward-looking statements but are not the exclusive means of identifying such statements.

Forward-looking
statements involve inherent risks and uncertainties. We caution you that a number of important factors could cause actual results to differ materially from the plans,
objectives, expectations,
estimates and intentions expressed in such forward-looking statements. These factors, some of which are discussed under "Item 3. Key InformationRisk Factors," include developments in
legal proceedings, limitations on our access to sources of financing on competitive terms, economic and political conditions and governmental policies in Argentina or elsewhere, changes in capital
markets that may affect the ability of Argentina or Argentine companies to obtain financing, inflation rates, foreign exchange rates volatility, exchange controls, regulatory developments, customer
demand and competition. We caution you that the foregoing list of factors is not exclusive and that other risks and uncertainties, which we cannot predict, may cause actual results to differ
materially from those in forward-looking statements.

Forward-looking
statements speak only as of the date they are made, and we do not undertake any obligation to update them in light of new information or future developments. We encourage
readers to consult our periodic filings on Form 6-K with the United States Securities and Exchange Commission.

Item 1. Identity of Directors, Senior Management and Advisors.

Not applicable.

Item 2. Offer Statistics and Expected Timetable.

Not applicable.

1

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Item 3. Key Information.

Selected Financial Data

The following selected consolidated financial data has been derived from our consolidated financial statements as of the dates and for each of the periods
indicated below. This information should be read in conjunction with and is qualified in its entirety by reference to our consolidated financial statements and the discussion in "Item 5. Operating and
Financial Review and Prospects" included elsewhere in this annual report. The selected consolidated financial data as of December 31, 2003 and 2002 and for the years ended December 31,
2003, 2002 and 2001 derive from our consolidated financial statements included elsewhere in this annual report, which have been audited by our independent auditors, Price Waterhouse & Co., a
member firm of PricewaterhouseCoopers. The selected consolidated financial data as of December 31, 2001, 2000 and 1999 and for the years ended December 31, 2000 and 1999 are derived from
our consolidated financial statements that are not included herein.

Our
consolidated financial statements as of and for the year ended December 31, 2003 have been prepared on the assumption that we will continue as a going concern. Our independent
auditors have issued a report stating that we failed to make scheduled payments on all of our Notes and our Series J Floating Rate Notes due 2003 (together, the "Existing Notes") and we were
notified of the filing of various petitions for bankruptcy against us. We have also undertaken a financial debt restructuring process. If this process is unsuccessful, we will likely have to file for
aconcurso preventivoor voluntary insolvency proceeding. Our consolidated financial statements as of and for the year ended December 31, 2003 do
not include any adjustments that might result from the outcome of this uncertainty. See "Item 3. Key InformationRisk FactorsRisks Relating to Multicanal" and "Item 13.
Defaults, Dividend Arrearages and Delinquencies."

Our
financial statements are presented in pesos. Except as discussed in the following paragraph, we prepare our financial statements in accordance with accounting principles generally
accepted in Argentina ("Argentine GAAP") and the regulations of theComisión Nacional de Valoresor National Securities Commission
("CNV"), which differ in certain significant respects from accounting principles generally accepted in the United States ("U.S. GAAP"). Note 15 to our consolidated financial statements provides
a description of the principal differences between Argentine GAAP and U.S.
GAAP affecting our net gain (loss) and shareholders' (deficit) equity and Note 16 provides a reconciliation to U.S. GAAP of net gain (loss) and shareholders' (deficit) equity reported under
Argentine GAAP.

As
discussed in Note 2.6.(k) to our consolidated financial statements, in order to comply with regulations of the CNV, we recognized deferred income tax assets and liabilities on
a non-discounted basis. This accounting practice represents a departure from generally accepted accounting principles in Argentina. However, such departure has not had a material effect on
the accompanying financial statements.

The
consolidated financial statements were prepared in constant units of currency, reflecting the overall effects of inflation through August 31, 1995. On August 22, 1995,
the Argentine government issued Decree No. 316/95 discontinuing the requirement that financial information be restated for inflation for any date or period after August 31, 1995.
Effective September 1, 1995, in accordance with CNV resolutions and Argentine GAAP, we began accounting for our financial transactions on a historical cost basis, without considering the
effects of inflation. Prior to September 1, 1995, the financial statements were prepared on the basis of general price level accounting, which reflected changes in the purchasing power of the
peso in the historical financial statements. The financial statement information of periods prior to August 31, 1995 was restated to pesos of general purchasing power as of August 31,
1995. The August 31, 1995 balances, adjusted to the general purchasing power of the peso at that date, became the historical cost basis for subsequent accounting and reporting.

2

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However,
as a result of the inflationary environment in Argentina in 2002, the Professional Council in Economic Sciences of the Autonomous City of Buenos Aires ("CPCECABA") approved on
March 6, 2002 a resolution reinstating the application of inflation accounting in financial statements as from January 1, 2002. This resolution provided that all recorded amounts
restated for inflation through August 31, 1995, as well as those arising between that date and December 31, 2001, are to be considered stated in currency as of December 31, 2001.

However,
after considering inflation levels for the second half of 2002 and the first months of 2003, on March 25, 2003, the Argentine government repealed the provisions of the
previous decree related to the inflation adjustment and instructed the CNV to issue the necessary regulations to preclude companies under its supervision from presenting price-level restated financial
statements. Therefore, on April 8, 2003, the CNV issued a resolution providing for the discontinuance of inflation accounting as of March 1, 2003. We complied with the CNV resolution and
accordingly recorded the effects of inflation until February 28, 2003. Comparative figures were also restated until that date, using a conversion factor of 1.007.

Since
Argentine GAAP required companies to prepare price-level restated financial statements until September 30, 2003, the application of the CNV resolution represents a departure
from generally accepted accounting principles. Had the provisions of Argentine GAAP been applied, the Company's shareholder's equity would be Ps.35 million lower and its net gain would be
Ps.32 million lower.

Our
consolidated financial statements are adjusted for inflation and restated in constant Argentine pesos as of March 1, 2003. In addition, for comparative purposes, we have also
restated in constant Argentine pesos as of March 1, 2003 all other financial data included throughout this Form 20-F.

The
exchange rate between the dollar and the peso as of December 31, 2001 was U.S.$1.00 = Ps.1.00. However, as a result of the elimination of the fixed exchange rate and
the devaluation of the peso, the exchange rate between the peso and the dollar initially increased and has subsequently decreased. As of December 31, 2003, the exchange rate between the dollar
and the peso was U.S.$1.00 = Ps.2.93, and as of June 24, 2004 the exchange rate was U.S.$1.00 = Ps.2.95.

Unless
otherwise specified, references herein to "U.S. dollars", "dollars", "U.S.$" or "$" are to United States dollars and references to "pesos" or "Ps." are to Argentine pesos.

|                                                                    |                                                                                                      | 2003 |          | 2002 |          | 2001 |          | 2000 |           | 1999 |          
|------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------- | ---- | -------- | ---- | -------- | ---- | -------- | ---- | --------- | ---- | ---------
|
|
|Amounts in accordance with Argentine GAAP Statement of Income Data: |                                                                                                      |      |          |      |          |      |          |      |           |      |          
|                                                                    | Net revenues(1)                                                                                      |      | 507,498  |      | 582,121  |      | 999,719  |      | 1,090,672 |      | 1,094,456
|                                                                    | Direct operating expenses                                                                            |      | (245,004 | )    | (312,181 | )    | (500,032 | )    | (495,684  | )    | (462,773 
|                                                                    | Selling, general, administrative and marketing expenses                                              |      | (94,483  | )    | (126,478 | )    | (170,918 | )    | (265,454  | )    | (283,354 
|                                                                    | Depreciation and amortization                                                                        |      | (150,086 | )    | (309,128 | )    | (334,648 | )    | (337,425  | )    | (308,393 
|                                                                    | Operating gain (loss)                                                                                |      | 17,926   |      | (165,666 | )    | (5,880   | )    | (7,891    | )    | 39,937   
|                                                                    | Financial results, net(2)                                                                            |      | 26,054   |      | (474,959 | )    | (224,100 | )    | (246,115  | )    | (221,881 
|                                                                    | Other non-operating income (expenses), net                                                           |      | 4,013    |      | (311,767 | )    | (358,864 | )    | (34,540   | )    | (97,148  
|                                                                    | Gain on sales of investees                                                                           |      |         |      |         |      | 324,904  |      |          |      |         
|                                                                    | Gain (loss) before taxes, minority interest and equity in the gains (losses) of affiliated companies |      | 47,993   |      | (952,393 | )    | (263,939 | )    | (288,546  | )    | (279,092 
|                                                                    | Income taxes and/or tax on minimum notional income                                                   |      | 8,069    |      | 246,855  |      | 64,761   |      | (98,974   | )    | (14,510  
|                                                                    | Minority interest in results of consolidated subsidiaries                                            |      | 571      |      | (7,578   | )    | (2,939   | )    | (3,338    | )    | (6,138   
|                                                                    | Equity in the gains (losses) of affiliated companies                                                 |      | 4,918    |      | 23,188   |      | (5,009   | )    | (7,429    | )    | (1,769   
|                                                                    | Income (loss) from continuing operations                                                             |      | 61,551   |      | (689,928 | )    | (207,126 | )    | (398,288  | )    | (301,510 
|                                                                    | Net Gain (loss)                                                                                      |      | 61,551   |      | (689,928 | )    | (207,126 | )    | (398,288  | )    | (301,510 
|                                                                    |                                                                                                      |      |          |      |          |      |          |      |           |      |          

3

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|Balance Sheet Data (at year end):    |                                                                                                        |  |           |   |           |   |            |   |           |   |          
|------------------------------------ | ------------------------------------------------------------------------------------------------------ |  | --------- | - | --------- | - | ---------- | - | --------- | - | ---------
|                                     | Current assets                                                                                         |  | 262,398   |   | 183,297   |   | 373,359    |   | 246,204   |   | 333,644  
|                                     | Property and equipment, net                                                                            |  | 495,849   |   | 624,698   |   | 803,660    |   | 956,879   |   | 1,074,187
|                                     | Goodwill and intangible assets, net                                                                    |  | 1,207,766 |   | 1,210,431 |   | 1,633,786  |   | 2,079,434 |   | 2,213,019
|                                     | Other non-current assets(3)                                                                            |  | 391,345   |   | 374,881   |   | 137,377    |   | 63,322    |   | 146,773  
|                                     | Total assets                                                                                           |  | 2,357,358 |   | 2,393,307 |   | 2,948,183  |   | 3,345,839 |   | 3,767,622
|                                     | Short-term debt(4)                                                                                     |  | 1,971,979 |   | 2,044,719 |   | 1,684,923  |   | 629,013   |   | 578,793  
|                                     | Long-term debt(5)                                                                                      |  | 340       |   | 3,589     |   | 461        |   | 1,271,208 |   | 1,356,311
|                                     | Total financial debt                                                                                   |  | 1,972,319 |   | 2,048,308 |   | 1,685,384  |   | 1,900,221 |   | 1,935,104
|                                     | Other liabilities                                                                                      |  | 167,576   |   | 191,087   |   | 422,426    |   | 402,136   |   | 390,869  
|                                     | Total liabilities                                                                                      |  | 2,139,895 |   | 2,239,395 |   | 2,107,810  |   | 2,302,357 |   | 2,325,973
|                                     | Net assets(6)                                                                                          |  | 217,463   |   | 153,912   |   | 840,373    |   | 1,043,482 |   | 1,441,649
|                                     | Temporary translation differences                                                                      |  | 3,330     |   |          |   |           |   |          |   |         
|                                     | Minority interest in consolidated subsidiaries                                                         |  | 31,477    |   | 32,807    |   | 29,340     |   | 27,727    |   | 27,606   
|                                     | Common stock                                                                                           |  | 371,635   |   | 366,821   |   | 366,821    |   | 365,953   |   | 365,953  
|                                     | Shareholders' equity                                                                                   |  | 182,656   |   | 121,105   |   | 811,033    |   | 1,015,755 |   | 1,414,043
|Cash Flow Data:                      |                                                                                                        |  |           |   |           |   |            |   |           |   |          
|                                     | Net cash provided by operating activities                                                              |  | 109,259   |   | 188,671   |   | 43,794     |   | 50,674    |   | 74,497   
|                                     | Acquisition of cable systems and subscribers and decrease (increase) in goodwill and intangible assets |  | (8,292    | ) | (1,039    | ) | 315,534    |   | (7,409    | ) | (13,463  
|                                     | Purchases of property and equipment net of proceeds from sales                                         |  | (16,623   | ) | (11,332   | ) | (46,562    | ) | (86,003   | ) | (152,165 
|                                     | Cash (used in) provided by financing activities                                                        |  | (3,441    | ) | (257,629  | ) | (206,883   | ) | (38,101   | ) | 166,957  
|Other Financial Information          |                                                                                                        |  |           |   |           |   |            |   |           |   |          
|                                     | Weighted average number of shares (in thousands)(7)                                                    |  | 371,635   |   | 371,635   |   | 371,635    |   | 365,953   |   | 365,953  
|                                     | Net gain (loss) per share                                                                              |  | 0.17      |   | (1.86     | ) | (0.56      | ) | (1.09     | ) | (0.82    
|Amount in Accordance with U.S. GAAP: |                                                                                                        |  |           |   |           |   |            |   |           |   |          
|                                     | Total assets                                                                                           |  | 1,915,576 |   | 1,952,541 |   | 1,882,094  |   | 3,282,173 |   | 3,696,041
|                                     | Net assets(6)                                                                                          |  | (225,980  | ) | (619,232  | ) | (557,652   | ) | 981,811   |   | 1,370,210
|                                     | Revenues                                                                                               |  | 508,318   |   | 618,124   |   | 1,070,657  |   | 1,143,938 |   | 1,153,451
|                                     | Operating gain (loss)                                                                                  |  | 13,441    |   | (363,285  | ) | (301,804   | ) | (46,771   | ) | (66,703  
|                                     | Financial results, net(3)                                                                              |  | 26,510    |   | 104,988   |   | (1,240,841 | ) | (246,648  | ) | (218,516 
|                                     | Gain (loss) from continuing operations                                                                 |  | 386,143   |   | 131,644   |   | (1,556,345 | ) | (388,256  | ) | (299,127 
|                                     | Net gain (loss)                                                                                        |  | 386,143   |   | (53,192   | ) | (1,556,345 | ) | (388,256  | ) | (299,127 
|                                     | Shareholders' (deficit) equity                                                                         |  | (251,868  | ) | (640,886  | ) | (579,233   | ) | 958,493   |   | 1,345,918
|                                     | Gain (loss) from continuing operations per share                                                       |  | 1.04      |   | 0.35      |   | (4.19      | ) | (1.06     | ) | (0.82    
|                                     | Net gain (loss) per share                                                                              |  | 1.04      |   | (0.14     | ) | (4.19      | ) | (1.06     | ) | (0.82    
|Selected Argentine Operating Data:   |                                                                                                        |  |           |   |           |   |            |   |           |   |          
|                                     | Total households(8)                                                                                    |  | 5,092,900 |   | 5,092,900 |   | 5,092,900  |   | 5,092,900 |   | 5,092,900
|                                     | Multicanal homes passed(9)(10)                                                                         |  | 4,446,100 |   | 4,436,200 |   | 4,522,700  |   | 4,364,400 |   | 4,074,900
|                                     | Multicanal homes passed/Total households                                                               |  | 87.3      | % | 87.1      | % | 88.8       | % | 85.7      | % | 80.0     
|                                     | Total cable subscribers(8)                                                                             |  | 1,926,300 |   | 1,808,600 |   | 2,131,300  |   | 2,202,400 |   | 2,223,500
|                                     | Multicanal subscribers(8)                                                                              |  | 862,960   |   | 826,200   |   | 1,148,900  |   | 1,220,000 |   | 1,241,100
|                                     | Multicanal penetration(10)(11)                                                                         |  | 19.4      | % | 18.6      | % | 25.4       | % | 28.0      | % | 30.5     
|                                     | Multicanal market share(11)                                                                            |  | 44.8      | % | 45.7      | % | 53.9       | % | 55.4      | % | 55.8     

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4

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Exchange Rates

From April 1, 1991 until the beginning of 2002, the Central Bank of Argentina (the "Central Bank") was obliged to sell U.S. dollars at a fixed rate of one
peso per U.S. dollar (the "Convertibility Law"). Under the Convertibility Law all foreign exchange controls were eliminated and no restrictions were placed on capital flows.

On
December 1, 2001, the government placed severe restrictions on the withdrawal of bank deposits and introduced exchange controls subjecting transfers of foreign currency abroad
to Central Bank approval. The reintroduction of foreign exchange controls had a significant impact on the foreign exchange market and the peso began to trade at less than parity with the U.S. dollar,
despite the fact that the Convertibility Law remained in effect. Many of these controls were subsequently lifted. See "Item 10. Additional InformationExchange Controls."

On
January 6, 2002, Argentina's congress enacted Law No. 25,561,Ley de Emergencia Pública y Reforma del Régimen
Cambiario(the "Public Emergency Law") putting an end to the regime of the Convertibility Law and thus abandoning over ten years of the U.S. dollar-peso parity and
eliminating the requirement that the Central Bank's reserves in gold and foreign currency be at all times equivalent to not less than 100% of the monetary base. The Public Emergency Law granted the
Argentine executive branch (the "Executive Branch") the power to set the exchange rate between the peso and foreign currencies and to issue regulations related to the foreign exchange market. On
January 6, 2002, the Executive Branch established a temporary dual exchange rate system. One exchange rate, applicable to exports and essential imports, was set at a rate of Ps.1.40 per U.S.
dollar. The other, which was applicable to all other transactions, was a floating rate to be freely determined by the market. On February 3, 2002, the Executive Branch repealed the dual
exchange system, and since February 11, 2002, there has been only one freely floating exchange rate for all transactions. See "Item 3. Key InformationRisk FactorsRisks
Relating to ArgentinaExchange Rate Risks."

On
January 11, 2002, the Central Bank ended a banking holiday imposed on December 21, 2001. The exchange rate began to float freely for the first time in 11 years at
Ps.1.40 per U.S. dollar. The shortage of and heightened demand for U.S. dollars caused the peso to devalue significantly. As a result, the
Central Bank intervened on several occasions by selling U.S. dollars in order to lower the exchange rate. On February 3, 2002, another banking holiday was imposed and no exchange operations
were resumed until February 11, 2002, following the repeal of the temporary dual exchange system established in January 2002. Heightened demand for scarce U.S. dollars, caused by
uncertainty and by the lack of any other investment alternatives under the then applicable restrictions on bank withdrawals and exchange controls restricting capital outflows, led the peso to trade
well below the Ps.1.40 per U.S. dollar exchange rate used by the Argentine government in the official market. During June 2002, the peso lost significant ground, trading as low as Ps.3.90 per
U.S. dollar.

In
2003, the balance of trade yielded a strong surplus, which, together with the continuing default in partial foreign debt payments, caused an excess supply of foreign currency. As a
result, the peso appreciated significantly against the U.S. dollar during 2003, notwithstanding the Central Bank's efforts to curtail these effects on the exchange rate through numerous currency
purchases.

5

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Although several measures have been put into place to free the exchange market in order to increase demand for U.S. dollars, if the Central Bank does not actively participate in the
exchange market, the peso will most likely appreciate against the U.S. dollar.

The
following table sets forth the annual high, low, average and period-end exchange rates for U.S. dollars for the period indicated, expressed in nominal pesos per U.S.
dollar. The Federal Reserve Bank of New York does not report a noon buying rate for pesos.

|                       |                   | Exchange Rate of Pesos per U.S.$1.00
|---------------------- | ----------------- | ------------------------------------
|
|Year Ended December 31 |                   |                                     
|                       | 1999-2001(2)      |                                     
|                       | 2002(2)           |                                     
|                       | 2003              |                                     
|Month Ended            |                   |                                     
|                       | December 31, 2003 |                                     
|                       | January 31, 2004  |                                     
|                       | February 29, 2004 |                                     
|                       | March 31, 2004    |                                     
|                       | April 30, 2004    |                                     
|                       | May 31, 2004      |                                     
|                       | June 24, 2004(3)  |                                     

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Source:
Banco de la Nación Argentina

Risk Factors

You should carefully consider the risks described below, in addition to the other information contained in this
Form 20-F. We also may face additional risks and uncertainties that are not presently known to us, or that we currently deem immaterial, which may impair our business. In general,
you take more risk when you invest in the securities of issuers in emerging markets such as Argentina than when you invest in the securities of issuers in the United States and certain other
markets.

Risks Relating to Argentina

Overview

We are an Argentinesociedad anónima(corporation) and substantially all of our facilities and
approximately 88% of our subscribers are presently located in Argentina. Accordingly, our financial condition and results of operations depend to a significant extent on macroeconomic and political
conditions prevailing from time to time in Argentina.

Argentine
government actions concerning the economy, including with respect to inflation, interest rates, price controls, foreign exchange controls and taxes, have had and could continue
to have a material adverse effect on private sector entities, including us. We cannot provide any assurance that future economic, social and political developments in Argentina, over which we have no
control, will not impair our business, financial condition, or results of operations.

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Recent economic and political instability paralyzed commercial and financial activities

In the fourth quarter of 1998, the Argentine economy entered into a recession that caused the gross domestic product ("GDP") to decrease by 3.4% in 1999.
Following his election in October 1999, President Fernando de la Rúa was confronted with the challenges of dealing with Argentina's enduring economic recession and obtaining
political consensus on critical issues related to the economy, public sector spending, legal reforms and social programs. The de la Rúa administration failed to address adequately the
growing public sector deficit, both at the federal and at the provincial level. GDP contracted by 0.8% in 2000 and by 4.4% in 2001. As the recession caused tax revenues to drop, the public sector
relied increasingly on financing from local and, to a lesser extent, foreign banks, effectively foreclosing private sector companies from bank financing. As the public sector's creditworthiness
deteriorated, interest rates reached record highs, bringing the economy to a virtual standstill. The lack of confidence in the country's economic future and its ability to sustain the peso's parity
with the U.S. dollar led to massive withdrawals of deposits and capital flight.

On
December 1, 2001, the Argentine government effectively froze bank deposits and introduced exchange controls restricting capital outflows. The measures were perceived as further
paralyzing the economy for the benefit of the banking sector and caused a sharp rise in social discontent, ultimately triggering public protests, outbreaks of violence and the looting of stores
throughout Argentina. On December 20, 2001, after declaring a state of emergency and suspending civil liberties, President Fernando de la Rúa tendered his resignation to
Congress. His resignation was accepted in the midst of an escalating political, social and economic crisis.

The
absence of a Vice President required that the presidency be assumed temporarily by Ramón Puerta, the president of the Senate and a member of the opposition Peronist
party. On December 22, 2001, Argentina's congress called for new presidential elections to be held on March 3, 2002 and appointed Mr. Adolfo Rodríguez
Saá, governor of the province of San Luis and also a member of the opposition Peronist party, president of Argentina through the elections. However, on December 30, 2001, with
protesters threatening further demonstrations and with President Saá unable to retain the support of the Peronist party, he resigned.

On
January 1, 2002, Eduardo Duhalde, a Peronist senator who had lost the presidential election to Mr. de la Rúa in 1999, was appointed by Argentina's
congress to complete the remaining term of former President de la Rúa until December 2003.

During
his term, President Duhalde and his government undertook a number of far-reaching initiatives, including:



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Commercial
and financial activities were virtually paralyzed in 2002, further aggravating the economic recession and leading to a 10.9% decline in GDP in 2002. The crisis and the
government's reactions to the crisis severely weakened the Argentine banking system. A few small banks went into liquidation and credit became scarce for the public and private sectors.

Presidential
elections took place on April 27, 2003, resulting in a run-off election scheduled for May 18, 2003 between candidates Carlos Menem and
Néstor Kirchner. On May 14, Mr. Menem announced his withdrawal from the run-off, leaving Mr. Kirchner as the sole candidate. Mr. Kirchner took
office on May 25, 2003.

In
September 2003, Argentina and the International Monetary Fund (the "IMF") reached a three-year stand-by credit agreement setting specific fiscal targets
for 2004. This new agreement guaranteed the refinancing of all principal maturities of credit facilities granted by multilateral agencies.

In
2003, the Argentine economy began to recover with GDP growing 8.7%. This recovery, at first based almost exclusively on import substitution, broadened as the level of consumption and
investment increased. Reflecting the economic recovery, Argentine stock exchange indices displayed great dynamism in 2003, and both labor indicators and salary purchasing power registered consistent
improvements during this year. The balance of trade exhibited a strong surplus, favored by an increase in commodity prices, which, together with the continuity of the partial foreign debt payment
default, caused an excess supply of foreign currency. The peso appreciated against the U.S. dollar during 2003, even as the Central Bank made numerous currency purchases to attempt to maintain a high
rate of exchange. Inflation was approximately 2% during 2003 and Argentina was therefore able to meet its fiscal targets for the year.

Although
the social and economic situation has improved, important issues remain unresolved, such as renegotiating the external public debt and public utility contracts, restructuring
the financial system and redesigning the federal fiscal regime. Argentine government actions concerning the economy, including with respect to inflation, interest rates, price controls, foreign
exchange controls and taxes, have had, and may continue to have, a material adverse effect on private sector entities, including us. We cannot provide any assurance that future economic, social and
political developments in Argentina, over which we have no control, will not further impair our business, financial condition, or results of operations or continue to impair our ability to make
payments of principal and/or interest on our outstanding indebtedness.

Exchange rate risks

We realize substantially all of our earnings in Argentina through sales denominated in pesos while most of our financial liabilities are denominated in U.S.
dollars.

On
January 6, 2002, Argentina's congress enacted the Public Emergency Law, eliminating the requirement that the U.S. dollar/peso exchange rate remain fixed at one to one. Since
February 11, 2002, the peso has floated freely and devalued sharply to Ps.3.90 per U.S.$1.00 on June 25, 2002. During the last quarter of 2002 and through 2003, the peso/U.S. dollar
exchange rate remained stable and the peso strengthened as exporters remitted significant amounts of export proceeds to the Central Bank in compliance with current regulations. As of June 24,
2004, the peso/U.S. dollar exchange rate was Ps.2.95 per U.S.$1.00, as quoted by Banco de la Nación Argentina. See "Item 3. Key InformationExchange Rates."

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The
devaluation of the peso has adversely affected the U.S. dollar value of our earnings and thus impaired our financial condition. As of December 31, 2003, our total consolidated
bank and financial debt amounted to U.S.$647.1 million (including accrued interest and seller debt) and Ps.73.1 million (including accrued interest). Any depreciation of the peso against
the U.S. dollar will correspondingly increase the amount of our debt in pesos, with further adverse effects on our results of operations and financial condition. Given the continuing economic and
political uncertainty in Argentina, it is impossible to predict whether, and to what extent, the value of the peso may appreciate or depreciate against the dollar. Moreover, we cannot predict whether
the Argentine government will further modify its monetary policy, and if so, what impact these changes will have on our financial condition and results of operations. See "Item 5. Operating and
Financial Review and ProspectsLiquidity and Capital Resources."

The stability of the Argentine financial system is at risk

Although deposits in the Argentine banking system had grown in 1999 and 2000, in 2001, especially in the fourth quarter, a very significant amount of deposits
were withdrawn from financial institutions as a result of increasing political instability and uncertainty. This run on deposits had a material adverse effect on the Argentine financial system as a
whole. Since the fourth quarter of 2001, banks have focused on collection activities in order to pay their depositors. The magnitude of deposit withdrawals, the general unavailability of external or
local credit, together with the restructuring of the public-sector debt with local holders (a substantial portion of which was placed with banks) created a liquidity crisis which undermined the
ability of Argentine banks to pay their depositors.

To
prevent a run on the U.S. dollar reserves of local banks, on December 1, 2001, the government of President de la Rúa restricted the amount of money that account
holders could withdraw from banks and introduced exchange controls restricting capital outflows. Although these restrictions, known as "corralito," are
no longer in place, President Duhalde subsequently imposed new restrictions known as "corralón" and released a schedule stating how and
when deposits would become available.

On
February 3, 2002, the Argentine government issued Emergency Decree No. 214, which required conversion of all debts to financial institutions into pesos at a rate of
Ps.1.00 per U.S.$1.00. After a six-month grace period, debts were adjusted pursuant to an index based on consumer price variations in the preceding month. This decree also provided for:
(i) the conversion of all foreign currency-denominated deposits into peso-denominated deposits at an exchange rate of Ps.1.40 per U.S.$1.00; and (ii) the issuance by the
government of bonds intended to compensate banks for the losses incurred as a result of the "asymmetric" conversion of loans and deposits into pesos. The different exchange rates applied to the
conversion of foreign currency-denominated deposits and loans had a material and adverse effect on the financial system.

On
June 1, 2002, the Argentine government enacted Decree No. 905/02, which gave owners of rescheduled foreign currency and peso-denominated bank deposits the
option, during a period of 30 banking business days beginning on June 1, 2002, to receive certain bonds issued by the Argentine government in lieu of payment of such deposits. These bonds were
applied to the payment of certain loans under certain conditions. Deposits not exchanged for bonds were considered securities that, under the conditions established by the CNV, were applied to the
subscription of notes and to the cancellation of certain loans. On September 17, 2002, Decree No. 1836/02 established another exchange option. Depositors, however, showed little interest
in the first or second stages of the voluntary exchange of deposits for bonds.

In
a decision dated March 5, 2003, the Supreme Court of Argentina struck down on constitutional grounds the mandatory conversion of U.S. dollar deposits held by the Province of
San Luis with Banco de la Nación Argentina pursuant to Emergency Decree No. 214/02. Under Argentine law, Supreme Court rulings are limited to the particular facts and defendant
in the case; however, lower courts tend

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to
follow the precedents set by the Supreme Court. There are also numerous other cases in the Argentine judicial system challenging the constitutionality of the pesification pursuant to the Public
Emergency Law. The Supreme Court's ruling creates uncertainty as to the implications for the banking system as a whole, including the need for the Argentine government to provide additional financial
assistance to the banks in the form of U.S. dollar-denominated bonds. This, in turn, could add to the country's outstanding debt and is viewed with concern by holders of Argentina's outstanding bonds.

Through
Decree No. 739/03 dated March 28, 2003, the Argentine government made a further attempt to eliminate the corralónby giving depositors the option to be reimbursed in pesos pursuant to a
schedule for their deposits, at a Ps.1.40 per U.S.$1.00
exchange rate adjusted pursuant to theCoeficiente de Estabilización de Referencia, or Reference Stabilization Coefficient ("CER"), plus
accrued interest, and to receive a 10-year U.S. dollar-denominated bond to be issued by the Argentine government to cover the difference between the amount in pesos to be received by the
depositors and the face amount of the original deposit made in U.S. dollars at the exchange rate applicable on April 1, 2003.

The
financial system needs to be restructured for the economy to be able to grow. Certain foreign-controlled banks have closed down operations and, generally, foreign shareholders have
not made additional capital contributions. Given the loss of confidence of depositors in the financial system, the elimination of the corralónwould likely result in an attempt by such depositors
to withdraw all of their deposits and convert such pesos into U.S. dollars.
If amounts so withdrawn flow to the foreign exchange market, the recent increase in the level of bank deposits would most likely be quickly reversed, causing a sharp increase in the exchange rate and
inflation. Moreover, due to the liquidity problems of Argentine banks, such attempt would likely result in the collapse of the financial system and could lead to the further depreciation of the peso.
In the event that the Central Bank provides financial assistance to financial institutions in order to avoid such collapse, liberated funds would likely flow into the foreign exchange market. As of
the date of this Form 20-F, there are numerous cases pending before the Argentine Supreme Court challenging the constitutionality of several of the measures adopted by the
government to protect the financial system. Even though the Argentine Supreme Court has yet to render a final judgment, it has indicated that it is considering the possibility of imposing a
re-dollarization of previously pesified bank deposits. A judgment to this effect would have a material adverse effect on the Argentine financial system.

The
banking system's collapse, or the collapse of one or more of the largest banks in the system, would have a material and adverse effect on the prospects for economic recovery and
political stability and most likely, a material adverse affect on us.

Inflation may escalate and further undermine economic recovery

On January 24, 2002, the Argentine government amended the Central Bank's charter to allow the monetary authority to print currency (without having to
maintain a fixed and direct ratio with the foreign currency and gold reserves), to make advances to the federal government to cover its anticipated budget deficit, and to provide financial assistance
to financial institutions with liquidity problems. There is considerable concern that, if the Central Bank prints currency to finance public-sector spending or financial institutions in distress,
significant inflation will result. Past history raises serious doubts as to the ability of the Argentine government to maintain a strict monetary policy and control inflation. In the past, inflation
materially undermined the Argentine economy and the government's ability to create conditions that would permit growth.

Furthermore,
the devaluation of the peso has created pressures on the domestic price system that generated inflation in 2002, after several years of price stability, and, in recent years
prior to 2002, price deflation. However, during the year ended December 31, 2003, the wholesale price index ("WPI") and the consumer price index were approximately 2% and 3.7%, respectively. If
the value of the peso

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cannot
be stabilized by positive expectations for Argentina's economic future, as well as by strict fiscal and monetary policies, an increase in inflation rates can be expected.

In
the past, inflation has materially undermined the Argentine economy and the government's ability to stimulate economic growth. The variability of inflation in Argentina makes it
impossible to estimate how our activities and results of operations will be affected in the future. Sustained inflation in Argentina, without a corresponding increase in the price of our services in
the local market, would have a negative effect on our results of operations and financial position.

Argentina's insolvency and default on its public debt deepened the financial crisis

As a result of its growing fiscal deficit, Argentina's ability in the short term to stimulate economic growth, appease social unrest and repay its debt is likely
to depend on external financial assistance. In December 2000, Argentina obtained a conditional U.S.$39.7 billion assistance package from the International Monetary Fund (the "IMF"),
multilateral lending institutions, foreign governments, local banks and institutional investors. The IMF conditioned the availability of a significant portion of the package on the ability of the
Argentine government to reduce its fiscal deficit and implement a sustainable economic program. Argentina failed to meet the IMF's conditions in March 2001 and failed to comply with a new
fiscal deficit target for the fourth quarter of 2001. Such failure triggered the suspension, on December 5, 2001, of further IMF disbursements. The IMF's decision deepened the economic and
political crisis.

On
December 23, 2001, interim President Rodríguez Saá declared the suspension of payments on most of Argentina's sovereign debt, which totaled
approximately U.S.$146 billion as of December 31, 2003. President Duhalde ratified this measure on January 2, 2002.

On
September 22, 2003, the Argentine government presented bondholders with a proposal for restructuring the country's defaulted bonds at the IMF/World Bank annual meeting in
Dubai, United Arab Emirates. Under the proposal, sovereign bonds issued before December 31, 2001 would be eligible ("Eligible Debt") for the proposed bond exchange, maintaining a strict
equitable principle among all kinds and classes of creditors. The Eligible Debt would comprise approximately U.S.$100 billion, issued under 152 different series of bonds, seven different
currencies and eight different governing laws. Past due interest payments since the early 2002 default would not be paid, and principal would be reduced by a market value of approximately 90%. The
stated main objective of the government's proposal was to restore solvency through improvements in the debt to GDP and debt service to fiscal revenues ratios, reaching a new debt profile that would be
consistent with Argentina's payment capacity. The initial public response by bondholders was not positive.

In
March 2004, within the framework of a second review of the three-year agreement with the IMF, the government committed itself to taking decisive steps towards the
restructuring of the public debt. In this regard, the Executive Branch issued a decree appointing the syndicate of banks that will assist the government in the restructuring. On June 1, 2004,
the government revised its original proposal of September 2003 to private bondholders by offering to pay past-due interest
and to reduce the market value of the debt by approximately 75%, rather than the original 90% offer. Again, the initial public response by bondholders was not positive.

Uncertainties
regarding the government's debt restructuring and the adoption of certain measures affecting key sectors of the economy such as the utilities and the financial system have
a significant impact on the private sector's long-term ability to grow and invest. If the inability of the Argentine government and the private sector to complete the restructuring of
outstanding claims and access foreign financing continues, the fiscal situation of the country could be severely affected, undermining the ability of the government to implement adequate economic
policies (including structural reforms) and that of the private sector to reinitiate an investment cycle. The consolidation of a growth cycle in the medium term depends on all of these factors. If
economic growth fails to materialize in the

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medium
and long term, political and economic volatility are likely to recur. This would most likely negatively and materially impact the different entities operating in Argentina, including us.

Exchange controls may prevent us from servicing our external debt obligations

The Argentine foreign exchange market was subject to exchange controls until December 1989, when a freely floating exchange rate was established for all
foreign currency transactions. From 1989 to December 3, 2001, there were no foreign exchange controls preventing or restricting the conversion of pesos into U.S. dollars or the transfer of U.S.
dollars abroad. From December 3, 2001 until January 2, 2003, the transfer of foreign currency, except for certain transactions, was subject to prior authorization by the Central Bank,
including for the payment by Argentine debtors of principal on financial indebtedness and for the distribution of dividends. Effective January 2, 2003, the Central Bank's prior authorization
for the transfer of funds abroad in order to make payments of principal and/or interest was no longer required provided that certain conditions were met, as set out in Communication "A" 3843 dated
December 26, 2002, as amended by Communication "A" 3866 dated January 16, 2003, and in Communication "A" 3973 dated June 30, 2003, which allowed the transfer of funds for payments
such as principal of financial loans or notes to non-Argentine residents under certain conditions.

Moreover,
according to the provisions of Communication "A" 3859, dated January 7, 2003, Argentine companies may freely transfer corporate profits and dividends corresponding to
audited financial statements of local companies without prior Central Bank approval, and transfers of funds abroad in order to pay reinsurance premiums will be subject only to the issuance of a
statement from theSuperintendencia de Seguros de la Nación, or the Argentine Superintendency of Insurance Board (the regulatory
authority on insurance matters) with respect to the reason and amount to be transferred.

On
May 6, 2003, the Central Bank passed Communication "A" 3944 repealing the prior consent requirement from the Central Bank in order to make payments of principal or interest on
financing debt obligations. Although there are currently no restrictions to transfer funds in payment of principal or interest out of Argentina for any existing debt, Communication "A" 3944 requires
that, if applicable, the paying debtor should comply with Central Bank Communication "A" 3602, which provides for the disclosure of certain information regarding existing debt. Notwithstanding the
foregoing, Communication "C" 35731, dated May 8, 2003, establishes certain conditions that must be met in order to be exempt from the Central Bank's prior authorization. On May 18, 2004,
the Central Bank issued Communication "A" 4142 authorizing access to the exchange market in connection with: (i) the payment of accrued interest on foreign debts, prior to the relevant interest
maturity date; and (ii) the total or partial payment of principal, at its nominal value, of private non-financial sector foreign debts deriving from financial loans, the issuance of
bonds and other debt instruments, within 90 calendar-days prior to the maturity date, provided that a 180-day minimum term as from the entry of the foreign funds into the
exchange market has elapsed.

The
Central Bank has also issued Communication "A" 3845, dated December 26, 2002, as amended by Communication "A" 4128 on April 14, 2004, which states that Argentine
individuals and companies are authorized to buy up to U.S.$2,000,000 per month for the purposes of, among other things: (i) real estate investments outside of Argentina; (ii) loans
granted to persons not domiciled in Argentina; (iii) direct investments outside of Argentina of persons domiciled in Argentina; (iv) portfolio investments outside of Argentina; and
(v) payments outside of Argentina of corporate dividends and profits.

In
the absence of exchange controls, due to the scarcity of U.S. dollars, we may find it difficult to convert large amounts of pesos into U.S. dollars to make principal or interest
payments on our U.S. dollar-denominated debts. See "Item 10. Additional InformationExchange Controls."

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Creditors' ability to acquire equity interests in us in the event of a concurso preventivo to restructure our outstanding U.S. dollar-denominated indebtedness may be limited

On June 18, 2003, the Congress passed a bill (Law No. 25,750) regarding the protection of, among others, assets related to Argentine culture,
requiring that corporations in media-related businesses be owned by Argentine persons (either natural persons or legal or corporate entities) and establishing a maximum potential foreign ownership of
such companies at 30% of the outstanding capital stock representing 30% of the voting rights.

According
to the bill as approved by Congress on June 18, 2003, "cramdown" provisions set forth in Section 48 of Title II, Chapter II of Law No. 24,522, as amended
(the "Argentine Insolvency Law"), which could result in the transfer of up to 100% of the equity to creditors if aconcurso preventivodid
not result in the approval of a reorganization plan proposed by a debtor, are not applicable to media-related companies owned by Argentine persons. Furthermore, if a media-related company in a concurso
preventivodoes not reach agreement with its creditors, participations of foreign persons in the capital stock of such a media-related company
in excess of the 30% ownership cap are only allowed if the media-related company requests the authorization of the Executive Branch to exceed such limit and the Executive Branch authorizes such an
excess.

Because the Argentine standards for disclosure and accounting differ from those of the United States and certain other countries, information about us may not be as detailed or
comprehensive as that of non-Argentine issuers, including that of United States companies.

Publicly
available information about the issuers of securities listed on the Buenos Aires Stock Exchange provides less detail in certain respects than the information that is regularly
published by or about listed companies in the United States and certain other countries. In addition, regulations governing the Argentine securities market are not as extensive as those in effect in
the United States and other major world markets. While we are subject to the periodic reporting requirements of the Securities and Exchange Act of 1934, as amended (the "Exchange Act"), the periodic
disclosure required by foreign issuers under the Exchange Act is more limited than the periodic reporting disclosure required by listed United States issuers. Furthermore, there is a lower level of
regulation of the Argentine securities markets and of the investors in such markets as compared with the securities markets in the United States and certain other developed countries. Except as
discussed in "Item 5. Operating and Financial Review and Prospects," we prepare our financial statements in accordance with Argentine GAAP, which differs in certain respects from U.S. GAAP.

Risks Relating to Multicanal

Auditor's doubt as to our ability to operate as a going concern

The consolidated financial statements as of December 31, 2003 have been prepared on the assumption that we will continue to operate as a going concern.
However, as a result of the continued deterioration of the Argentine economy in recent years and the devaluation of the peso, as further described in these "Risk Factors," we cannot assure you that we
will be able to obtain the necessary financial resources to repay or refinance our debt and that the restrictions imposed by the Central Bank on the transfer of funds abroad will not prevent us from
paying principal and interest on our U.S. dollar-denominated debt as it comes due. Accordingly, we cannot assure you that these conditions will not have a material adverse effect on our financial
condition or results of operations or that we will be able to continue to operate as a going concern.

We
have failed to make scheduled payments on all of our Existing Notes and have been notified of the filing of various petitions for bankruptcy against us. We have also undertaken a
financial debt restructuring process. We believe that if this process is unsuccessful, we will likely have to file for aconcurso preventivoin
Argentina. See "Item 13. Defaults, Dividend Arrearages and Delinquencies."

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Investors
in our securities should review the attached report of our independent auditors carefully. The consolidated financial statements do not include any adjustments to reflect the
possible negative effect that the current uncertain situation may have on us. At December 31, 2003, we recognized a shortfall in consolidated working capital in the amount of
Ps.1,841.5 million in accordance with Argentine GAAP. As indicated in Note 12 to the consolidated financial statements, our accumulated losses have exceeded 50% of our capital and 100%
of our reserves. Although section 206 of the Argentine Companies Law establishes mandatory capital reduction in such situations, by means of Decree No. 1293/03 the government suspended
enforcement of this regulation until December 10, 2004. We cannot assure you that in the future, Section 206 of the Corporations Law or any other pertinent law or regulation will not
force us to reduce capital.

Recent losses and default

As a result of Argentina's severe economic recession of recent years and the restrictions affecting our ability to refinance our debts, we have dedicated all of
our cash flow from operations and any other source of liquidity available to us to fund our operations. We have defaulted on payments on all our outstanding U.S. dollar-denominated indebtedness and
all principal payments and a substantial portion of our interest payments on our local Argentine bank debt (affected by the mandatory conversion into pesos at the exchange rate of one peso per dollar
pursuant to Decree No. 214/02) since February 2002. Our ability to make payments on our foreign currency-denominated indebtedness was further curtailed by the exchange controls
introduced on December 1, 2001, many of which were subsequently lifted. See "Item 10. Additional InformationExchange Controls." All of our outstanding U.S. dollar-denominated
indebtedness is in default and our creditors could accelerate the maturity thereof. We do not have the ability to meet our obligations as currently scheduled without additional financial assistance,
which we do not expect to receive.

We
cannot assure you that our proposed Restructuring (as defined in Item 13) will be successful, or that we will be able to resume payments on our outstanding U.S.
dollar-denominated indebtedness. See "Item 13. Defaults, Dividend Arrearages and Delinquencies."

Certain holders have challenged our restructuring proposal

Our restructuring proposal, to be implemented by means of anacuerdo preventivo extrajudicial, or
pre-packaged agreement ("APE"), comprises three options: a cash option, a ten-year par bond option and a combined option (including a seven-year discount bond and
common stock), each subject to a ceiling. Our proposal was submitted to our financial creditors. Based on the support obtained at a bondholders' meeting held on December 10, 2003, together with
the support provided by commercial bank creditors, we announced on December 13, 2003 that the requisite majority of affected creditors had consented to the restructuring set forth in the APE.
On December 16, 2004, we filed our executed APE with Commercial Court No. 4 of Buenos Aires (the "Buenos Aires Court") seeking judicial confirmation. On December 17, 2003, the
Buenos Aires Court determined that the filing met all of the formal requirements for confirmation and ordered us to publish the statutory notices regarding creditor objections. Following publication
by us of statutory notices, creditors could file objections to the confirmation of the APE until February 13, 2004. Several objections were filed, including an objection by State Street Bank,
on behalf of the U.S.-based investment group known as W.R. Huff (the "WRH Affiliates"). We filed responses to each of the objections filed. On April 14, 2004, the Buenos Aires Court issued a
decision rejecting each of the objections filed and confirming the APE. In addition, the Buenos Aires Court ordered that persons present at the bondholders' meeting held on December 10, 2003,
who voted against or abstained from voting, as well as those who were absent, be permitted to exercise within a 30-day period the right granted to the rest of the creditors to elect among
the three options presented, under the same conditions as those who had already made such election directly with us or at the December 10, 2003 bondholders' meeting. We intend to abide by the
Buenos Aires

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Court's
April 14, 2004 order if such order, which has been appealed, is affirmed, at which time we intend to publish the statutory notices announcing such 30-day election period.

WRH
Affiliates brought action in New York State courts on December 19, 2003, seeking, among other things, to prevent the continuation of the APE proceedings in Argentina. On
January 16, 2004, ourDirectorio, or Board of Directors, filed a petition under Section 304 of the U.S. Bankruptcy Code with the United
States Bankruptcy Court for the Southern District of New York (the "U.S. Bankruptcy Court"), seeking to ensure the validity of our APE proceedings and that the outcome of such proceedings will be
respected in the United States. On January 28, 2004, WRH Affiliates and a Mr. Willard Alexander (together, the "Involuntary Petitioners"), claiming to be holders of debt securities
issued by us, sought to initiate an involuntary proceeding under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court.

On
January 30, 2004, the U.S. Bankruptcy Court entered an order allowing (a) us to take all actions to participate in, conduct, or take any action in furtherance of, our
APE under the jurisdiction of the Buenos Aires Court to the fullest extent permitted under Argentine law; (b) any creditor, equity holder, party in interest or any other person, entity, court
or governmental unit (including, without limitation, the Involuntary Petitioners) to take all actions to participate in, conduct, or take any action in furtherance of, our APE and our APE proceedings,
to the fullest extent permitted under Argentine
law; and (c) any creditor, equity holder, party in interest or any other person, entity, court or governmental unit (including, without limitation, the Involuntary Petitioners) to take all
actions in the Buenos Aires Court (and any right to appeal any decision of such Argentine court) to oppose our APE or our APE proceedings to the fullest extent permitted under Argentine law.

The
order of the U.S. Bankruptcy Court ensures that the filing by the Involuntary Petitioners does not interfere with participation by creditors of ours or any other person in our APE
proceedings. The order makes clear that any person's or party's participation in the APE or the APE proceedings in Argentina is not prohibited or limited by application of automatic stay provisions of
the U.S. Bankruptcy Code.

On
March 12, 2004, the U.S. Bankruptcy Court denied a preliminary motion by a WRH Affiliate seeking a declaration that its rights as a holder of negotiable obligations issued by
us and placed, among other markets, in the United States, pursuant to indentures subject to the Trust Indenture Act of 1939, cannot, as a matter of law, be impaired by a foreign bankruptcy proceeding,
and that for that reason the abovementioned Section 304 proceeding should be denied in the case of Multicanal S.A. Accordingly, the Section 304 proceeding is continuing.

We
can provide you no assurance that our Board of Director's petition under Section 304 of the U.S. Bankruptcy Code will be granted or that the involuntary Chapter 11 petitions
filed against us will be dismissed. Decisions rendered by the U.S. Bankruptcy Court may have an adverse impact on the manner in which we effect our restructuring, even if the April 14, 2004
order of the Buenos Aires Court is affirmed.

Although
the restructuring pursuant to the APE described above contemplates a reduction of our debt, as of March 8, 2004, the date of our auditor's report, the success of the
restructuring was still unknown. If the court order of April 14, 2004 is not affirmed we will likely commence aconcurso preventivo. The filing
of aconcurso preventivomay result in a partial or total loss of an investment in our Existing Notes and certain other financial indebtedness (together
with the Existing Notes, the "Existing Debt").

As
of June 24, 2004, we have been served with process on 34 involuntary bankruptcy (quiebra) petitions. Of those 34 petitions, one
has been suspended and 33 have been dismissed by the court because the court deposits made by us to pay for the petitioners' claims were, in the view of the court

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of
original jurisdiction, sufficient to disprove that we were unable to pay our debts as they fell due. The lower court's decision dismissing the petitions has been affirmed by the court of
appeals.

If the Restructuring fails or the confirmation of the APE is not affirmed we will likely file for concurso preventivo or face quiebra

We have not made principal or interest payments on our outstanding U.S. dollar-denominated indebtedness since February 1, 2002, except for interest
payments on certain of our local Argentine bank debt affected by the mandatory pesification decreed by the Argentine government in January 2002. As of December 31, 2003, our total
consolidated bank and financial debt amounted to U.S.$647.1 million (including accrued interest and seller debt) and Ps.73.1 million (including accrued interest). See "Item 5. Operating
and Financial Review and ProspectsLiquidity and Capital Resources."

During
the pendency of any insolvency proceeding, our ability to operate or manage our business, to retain employees and to continue to pay for programming and equipment needed to
conduct our operations may be materially adversely affected. Our assets are currently insufficient to repay our creditors. We believe that the ability of our creditors to recover their claims will
diminish substantially if the restructuring fails and they are forced to participate in aconcurso preventivoor quiebraproceeding.

In
aconcurso preventivoproceeding we have been advised by our Argentine counsel that the holders of Existing Debt should expect the
following:



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In
aquiebraproceeding, we have been advised that holders of Existing Debt should expect the following:



The deterioration of the Argentine economy has made it increasingly difficult to obtain financing

Argentine companies that rely primarily on local revenues, including us, have had limited access to the capital markets over the last few years. Our limited
financing alternatives disappeared completely after December 2001 when the Argentine government defaulted on most of its foreign debt obligations. Furthermore, the Argentine government has
imposed transfer restrictions on payments of foreign financial obligations, creating additional obstacles to obtaining foreign sources of financing. The prospects of Argentine companies, including us,
accessing the financial markets in the near or medium-term are negative.

Our ability to operate our business will be constrained by restrictions and limitations imposed by our debt agreements governing our existing debt

As of December 31, 2003, debt agreements governing most of our notes contain certain operating and financial restrictions and covenants which may adversely
affect our ability to finance our future operations or capital needs or to engage in business activities. These covenants limit, and in some cases prohibit, our ability and the ability of our
subsidiaries to:



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Some of our suppliers are affiliated with our controlling shareholder, who may take actions that do not reflect the will or best interests of other shareholders

Grupo Clarín, S.A. ("Grupo Clarín"), our controlling shareholder, has interests in companies that provide us with one of the
highest-rated channels of sports-oriented programming in Argentina and in other media companies. The interests of those companies will not always necessarily be aligned with our interests, and may
even in certain cases be adverse to our interests. In such a circumstance, it is possible that Grupo Clarín may take actions that are in the interests of such a programming company and
adverse to us. We cannot assure you that, if presented with a conflict of interest between different companies in which it has investments, Grupo Clarín will take actions that are not
adverse to us.

Risks Relating Specifically to Our Argentine Cable Television Business

We face substantial and increasing competition in the Argentine pay television industry

The pay television business in Argentina is very competitive, as cable operators are not given exclusive territorial broadcast licenses. We face competition from
other cable television operators that have built networks in the areas where we operate, providers of other television services, including direct broadcasting, direct-to-home
satellite ("DTH") and multi-channel multi-point distribution system ("MMDS") services and licensed suppliers of basic telephone services. We expect this competition to increase in the future due to a
number of factors, including the development of new technologies. In addition, free broadcasting services are currently available to the Argentine population from four privately-owned television
networks and their local affiliates and one state-owned national public television network.

The
consolidation of the cable television industry increases the level of competition that we face, and will reinforce the need to undertake frequent investments to remain competitive.
During 2003 we limited the amount of capital expenditures to the minimum level necessary to continue providing the current level of services to our customers. Our competitiveness will depend on our
ability to attract and retain customers through vigorous consumer service policies and provide new programming services on
an exclusive basis for an initial period of time. In light of the foregoing factors, we cannot assure you that we will be able to undertake the investments necessary to remain competitive, or that we
will be able to retain customers through consumer service policies or new programming services.

Our revenues may be adversely affected by subscriber termination

Our revenues depend heavily on our ability to retain customers by limiting our churn rates (churn means subscriber termination). We determine our churn rate by
calculating the total number of disconnected cable television customers over a given period as a percentage of the initial number of cable television customers for the same period. Our annual gross
churn rate averaged 32.4% in the year ended December 31, 2001, 43.8% in the year ended December 31, 2002, and 20.5% in the year ended December 31, 2003. To reduce our churn rate
and to address associated risks, such as the difficulty in collecting receivables, we pursue a vigorous customer service and retention policy. Approximately 350,000 subscribers disconnected from our
service during 2002, but during 2003 approximately 32,000 subscribers joined our cable systems. The macro-economic crisis that Argentina suffered in the last few years severely affected our
subscribers' purchasing power and has led to and may in the future lead to a loss of subscribers.

We may not be able to provide additional premium services

We have targeted the enhanced revenue opportunities associated with premium service and have been working with other cable operators and cable programming
providers to create additional premium tiers by adding new premium channels. We cannot assure you that this type of tiering will be accomplished, since creating additional premium tiers requires
industry-wide cooperation and

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agreement.
Additionally, premium subscriptions decreased significantly in 2002. However, during 2003 we added approximately 500 premium subscribers.

We may not be able to renew programming contracts

We purchase basic and premium programming from more than 20 program suppliers. Several programming suppliers have agreed to provide us volume discount pricing
structures because of our growth and market share. Due to the macro-economic crisis that Argentina suffered in the last few years, growing inflation and higher gross churn rates prior to 2003, the
terms of our programming
contracts, which in the past generally ranged from 24 to 36 months and were typically based on a flat fee, are now being renewed for an average period of 12 to 24 months with varying
fees. Most of these contracts are subject to negotiated renewal in the event that the Argentine peso is devalued below a certain level against the U.S. dollar. We cannot assure you that we will
continue to be able to negotiate renewals of our programming contracts due to the fact that many of our suppliers have U.S. dollar-based costs and are reluctant to accept contracts denominated in
pesos. We also cannot assure you that we will be able to obtain volume discounts in the future.

We depend on third parties for the development of and access to new technologies and we cannot predict the effect of technological changes on our business

The cable television industry is subject to rapid and significant changes in technology and the related introduction of new products and services. We do not have
significant intellectual property rights with respect to the technologies we use, and we depend on third parties for the development of and access to new technologies. We believe that, in the
foreseeable future, technological changes will not affect the continued use of coaxial, fiber optic or other currently available technologies and that we will be able to obtain access to appropriate
technologies on a timely basis. However, we cannot predict the effect of unforeseen technological changes on our business. The cost of implementing emerging technologies or expanding capacity could be
significant and our ability to fund such implementation may be dependent on our ability to obtain additional financing.

We may not be able to build and upgrade our networks in accordance with our anticipated schedule or to comply with regulatory requirements

While in the past we have upgraded a significant part of our networks to maintain the highest technological standards throughout our cable systems and to expand
programming alternatives and services, during 2003 we kept annual capital expenditures to the minimum level necessary to continue providing the current level of services to our customers. The
deployment of the fiber to service area ("FSA") network architecture throughout our systems will enable us to introduce new services and expand the services we provide to include
pay-per-view programming utilizing addressable technology and access to the Internet through high-speed cable modems. The level of this deployment has decreased
over the last few years due to the Argentine economic situation. We are currently analyzing the possibility of starting to invest in the deployment of FSA network architecture using our own funds,
since we have received no new financing. In addition, we may not be able to make investments needed to comply with existing and future regulatory requirements such as municipal rules regarding the use
of air space. Our failure to make those investments may result in fines and further adversely affect our financial condition.

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Risks Relating to Our Subsidiaries and Foreign Operations

Our ability to meet our financial obligations is in part dependent upon the cash flow and earnings of our subsidiaries

We conduct our cable television business directly and through subsidiaries. Our ability to meet our financial obligations is in part dependent upon the cash flow
and earnings of our subsidiaries and in some cases the distribution of such earnings to us in the form of dividends, loans or other advances, payment or reimbursement for management fees and expenses,
and repayment of loans or other advances from us. The payment of dividends or the making of loans or advances by our subsidiaries to us may be subject to statutory, regulatory or contractual
restrictions. Moreover, we may not have voting control over certain entities in which we have ownership interests and such entities have no obligation, contingent or otherwise, to make any funds
available to us, whether by dividends, advances, loans or other payments.

Our foreign operations expose us to economic, social, and political instability in foreign countries

We have operations in Uruguay and Paraguay. The construction and operation of systems in these markets involves regulatory and governmental requirements that may
be different from those in Argentina. Economic, social, and political instability in foreign countries could have a material adverse effect on our revenues and profitability. We may also be adversely
affected by foreign governmental regulations, fluctuations in foreign currency rates, confiscatory taxation, and difficulties in managing international operations.

Our results of operations and financial condition may be adversely affected by movements in exchange rates

Our revenues are primarily in local currency and a significant portion of our costs are U.S. dollar-denominated. As a result, movements in the exchange rate of
the U.S. dollar against the respective local currencies in countries where we have operations can have a significant impact on our revenue, results and financial condition. A rise in the value of the
U.S. dollar relative to local currencies will increase our programming costs, thereby adversely affecting the margins of our foreign operations.

We face substantial competition in foreign markets

We face substantial competition in foreign markets. In Uruguay, for example, we own Telemás S.A., a company that provides programming and
management to UHF (over-the-air broadcast frequency) systems and to seven cable operators in Uruguay. In the City of Montevideo, the UHF system served by Telemás
S.A. offers twenty-five channels and competes with other cable systems offering more than thirty channels. We cannot assure you that the UHF system will be able to compete with the cable
systems successfully in the future. We also cannot assure you that we will be successful in obtaining required licenses and expanding our multi-channel television operations into other countries or
that we can operate profitably in those countries.

Risks Relating to the Cable Television Industry Generally

Our ability to operate effectively depends on obtaining regulatory approvals

The installation and operation of cable television service in Argentina is governed by Law No. 25,285,Ley de
Radiodifusión(the "Broadcasting Law") and related regulations. The cable television industry is principally regulated and supervised by Comité Federal de
Radiodifusión("Comfer") but also falls under the jurisdiction of the Comisión Nacional de Comunicaciones(the National Communications Commission or "CNC") for
matters related to installation of cable
services and compliance with technical regulations. TheSecretaría de Prensa y Difusión(the "Department of Press and
Transmission")

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supervises
Comfer and reports directly to the Executive Branch. It also supervises the general enforcement of the Broadcasting Law and the regulatory framework for the industry.

Cable
television companies in Argentina are required to obtain a non-exclusive broadcasting license from Comfer in order to carry and distribute programming over their cable
networks. Comfer licenses have an initial fifteen-year term. At the end of this term, the licensee may apply for a one time ten-year extension and, according to the
Broadcasting Law, Comfer must grant the extension if it verifies that the licensee has complied, during the first term, with all legislation and obligations imposed on it.

We
expect to be granted all extensions for which we have applied. The Broadcasting Law provides for a one time ten-year extension and does not provide for subsequent renewals
when such term expires. As a result, once the additional ten-year term elapses we may be forced to apply for new licenses. Because cable television licenses are directly granted by Comfer,
if Comfer verifies that the laws and obligations have been complied with, it may grant a new license. At December 31, 2003, the weighted average remaining life of our licenses was
9.27 years, based on the number of subscribers and the assumption that a ten-year extension will be granted in all cases. In the event that Comfer denies us an extension of a
license in a specific area, we must cease operations in such area, seek to acquire a company that has a valid broadcasting license for the area or apply for a new license in our own name. We cannot
assure you that there will be a cable company with a valid license operating in such an area, that we will be able to acquire such a cable company, or that if we apply for a new license in our name,
that such license will be granted.

Section 45
of the Broadcasting Law requires Comfer approval for any transfer of shares in a licensee company. In the event that a stockholder or partner of a licensee company is
another company according to Section 45, Comfer has the authority to review that company's stockholders and determine whether they comply with the requirements set forth in Section 45.
Comfer has authorized, directly or indirectly, shareholders of Grupo Clarín (Mrs. Ernestina L.H. de Noble, Mr. Héctor Horacio Magnetto,
Mr. José Antonio Aranda and Mr. Lucio Rafael Pagliaro; together, the "Clarín Shareholders") as shareholders of several licensed companies that were merged
into us. However, Comfer has not yet authorized Arte Gráfico Editorial Argentino S.A. ("AGEA"), a corporation controlled by Grupo Clarín, and Grupo Clarín
as our shareholders. We have given notice but not yet obtained the required approvals from Comfer in connection with some of our acquisitions of shares in companies which hold licenses and the
transfer of licenses to us by certain of the subsidiaries merged into us.

Due
to an injunction imposed by a federal judge investigating Comfer's practices, including with respect to the granting of cable television licenses in recent years, Comfer is currently
prevented from authorizing the transfer of shares of certain licensees, including us. We cannot determine if or when Comfer will be allowed to issue such authorizations.

Failure
to obtain Comfer's approval of the transfer of an ownership interest in a licensed company may result in the unwinding of the transfer. Violation of Comfer regulations regarding
the transfer of an ownership interest in a licensed company can result in the imposition of fines, the suspension of advertising or the revocation of the license of the licensee that violated Comfer
regulations.

Comfer
must also approve any elimination of "headends," the collection of hardware that processes and combines signals for distribution within a cable network. We are awaiting approvals
for several headend eliminations resulting from the acquisition and division of Video Cable Comunicaciones, S.A. ("VCC"). Although we expect to receive all of the required approvals, it is not certain
that Comfer or any successor agency will grant all of the approvals.

Pursuant
to Section 53 of the Broadcasting Law, licenses may be cancelled in the event of a licensee's filing of aconcurso
preventivo. If the restructuring is not successful and we commence aconcurso preventivowe will need to file for injunctive
relief with the bankruptcy court in Argentina to

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avoid
any declaration that our licenses have been or will be cancelled solely as a result of the filing of theconcurso preventivo. However, we cannot
assure you that the bankruptcy court will grant any injunctive relief that we may request.

We may not be in compliance with local ordinances

We were required to bring our cable systems fully into compliance with municipal regulations relating to the installation of cables in several areas of the City
of Buenos Aires Region (see "Item 4. Information on the CompanyBusiness OverviewCable Networks") by late 2002, and were required to do so in the City of Mar del Plata by
November 2001. We are not in compliance with the City of Buenos Aires and the City of Mar del Plata regulations as of the date of this Form 20-F. In 2002 we filed with both
the City of Buenos Aires and the City of Mar del Plata requests for extensions of the terms granted. However, as of the date of this Form 20-F, extensions still have not been
granted. Although such ordinances generally do not provide for penalties to be imposed on non-compliant cable systems, theJusticia Municipal de
Faltas, or Municipal Claims Court, may impose fines on us. If we have sufficient cash flow and financing is available at commercially attractive rates we will upgrade our
existing cable systems, including any network upgrades or modifications required by regulatory or local authorities.

Item 4. Information on the Company

History and Development of the Company

We are asociedad anónima(corporation) organized under the laws of Argentina. Our business began
on July 26, 1991, with the incorporation of Multicanal S.A. We offered basic cable services to the City of Buenos Aires and were acquired by the Clarín Shareholders, directly or
indirectly, in October 1992. Since then we have become a leader in Argentina's cable television industry through an acquisition policy that has allowed us to diversify the programming we offer
and increase our market share. We
have established foreign operations in Paraguay and Uruguay. Our charter documents provide that our corporate existence will continue until 2090, but this date may be extended by a resolution of our
shareholders. Our registered office is located at Avalos 2057, (1431) Buenos Aires, Argentina, telephone 011-54-11-5169-4700.

We
have failed to make scheduled payments on all of our Existing Notes and as of the date of this Form 20-F various petitions for bankruptcy have been filed against us. We
have also undertaken a financial debt restructuring process. If this process is unsuccessful, we will likely have to file for aconcurso preventivo. See
"Item 3. Key InformationRisk FactorsRisks Relating to Multicanal" and "Item 13. Defaults, Dividend Arrearages and Delinquencies."

For
a detailed description of our recent principal capital expenditures and divestitures and those currently in progress, see "Item 4. Information on the CompanyAcquisitions
of Cable NetworksRecent Acquisitions" and "Item 4. Information on the CompanyProperty, Plants and EquipmentCapital Expenditures and Divestitures."

Business Overview

We are a multiple system operator ("MSO") with operations in Argentina, Paraguay and Uruguay. A MSO is a cable company that owns multiple cable systems in
different locations under the control and management of a single, common organization. As of December 31, 2003, we served approximately 981,500 subscribers, of which approximately 863,000
reside in Argentina and the balance reside in Uruguay and Paraguay. We own cable television systems in many of Argentina's most important regions and operate them through three regional clusters.

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We
derive revenues primarily from monthly subscription fees for basic cable service. To a lesser extent, we also derive revenues from connection fees and advertising and from fees for
premium and pay-per-view programming services, Internet services and magazine distribution. See "Item 4. Information on the CompanyProgramming and Other Services."

Substantially
all of our operations, property and customers are located in Argentina. Accordingly, our revenues are primarily in pesos and our financial conditions and results of
operation depend primarily on macroeconomic and political conditions prevailing in Argentina. Substantially all of our debt,
however, is denominated in U.S. dollars. As a result of the severe economic crisis affecting Argentina since the fourth quarter of 2001, our debt burden became unsustainable. In February 2002
we suspended payment of our U.S. dollar- denominated debt and focused our efforts on preserving the ongoing viability of our operations. Our first priority was to align our operating costs, to a large
extent denominated in U.S. dollars, with our peso revenues. During 2002 we renegotiated various contracts to convert substantially all of our U.S. dollar-denominated costs into pesos, and in 2002,
2003, and early 2004, have devoted all of our resources to ensure the continuity of our operations.

In
early 2003 we presented a debt restructuring proposal in an effort to reach agreement with a majority of our creditors, allowing us to file for an APE. Our APE was confirmed by the
Buenos Aires Court on April 14, 2004 and is currently pending affirmation by the court of appeals. See "Item 13. Defaults, Dividend Arrearages and Delinquencies" and "Item 3. Key
InformationRisk FactorsRisks Relating to MulticanalRecent Losses and Default."

Business Strategy

Our business strategy focuses on maintaining our position as a significant cable television company in Argentina and, in the long-term, positioning
ourselves to become a provider of other cable-based services. As a cable television company, our goal is to continue offering high quality services and programming. In light of the difficult Argentine
macro-economic environment of the last few years, we focused initially on preserving the ongoing viability of our operations and, once that was assured, decided to address by means of the APE the
long-term restructuring of our balance sheet that is dictated by our reduced cash flows. We have also emphasized customer service and retention in our efforts to maintain our subscriber
base.

While
in past years we had upgraded a significant part of our networks to maintain the highest technological standards throughout our cable systems and to expand programming alternatives
and services, during 2003 we limited the amount of annual capital expenditures to the minimum level required to continue providing the current level of services to our customers.

We
have negotiated arrangements with programming providers to reduce programming expenses in line with lower revenues.

We
seek to differentiate ourselves from our competitors and reduce subscriber termination rates by focusing on the quality of our customer service, the strength of our brand name and the
development of new cable products and services. Each of our operating regions is managed by a regional manager who is responsible for customer and technical service and who reports directly to our
Chief Executive Officer. We believe that our flat operating structure enables us to respond effectively to our customers' needs.

Our
strategy has been consistently based on the premise that the continuation of our operations offers our creditors the best prospects for a recovery. To this end, our management has
focused on the following measures:



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Measures
implemented in 2002 and 2003 to further rationalize our operations and protect our operating margins included:



Consistent
with our focus on improving operating efficiency, in 2002 we consolidated our City of Buenos Aires Region, Greater Buenos Aires Southern Region and most of the Greater Buenos
Aires Northwestern Region networks through the installation of fiber optic loops. This installation eliminated ten headends and allows us to serve all three regions through one headend. We have kept
an additional headend in the region to ensure redundant capability in the event of a network impairment. See "Item 3. Key InformationRisk FactorsRisks Relating to the Cable
Television Industry GenerallyOur ability to operate effectively depends on obtaining regulatory approvals."

Cable Networks

Overview.We currently operate our cable systems in Argentina through three regional clusters. The following table shows
subscriber and related data for all three operating regions as of December 31, 2003, and is based on information published by third parties and our internally generated market information:

|                                         |  | City of Buenos
Aires Region |  | Atlantic Coast &
Central Region |  | Litoral
Region |  | Total    
|---------------------------------------- |  | --------------------------- |  | ------------------------------- |  | -------------- |  | ---------
|Total Households(1)                      |  | 3,294,220                   |  | 1,070,280                       |  | 728,400        |  | 5,092,900
|Multicanal Homes Passed(1)(2)(3)         |  | 2,953,600                   |  | 1,065,900                       |  | 426,600        |  | 4,446,100
|Multicanal Homes Passed/Total Households |  | 89.7%                       |  | 99.6%                           |  | 58.6%          |  | 87.3%    
|Total Cable Subscribers(1)(2)            |  | 1,202,000                   |  | 443,100                         |  | 281,200        |  | 1,926,300
|Multicanal Subscribers(2)                |  | 455,600                     |  | 283,200                         |  | 124,200        |  | 863,000  
|Multicanal Penetration(4)                |  | 15.4%                       |  | 26.6%                           |  | 29.1%          |  | 19.4%    
|Multicanal Market Share(5)               |  | 37.9%                       |  | 63.9%                           |  | 44.2%          |  | 44.8%    

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City of Buenos Aires Region.This region consists of cable systems in the City of Buenos Aires, the greater Buenos Aires
Southern and Northwestern Regions and the cities of La Plata, Berisso and Ensenada. The City of Buenos Aires is the federal capital of Argentina and, together with the Buenos Aires metropolitan area,
accounts for approximately 12 million inhabitants, representing approximately

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35%
of the total Argentine population. La Plata is the capital of the province of Buenos Aires, and Berisso and Ensenada are neighboring cities of La Plata. We serve approximately 455,600 subscribers
in this region, with 2,953,600 homes passed and 10,500 miles of trunk and feeder cable. We have consolidated the City of Buenos Aires with the Greater Buenos Aires Southern Region using fiber optic
loops, and our systems have a capacity ranging from 450 MHz to 750 MHz, with approximately 60.4% of our systems in this region having 750 MHz capacity.

Atlantic Coast and Central Region.This region consists of cable systems in ten major cities of the province of Buenos Aires,
eight of which are on the Atlantic coast, including Mar del Plata and Bahía Blanca, seven of the largest cities in the province of Córdoba, the second largest province of
Argentina in number of inhabitants, and two cities in the province of La Pampa. Our systems serve approximately 283,200 subscribers in this region, with approximately 1,065,900 homes passed and 4,900
miles of trunk and feeder cable. Approximately 52% of our systems have a capacity of 450 MHz in this region.

Litoral Region.This region consists of cable systems in five cities in the province of Santa Fe, the third largest province
of Argentina in number of inhabitants, one city in the province of Entre Ríos, the City of Corrientes in the province of Corrientes, two cities in the province of Chaco and the City of
Formosa in the province of Formosa. Our systems serve approximately 124,200 subscribers in this region, with 426,600 homes passed and 2,300 miles of trunk and feeder cable. Our systems have a capacity
ranging from 350 to 750 MHz in this region.

Network Architecture.Our strategy emphasizes high technological standards for our cable television systems. While in the
past we had upgraded a significant part of our networks to maintain the highest technological standards throughout our cable systems and to expand programming alternatives and services, we are
currently limiting the amount of annual capital expenditures to the minimum level necessary to continue providing the current level of services to our customers. We use a FSA design to upgrade or
rebuild our network because it permits bi-directional transmission. FSA network architecture is a design of cable network fiber trunks and coaxial cable extensions which connect
programming headends to the distribution network and allow signals to flow both to and from headends and the distribution network.

Our
FSA network is made up of five levels.





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Our
network architecture creates a flexible network that can be used as a platform for additional services and products, including cable modems for Internet access and telephony
services. It allows us to:



Currently,
approximately 31.7% of our network has a capacity of 750 MHz. As a result of the economic instability and cash flow restrictions affecting our business, we have limited our
capital expenditures to the minimum required to continue providing services to our customers.

Acquisitions of Cable Networks

At the time we began operations in 1991, the Argentine cable television industry was highly fragmented and comprised of two large operators,
Cablevisión and VCC, and more than 1,500 small and medium-size operators. Since our creation, we have followed a systematic approach in acquiring, consolidating and
operating cable television systems, selected on the basis of their subscriber base, location, operational characteristics and growth prospects. Since our inception through December 31, 2003, we
completed 121 acquisitions, adding approximately 1,242,400 subscribers to our subscriber base.

We
have improved the operating performance and cash flow of the acquired cable television systems by:



In
addition to our acquisition strategy, we have sought to increase our subscriber base by extending the number of homes passed by our systems. We have also sought to increase our
penetration rates by promoting a distinct image of high quality programming and superior customer service. During the twelve-month period ended December 31, 2003, mainly due to the recovery of
the Argentine economy, we added approximately 32,000 subscribers.

We
have restructured our corporate organization on six occasions to rationalize and streamline our operations. Several regulatory approvals required in connection with these corporate
reorganizations are currently pending. See "Item 4. Information on the CompanyRegulatory Overview" for a discussion of several governmental approvals which are applicable to our
reorganizations.

On
June 22, 2001, our shareholders approved the merger agreement entered into with Plataforma Digital S.A., Red Argentina S.A., Radio Satel Sociedad Anónima, Cable
Espacio del Buen Ayre S.A., Video Cable Norte S.A., Televisión por Cable S.A. and Cablevisión Corrientes Sociedad Anónima. This corporate reorganization
was effective as of January 1, 2001. We have complied with all necessary legal

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requirements
and submitted the agreement on April 11, 2004 to the CNV for its approval. We expect the CNV to grant its approval and to submit the merger agreement to the Inspección General de Justicia,
or Superintendency of Corporations ("IGJ"), for its approval and registration. The CNV has not yet
granted its approval because it is still awaiting the IGJ's registration of the previous mergers.

Recent Acquisitions

As a result of acquisitions during 1997, Fintelco S.A. ("Fintelco") and VCC continue to be jointly owned by us and Cablevisión and will continue
operations with their remaining assets, Ps.0.5 million, at November 30, 2003, and liabilities, Ps.30.3 million, at November 30, 2003, until their residual liabilities have
been paid off. We have agreed with Cablevisión to make capital contributions to Fintelco in proportion to each of our respective equity interests and to enable VCC to discharge its
remaining liabilities, including any contingent liabilities arising from court actions or claims initiated or filed before July 1, 1998 which remain with VCC. In an April 30, 1998
agreement, we agreed with Cablevisión to assume any contingent liabilities arising out of court actions or claims initiated or filed after June 30, 1998, relating to employees,
assets or operations allocated to either Fintelco or VCC, except for administrative and criminal proceedings and personal injury claims arising from events that occurred before July 1, 1998 and
initiated after June 30, 1998. These claims will be assumed by us and Cablevisión in equal parts.

We
divided the subscribers, assets and liabilities of VCC and three cable systems in the Province of Santa Fe, owned jointly by us and Cablevisión (the "Santa Fe
Systems"), with Cablevisión as of July 1, 1998. As a result, we have effected the physical division of the assets of those systems and, since July 1, 1998, we have had
effective control of the operations and assets transferred to us. All legal requirements to cause our division of the subscribers, assets and liabilities of VCC and the Santa Fe Systems to become
effective under Argentine law have been completed. The approvals from Comfer and the IGJ are still pending. We have made the appropriate filings with the IGJ and expect it will grant its approval
during 2004. See "Item 4. Information on the CompanyRegulatory Overview."

On
October 27, 2000, we acquired 49% of the capital stock of Dorrego Televisión S.A. and of Cable Video Sur S.R.L. (two systems in Coronel Dorrego, Province of
Buenos Aires), for a total price of U.S.$1,312,000, of which U.S.$1,150,000 was paid in cash immediately and the balance, U.S.$162,000, was paid on October 26, 2001. On December 15,
2000, we acquired the remaining 51% of Dorrego
Televisión S.A. and Cable Video Sur S.R.L. The price of such transaction was U.S.$1,292,500, of which U.S.$220,000 was paid in cash and the balance was paid in 13 equal installments of
U.S.$82,500, the last of which was paid on December 17, 2001. The interests we acquired in Cable Video Sur S.R.L. were subject to certain liens as security for amounts due by the seller to the
former owners. Pursuant to an agreement dated October 15, 2002, we assumed from the seller the outstanding liabilities amounting to Ps.250,000 to former shareholders of Dorrego
Televisión S.A. and we agreed to discharge this debt in 30 monthly installments determined by reference to a formula based on the basic subscription fee charged in Coronel
Dorrego. On December 15, 2002, we entered into an agreement whereby we assumed from the seller liabilities owed to former co-owners of Cable Video Sur S.R.L. The seller's
liabilities were guaranteed with a pledge of 99% of the quotas of Cable Video Sur S.R.L. In connection with this agreement, we agreed to pledge the shares of Dorrego Televisión S.A. in
exchange for a release of the pledge of the quotas of Cable Video Sur S.R.L. This is intended to facilitate the conversion of Video Cable Sur S.R.L. into asociedad
anónimaand the contribution of its shares into Dorrego Televisión S.A.We also agreed to pay
Ps.829,641 in 39 monthly installments and six semi-annual installments. These installments are being timely paid.

On
November 10, 2000, Plataforma Digital S.A. ("Plataforma"), a company merged with us effective January 1, 2001, and Grupo Clarín entered into a share sale
agreement with DirecTV Latin America, LLC, one of the shareholders of Galaxy Entertainment Argentina S.A. ("GEA"), whereby Plataforma was entitled to sell its 51% participation in GEA in exchange for
approximately 4%

27

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investment
in DirecTV Latin America, LLC and a purchase option (the "Operation"). The consummation of the Operation was subject to the satisfaction of certain conditions precedent. The Operation was
consummated on April 30, 2001 and consequently we transferred to DirecTV Latin America, LLC our entire participation in the capital stock of GEA in exchange for a 3.97% interest in DirecTV
Latin America, LLC. In August 2001, we transferred our interests in DirecTV Latin America, LLC to an affiliate for U.S.$150 million. See "Item 4. Information on the
CompanyBusiness OverviewCompetition" and "Item 5. Operating and Financial Review and ProspectsLiquidity and Capital Resources."

On
September 7, 2001, pursuant to a trust agreement, the minority shareholders in Tres Arroyos Televisora Color S.A. ("Tres Arroyos") transferred all of their equity interests
representing 38.58% of the capital stock of Tres Arroyos in favor of the trustee, Mr. José María Sáenz Valiente (h). During the life of the trust,
the trustee is required to vote the shares assigned in trust in accordance with our instructions, as beneficiary of the trust. The stock being held in trust is gradually transferred to us as trust
beneficiary provided we pay Ps.42,876 per month to the trustee over a ten-year period. Amounts paid to the trust are distributed to the former minority shareholders of Tres Arroyos, in
accordance with the terms of the trust agreement. The trust will be revoked if we fail to pay any installment.

As
of December 31, 2003, the trustee transferred 2,315 shares to us under the trust agreement. The share ownership after the transfer is as follows: we own 17,055 shares
representing 71.06% of the capital stock and the trust owns 6,945 shares representing 28.94% of the capital stock of Tres Arroyos.

Foreign Operations

Uruguay.On May 2, 1997, through our wholly-owned subsidiary Adesol S.A., we acquired 75% of Telemás
S.A., a company that provides programming and management services to UHF systems and to another seven cable operators in Uruguay. Telemás S.A. receives a fee for its programming and
management services. This fee accounts for approximately 90% of the monthly billing generated by each cable operator. On July 15, 1999, we caused Adesol S.A. to acquire the remaining 25% of
Telemás S.A. and we agreed to pay U.S.$12.4 million in six semiannual installments, the first four of which were due and paid on December 15, 1999, June 15 and
December 15, 2000, and June 15, 2001 (the December 31, 2001 payment had been made in advance). The final installment due June 15, 2002 was renegotiated to be paid
24 months from July 2002. As per an addendum dated November 2002, we have partially renegotiated the financing obligations due in October 2002 through March 2003. On
June 23, 2003, we renegotiated the financing obligations due on April through December 2003. These financing obligations were paid in amounts of U.S.$90,000 on June 23, 2003, and
the sum of U.S.$180,000 in six monthly installments of U.S.$30,000 each from July 15, 2003 through December 15, 2003. The financing obligations due from January to June 2004 have
been paid as scheduled. The balance of U.S.$1,352,250 will be payable on August 15, 2004 and the installment due in July 2004 of U.S.$417,889 will be payable on July 15, 2004.
Until these installments have been paid, we are restricted from selling Adesol S.A. and Telemás S.A. As a result of the acquisition, the aggregate number of subscribers served by us in
Uruguay is approximately 78,100 as of December 31, 2003. In the City of Montevideo, the UHF system served by Telemás offers twenty-five channels and competes with
other cable systems offering more than thirty channels. There is no exclusivity. We cannot assure you that the UHF system will be able to compete with the cable systems successfully in the future.

Paraguay.We own the following Paraguayan companies:



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Brazil.In 1997, we participated, through a special purpose joint venture with Dágaba
Participações Ltda., a member of Grupo Bozano Simonsen, in the auction of several cable television licenses in Brazil. The joint venture was awarded licenses in
Brasilia, Recife and Santa Barbara de Oeste, but only retained the license in Recife. Effective April 5, 1999, we sold our interest in the joint venture to Dágaba
Participações Ltda. The transfer remains subject to the approval of the Brazilian telecommunications agency. The transfer request has still not been presented to
Anatel (the Brazilian regulatory authority) as of the date of this Form 20-F. Therefore, the sale of our interest to Dágaba
Participações Ltda. has not been approved as of the date of this Form 20-F. The joint venture began deploying its network in Recife during
June 2001 after having won approval for the use of pole space from the local power company.

The
following table is based on information published by third parties and our internally generated market information and sets forth certain information relating to our cable television
systems within Paraguay and Uruguay as of December 31, 2003:

|                                 |  | Paraguay |  | Uruguay
|-------------------------------- |  | -------- |  | -------
|Total Households(1)(2)           |  | 341,000  |  | 527,000
|Multicanal Homes Passed(1)(2)(3) |  | 327,300  |  | 520,000
|Homes Passed/Total Households    |  | 96.0%    |  | 98.7%  
|Total Cable Subscribers(2)(4)    |  | 55,400   |  | 202,100
|Multicanal Subscribers(4)        |  | 40,400   |  | 78,100 
|Multicanal Penetration(5)        |  | 12.3%    |  | 15.0%  
|Multicanal Market Share(6)       |  | 72.9%    |  | 38.6%  

---

Programming and Other Services

Programming

We purchase basic and premium programming from more than 20 program suppliers, including Grupo Clarín affiliates. Several programming suppliers
have agreed to provide us volume discount pricing
structures because of our growth and market share. Due to the macro-economic crisis in Argentina over the last few years, growing inflation and higher gross churn rates prior to 2003, the terms of our
programming contracts, which in the past generally ranged from 24 to 36 months and were typically based on a flat fee, are now being renewed for an average period of 12 to 24 months with
varying fees. Some of our programming arrangements are with affiliates of our parent company, Grupo Clarín. Most of the programming contracts are subject to negotiated renewal in the
event that the Argentine peso is devalued to a certain level against the U.S. dollar. Our programming costs expressed as a percentage of net revenues were 31.6% for the year ended December 31,
2003, as compared to 32.6% for 2002 and 29.0% for 2001. Total programming costs are largely comprised of costs of programming in key categories like sports and movie channels. Programming costs for
sports channels (including payments made to a joint venture in which our shareholder Grupo Clarín owns a 50% interest) are approximately 40% of total programming costs. Programming
costs for movie channels are approximately 30% of total programming costs.

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Basic Service

Throughout most of Argentina, we offer subscribers a uniform basic service plan at an average monthly fee of Ps.40.7 at December 31, 2003. The basic
service provides between 42 and 68 channels to our subscribers, depending on the capacity of the local networks. We divide our programming services into categories, including movies and television
series, news, sports, children's programming, women's programming, music, over the air and general interest/other.

The
following table sets forth information regarding the programming we offer customers through many of our systems:

|Programming Service          |  | Origin    |  | Language
|---------------------------- |  | --------- |  | --------
|MOVIES AND TELEVISION SERIES |  |           |  |         
|I-SAT                        |  | Argentina |  | Spanish*
|SPACE                        |  | Argentina |  | Spanish*
|FILM & ARTS                  |  | Argentina |  | Spanish*
|RETRO                        |  | Argentina |  | Spanish 
|VOLVER                       |  | Argentina |  | Spanish 
|CINECANAL                    |  | U.S.A.    |  | English*
|FOX                          |  | U.S.A.    |  | Spanish*
|HALLMARK                     |  | U.S.A.    |  | Spanish*
|SONY ENTERTAINMENT           |  | U.S.A.    |  | Spanish*
|PRIME TIME                   |  | Argentina |  | Spanish*
|TNT                          |  | U.S.A.    |  | Spanish*
|X-TIME                       |  | Argentina |  | Spanish*
|THE FILM ZONE                |  | U.S.A.    |  | Spanish*
|THE WARNER CHANNEL           |  | U.S.A.    |  | Spanish*
|EUROPA-EUROPA                |  | Europe    |  | Spanish*
|MGM                          |  | U.S.A.    |  | Spanish*
|AXN                          |  | U.S.A.    |  | Spanish*
|NEWS                         |  |           |  |         
|CVN                          |  | Argentina |  | Spanish 
|TODO NOTICIAS                |  | Argentina |  | Spanish 
|CNN INTERNACIONAL            |  | U.S.A.    |  | English 
|CNN SPANISH                  |  | U.S.A.    |  | Spanish 
|CANAL 26                     |  | Argentina |  | Spanish 
|CRONICA TV                   |  | Argentina |  | Spanish 
|SPORTS                       |  |           |  |         
|TYC SPORTS                   |  | Argentina |  | Spanish 
|MULTIDEPORTES                |  | Argentina |  | Spanish 
|ESPN                         |  | U.S.A.    |  | Spanish 
|FOX SPORTS                   |  | U.S.A.    |  | Spanish 
|ESPN INTERNACIONAL           |  | U.S.A.    |  | Spanish 
|CHILDREN'S PROGRAMMING       |  |           |  |         
|FOX KIDS                     |  | U.S.A.    |  | Spanish 
|BOOMERANG                    |  | U.S.A.    |  | Spanish 
|MAGIC KIDS                   |  | Argentina |  | Spanish 
|CARTOON NETWORK              |  | U.S.A.    |  | Spanish 
|NICKELODEON                  |  | U.S.A.    |  | Spanish 
|DISCOVERY KIDS               |  | U.S.A.    |  | Spanish 
|                             |  |           |  |         

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|WOMEN'S PROGRAMMING         |  |           |  |                
|--------------------------- |  | --------- |  | ---------------
|FASHION TV                  |  | Argentina |  | Spanish        
|UTILISIMA SATELITAL         |  | Argentina |  | Spanish        
|COSMOPOLITAN                |  | U.S.A.    |  | Spanish        
|MUSIC                       |  |           |  |                
|MUCH MUSIC                  |  | Canada    |  | Spanish        
|SOLO TANGO                  |  | Argentina |  | Spanish        
|MTV                         |  | U.S.A.    |  | Spanish        
|MUSIC COUNTRY               |  | U.S.A.    |  | Spanish        
|CM CRONICA MUSICAL          |  | Argentina |  | Spanish        
|OVER THE AIR                |  |           |  |                
|ARTEAR                      |  | Argentina |  | Spanish        
|AMERICA                     |  | Argentina |  | Spanish        
|CANAL 9                     |  | Argentina |  | Spanish        
|CANAL 7                     |  | Argentina |  | Spanish        
|TELEFE                      |  | Argentina |  | Spanish        
|GENERAL INTEREST/OTHER      |  |           |  |                
|PLUS SATELITAL              |  | Argentina |  | Spanish        
|METRO                       |  | Argentina |  | Spanish        
|GOURMET.COM                 |  | Argentina |  | Spanish        
|CANAL RURAL                 |  | Argentina |  | Spanish        
|INFINITO                    |  | Argentina |  | Spanish        
|MAGAZINE                    |  | Argentina |  | Spanish        
|GUIA EN PANTALLA            |  | Argentina |  | Spanish        
|THE HISTORY CHANNEL         |  | U.S.A.    |  | Spanish        
|TV 5                        |  | France    |  | French         
|DEUSTCHE WELLE              |  | Germany   |  | German         
|MENORAH                     |  | Israel    |  | Hebrew/ Spanish
|RAI                         |  | Italy     |  | Italian        
|EL CANAL DE LAS ESTRELLAS   |  | México    |  | Spanish        
|TVE ESPAÑA                  |  | Spain     |  | Spanish        
|TV CHILE                    |  | Chile     |  | Spanish        
|DISCOVERY                   |  | U.S.A.    |  | Spanish        
|P&E                         |  | Argentina |  | Spanish        
|MUNDO OLE                   |  | U.S.A.    |  | Spanish*       
|E! ENTERTAINMENT TELEVISION |  | U.S.A.    |  | Spanish*       
|ARGENTINISIMA               |  | Argentina |  | Spanish        
|ANIMAL PLANET               |  | U.S.A.    |  | Spanish        
|NUEVA IMAGEN                |  | U.S.A.    |  | Spanish        
|EWTN                        |  | U.S.A.    |  | Spanish        
|LOCOMOTION                  |  | U.S.A.    |  | Spanish        
|BLOOMBERG TV                |  | U.S.A.    |  | Spanish        
|GALICIA TV                  |  | Spain     |  | Spanish        
|PEOPLE & ARTS               |  | U.S.A.    |  | Spanish*       
|CANAL A                     |  | Argentina |  | Spanish        
|DISCOVERY HEALTH            |  | U.S.A.    |  | Spanish*       
|NATIONAL GEOGRAPHIC         |  | U.S.A.    |  | Spanish*       
|BBC WORLDWIDE               |  | U.K.      |  | English        
|                            |  |           |  |                

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|REALITY TV       |  | U.S.A.    |  | Spanish*
|---------------- |  | --------- |  | --------
|PREMIUM CHANNELS |  |           |  |         
|MOVIE CITY       |  | U.S.A.    |  | English 
|CINE CANAL 2     |  | U.S.A.    |  | English 
|HBO              |  | U.S.A.    |  | English 
|HBO PLUS         |  | U.S.A.    |  | English 
|CINEMAX          |  | U.S.A.    |  | English 
|VENUS            |  | Argentina |  | Spanish*
|PLAYBOY          |  | U.S.A.    |  | Spanish*

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Premium and Pay-Per-View Services

We were the first Argentine cable operator to develop and offer premium channels in Argentina. Currently we offer premium services in all regions in which we
operate. Our premium services include programming dedicated to live soccer, movies and adult programming. As of December 31, 2003, the penetration rate of the movie and adult programming
premium service was approximately 8.4%.

To
receive premium programming, subscribers pay an incremental monthly fee ranging from Ps.5 to Ps.56. To receive the service, premium subscribers must either rent or purchase from us an
addressable set top unit or utilize readily available low quality decoding devices known as "traps." Approximately 81,900 set tops are currently in use by our subscribers, a decrease from last year
attributable to a decrease in the number of subscribers to our premium services. We purchase addressable set top units with the capability of decoding audio and video signals, and we are implementing
a plan to aggressively market these units to our subscribers.

Set
top units also have the capacity for pay-per-view service. We have introduced pay-per-view programming to subscribers with set top
units, including sports events and movies. Subscribers can elect to receive both individual events and a series of events through the pay-per-view service.

We
were the first to launch a weekly live soccer program,El Clásico del Domingo, which is now available in all of our
systems either on a subscription basis at an average monthly premium fee of Ps.13.70, or as a pay-per-view service in the regions where we have introduced addressable
technology. Since August 2001, we have also offeredEl Quinto Partido, a second weekly live soccer program.El Quinto
Partidois offered together withEl Clásico del Domingoin a single premium package called Super Domingo. It is offered
either as a premium service at an average monthly
premium fee of Ps.21.30 at December 31, 2003, or as a pay-per-view service in those regions where addressable technology has already been implemented. We estimate that
the soccer premium service has achieved a 5.2% penetration rate within our subscriber base.

We
have targeted the enhanced revenue opportunities associated with premium service and have been working with other cable operators and cable programming providers to create additional
premium tiers by adding new premium channels. We can give no assurance that this type of tiering will be accomplished, since creating additional premium tiers requires industry-wide
cooperation and agreement.

Magazine

Beginning in October 2002 we began to offer our magazine by subscription to Multicanal subscribers at a cost of Ps.2.4 per issue. In April 2003 we
re-launched the magazine as a new publication with the titleMiradas. The new magazine covers a broad spectrum of topics, including

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movies,
television programs, national and international news, interviews, leisure information and information on Multicanal programming. The new magazine is sold commercially at kiosks throughout the
country and at Blockbuster video stores at a cost of Ps.4.14 per issue. The total number of monthly copies sold by December 31, 2003 was approximately 120,000.

Other Services

We currently provide Internet high-speed access through one-way and two-way cable modems, and are testing the service with
approximately 4,000 subscribers in the City of Buenos Aires and La Plata City, where we have deployed our FSA network. Additionally, we offer, together with Primera Red Interactiva de Medios
Argentinos (Prima) S.A. ("Prima"), another broadband technology called "asymmetric digital subscriber line." We charge an up-front fee of Ps.100 or Ps.150 for the installation of cable
modems (depending on the service) and Prima, a company owned and controlled by Grupo Clarín, provides Internet service to our subscribers for a monthly fee of Ps.69.9 (plus value-added
tax) for Internet access through 128 Kbps speed and Ps.79.9 (plus value-added tax) for Internet access through 512 Kbps speed at December 31, 2003. We have entered into a revenue-sharing
agreement with Prima pursuant to which we currently receive 50% of the monthly fees charged by Prima to our subscribers for Internet services.

Additionally,
we are offering, together with Prima, a dial-up Internet package for a monthly fee of Ps.15.4 (plus value-added tax) at December 31, 2003.

Advertising Revenue

We also provide advertising services. These services accounted for 1.8% of our net revenues in the year ended December 31, 2003, 1.8% of our net revenues
in 2002, and 2.7% of our net revenues in 2001. We develop cable television advertising services as a means to increase our net revenues.

Revenues by Category of Activity and Geographic Market

The following table sets forth our revenues by category of activity and geographic market for the last three years.

|               |                    | Years Ended December 31
|-------------- | ------------------ | -----------------------
|
|
|
|Net revenues   |                    | 507.5                  
|               | From subscriptions |                        
|               | From advertising   |                        
|               | From other         |                        
|Revenues from: |                    |                        
|               | Argentina          |                        
|               | International      |                        

Marketing and Customer Service

We seek to differentiate ourselves from our competitors on the basis of the strength of our brand name and our focus on the quality of our customer service.

The Multicanal Brand Name

We have taken and continue to take action to promote our corporate image with the public and increase consumer awareness of our brand name. We began trademarking
the names of our cable

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television
operations in 1994. Most of our operations, except for those in Paraguay, Uruguay and certain areas in the Province of Buenos Aires, operate under our brand name. We continued to expand the
use of our brand name throughout Argentina during 2003, except in several regions in the interior where we utilize shared branding between well-regarded local trademarks and our trademark.

We
employ advertising in a variety of forms to increase our brand awareness and customer recognition. These forms include:



Since
1996, we have maintained a website, http://www.multicanal.com.ar, to provide programming news and our financial information.

Superior Customer Service

On January 1, 2004, we implemented a subscriber management software system called Customer Relationship Management ("CRM"), which we have licensed from
Oracle Argentina S.A. Additionally, we developed our own system, which was fully integrated with CRM for billing purposes. We have fully implemented this system in most regions of Argentina where we
operate, and believe that this technology will enable us to centralize subscriber data and manage account information more efficiently, respond more quickly to customers' needs and measure the
effectiveness of customer service and subscriber retention initiatives.

Billing and Subscriber Management

Our billing system was centralized in the regions and cities where we have deployed the CRM system. Our billing systems for our Uruguay and Paraguay operations,
as well as those of our Argentine subsidiaries Televisora Privada del Oeste S.A. and Teledifusora San Miguel Arcángel S.A., are decentralized. Subscribers receive a bill issued by our
regional administrative office in their home area. We bill all of our subscribers in advance for monthly basic cable service. Subscribers are given 30 days from the date of issuance to pay
their bills without penalty. As of December 31, 2003, an average of 83% of our subscribers paid their bills within this period. We seek to enforce a strict disconnection policy. If subscribers
do not pay their bills within the first 30 days, they receive a telephone call indicating that their account is overdue. We then send a claim letter seeking overdue payments still pending after
the expiration of the next monthly billing cycle. In the third month, we no longer mail either a bill or the monthly programming magazine to the subscriber and, if payment is not received, we
disconnect the subscriber as soon as practicable after the expiration of this period. Our efforts to improve customer retention and collections in 2003 have resulted in a reduction in the lag between
invoicing and collection and, accordingly, a decrease in our charges for doubtful accounts.

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Management of Churn

Churn means subscriber termination. We determine our churn rate by calculating the total number of disconnected cable television customers over a given period as
a percentage of the initial number of cable television customers for the same period. We experienced a favorable trend in our churn rates from 1997 to 2000, with our annual gross churn rates averaging
approximately 29.7% in 2000, 30.9% in 1999, 30% in 1998, and 37% in 1997. However, the trend was reversed in 2001 and 2002, with our annual gross churn rate averaging 32.4% in 2001 and 43.8% in 2002.
Our churn decreased to 20.5%
and we experienced a net addition of approximately 32,000 subscribers during the year ended December 31, 2003.

We
believe that our higher churn rates until December 2002 were principally due to the continued slowdown of the Argentine economy that started in 1998, an increase in the
value-added taxes imposed on cable television services and the loss in the purchasing power of the Argentine peso generated by its devaluation and high inflation rates during 2002, together with the
increase in prices of basic and premium services. However, during 2003 our churn rate decreased significantly, mainly due to the economic recovery in Argentina and our decision to require a
sign-up fee.

To
reduce our churn rate and to address associated risks, such as the difficulty in collecting receivables, we pursue a vigorous customer service and retention policy. This policy
contributed to the reduction of our annual gross churn rate between 1995 and 2000. In addition, in April 2002, we re-instituted an initial activation fee for new subscribers in an
effort to reduce churn. However, we cannot assure you that we will be able to maintain the prior and recent reduction in churn in light of the macro-economic situation that continues to affect
Argentina.

Competition

The pay television business in Argentina is very competitive. We face competition from other cable television operators and providers of other television
services, including direct broadcasting, satellite and wireless cable services. As a result of the non-exclusive nature of our licenses, many of our cable systems have been overbuilt by
one or more competing cable networks. This has led to aggressive competition and marketing programs to encourage subscribers to switch networks, a trend which decreased during 2003 primarily due to
our decision to require a sign-up fee. Free broadcasting services are currently available to the Argentine population mainly from four privately-owned television networks and their local
affiliates and one state-owned national public television network. There are also some independent operators in cities in the interior of the country.

Although
the Argentine cable industry, with over 700 operators, is highly fragmented, two MSOs, Cablevisión and us, which compete primarily on the basis of customer
service and brand recognition, account for a significant portion of the market. In 1996, a third MSO was created to operate in the northwest of Argentina. This operation, called Supercanal, does not
compete directly with us or Cablevisión. A fourth MSO, focused in the City of Buenos Aires region, Telecentro S.A., entered the market in 1999 using an aggressive pricing policy. We
believe that the adverse impact of this competitor has been less significant for us than for Cablevisión. As of December 31, 2003, our penetration rate in the Argentine cable
market (measured by subscribers) was approximately 19.4%. Among the cable systems, competition is based primarily on:



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We
believe that we are able to compete efficiently against other providers of pay television services on each of these counts. We also seek to attract and retain customers through our
vigorous customer service policies. See "Item 4. Information on the CompanyMarketing and Customer Service."

MMDS.MMDS, often referred to as wireless cable, is a cable distribution technology based upon a microwave transmission
system which operates from a headend, consisting of a satellite receiver or other equipment. Programming is then transmitted by microwave transmitters from an antenna located on a tower or on top of a
building to a small receiving antenna located at a subscriber's premises, where the encoded microwave signals are decoded. Although establishing an MMDS network is less capital intensive than
constructing a cable television network, we believe that cable television has competitive advantages over MMDS:



We
provide MMDS service in the cities of Mar del Plata and Tres Arroyos and serve approximately 1,700 MMDS subscribers in these areas. There are presently approximately 200 MMDS
operators serving approximately 60,000 subscribers in Argentina.

DTH.DTH systems use high power satellites to deliver signals to satellite dish antennae at homes, hotels and apartment
buildings. In comparison to MMDS signals that are locally transmitted, a DTH satellite footprint can cover large land areas. High frequency Ku-Band DTH technology, which permits the use of
a smaller satellite receiver dish of 60 centimeters, offers more channels and better picture quality than C-Band DTH technology. DTH service in Argentina is regulated by the Broadcasting
Law.

At
present, only two companies, TDH S.A. and DirecTV Latin America, LLC, provide DTH services in Argentina. The first of the two companies presently providing such services, TDH S.A.,
offers approximately 24 video channels to its approximately 6,000 subscribers. On March 26, 2000, TDH S.A. initiated proceedings to determine the composition of creditors prior to an
adjudication in bankruptcy. The second, DirecTV Latin America, LLC, is a consortium comprised of Hughes Communications, Inc., a division of the Hughes Electronics subsidiary of General Motors
Corporation and the Cisneros Group. DirecTV Latin America, LLC began offering services in Argentina in June 1998 through an affiliate, GEA, in which Grupo Clarín had a majority
interest of 51% through its wholly-owned subsidiary Plataforma. Plataforma was merged into us on January 1, 2001, and on April 30, 2001, we transferred to DirecTV Latin America, LLC our
interest in GEA in exchange for a 3.97% investment in DirecTV Latin America, LLC. On August 24, 2001, we transferred all of our interests in DirecTV Latin America, LLC and certain contractual
rights related thereto to Raven Media Investments, LLC, a company organized under the laws of the state of Delaware and wholly-owned by Grupo Clarín, for U.S.$150,000,000. We received
the full purchase price upon the execution of the transfer agreement and reserved the right, subject to certain conditions, to indirectly repurchase the assets sold. The repurchase option expired on
November 10, 2003 and was not exercised by us.

DTH
service in Argentina may grow throughout the country over the next five years, primarily in rural areas where there are no cable networks. Although we believe that cable television
has advantages over DTH because cable television does not require the subscriber to bear the up-front cost for the purchase of an outdoor reception dish and related hardware necessary for
DTH, we cannot assure you that DTH will not in the future become a significant competitor in Argentina's pay television market.

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Regulatory Overview

The installation and operation of cable television service in Argentina is governed by the Broadcasting Law, as amended, and related regulations. The cable
television industry is principally regulated and supervised by Comfer but also falls under the jurisdiction of the CNC, for matters related to installation of cable services and compliance with
technical regulations. The Department of Press and Transmission supervises Comfer and reports directly to the Executive Branch. It also supervises the general enforcement of the Broadcasting Law and
the regulatory framework for the industry.

Comfer
has the authority to:



Rates
charged by cable television companies are not presently regulated.

As
a condition to obtaining a broadcast license, a cable operator must demonstrate that it has received permission to utilize municipal airspace from the relevant municipality and that
it has obtained the
rights to install poles that will carry the cable. The CNC must then approve the operator's technical plans for installation of cable service.

The
CNC monitors compliance with technical regulations related to installation of the cable service through its surveillance of the use of the broadcasting spectrum and the granting of
frequencies.

Cable
television companies in Argentina are required to obtain a non-exclusive broadcasting license from Comfer in order to carry and distribute programming over their cable
networks. Comfer licenses have an initial fifteen-year term. At the end of this term, the licensee may apply for a one time ten-year extension and, according to the
Broadcasting Law, Comfer must grant the extension if it verifies that the licensee has complied, during the first term, with all of the requirements and obligations set forth in the Broadcasting Law.

We
expect to be granted all extensions for which we have applied. The Broadcasting Law provides for a one time ten-year extension and does not provide for subsequent renewals
when such term expires. As a result, once the ten-year extension term elapses we may be forced to apply for new licenses. Because cable television licenses are directly granted by Comfer,
if Comfer verifies that the laws and obligations have been complied with, it may grant a new license. As of December 31, 2003, the weighted average remaining life of our licenses was
9.27 years, based on the number of subscribers and the assumption that a ten-year extension will be granted in all cases. In the event that Comfer denies us an extension of a
license in a specific area, we must cease operations in such area, seek to acquire a company that has a valid broadcasting license for the area or apply for a new license in our own name. We cannot
assure you that there will be a cable company with a valid license operating in such an area, that we will be able to acquire such a cable company, or that if we apply for a new license in our name,
that such licenses will be granted.

Related
to an injunction imposed by a federal judge investigating Comfer's practices, including with respect to the granting of cable television licenses in recent years, Comfer has
issued a resolution

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suspending
the granting of new licenses or extensions. We cannot assure you if or when Comfer will reinitiate these activities.

In
addition, due to the various corporate reorganizations we have undergone, several licensee operating companies have been merged into us. In some cases operating companies merged into
us hold licenses for areas where we already hold a license and, because we are not legally allowed to keep both licenses, we have elected in most cases to keep in force the license with the longest
remaining period of life. However, we cannot guarantee that Comfer will approve our choice to do so. Broadcasting licenses are transferable upon approval by Comfer and subject to compliance with the
regulatory conditions set forth in Resolution No. 870/93.

Comfer
issues broadcasting licenses upon a review of several qualifications of the applicant and its shareholders and partners. Under Section 45 of the Broadcasting Law, a
licensee's shareholders and partners must:



In
addition, in the event one or more of the licensee's shareholders is a corporation, the corporate shareholder must be duly organized and the members of its board of directors must
meet the conditions set forth above, except that the directors of the corporate shareholder are not required to show financial capability.

Section 46
of the Broadcasting Law establishes that licensed companies may not be affiliates, subsidiaries or under the control of foreign persons. Law No. 25,750, passed
on June 18, 2003, requires that corporations in media-related businesses be owned by Argentine persons and establishes a maximum potential foreign ownership of such companies at 30% of the
outstanding capital stock representing 30% of the voting rights. These requirements can be waived if the Executive Branch agrees and there is a bilateral treaty granting non-discriminatory
treatment. Currently, such treaties exist between Argentina and the United States, Italy and France. See "Item 3. Key InformationRisk FactorsRisks Relating to
ArgentinaCreditors' ability to acquire equity interests in us in the event of aconcurso preventivoto restructure our outstanding U.S.
dollar-denominated indebtedness may be limited" and "Item 10. Additional InformationMemorandum and Articles of AssociationLimitations on Rights to Own Securities."

Finally,
Section 45 of the Broadcasting Law requires Comfer approval for any transfer of shares in a licensee company, including the roll up transaction discussed in "Item 7.
Major Shareholders and Related Party TransactionsOverview of Grupo Clarín." In the event that a stockholder
or partner of a licensee company is another company, Comfer has the authority to review that company's stockholders and determine whether they comply with the requirements set forth in such
Section 45. Comfer has authorized the Clarín Shareholders as shareholders of several licensed companies that were merged into us. However, Comfer has not yet authorized AGEA, a
corporation controlled by Grupo Clarín, and Grupo Clarín as our shareholders. We have given notice but not yet obtained the required approvals from Comfer in connection
with all of our acquisitions of shares in companies which hold licenses and the transfer of licenses to us by certain of the subsidiaries merged into us.

Failure
to obtain Comfer's approval of the transfer of an ownership interest in a licensed company may result in the unwinding of the transfer. Violation of Comfer regulations regarding
the transfer of an ownership interest in a licensed company can result in the imposition of fines, the suspension of advertising or the revocation of the license of the licensee that violated the
Comfer regulations.

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We
have notified Comfer of the following transactions, among others, but Comfer has not yet approved them:



The
division of the operations of VCC resulted in the transfer of several broadcasting licenses of the VCC's companies to us. Comfer Resolution No. 870/93 establishes regulatory
procedures for the transfer of a license. We have followed these procedures. On July 16, 2001, Comfer issued Resolution No. 1110/01, establishing the procedure and documentation
necessary for the transfer of shares, interests and licenses. This resolution granted petitioners a term of 90 days to complete the documentation required to be filed with Comfer. The
90-day term expired on December 4, 2001. Although we have completed the documentation in accordance with the new procedure, there are documents that we were not able to file because
we could not obtain them from previous license holders. While we have requested those documents they have not been provided to us by the previous license-holders. As of the date of this
Form 20-F we are not aware of the suspension of any transfers.

Additionally,
Comfer must approve any elimination of headends. We are awaiting approvals for several headend eliminations resulting from the acquisition and division of VCC. Although we
expect to receive all of the required approvals, we cannot assure you that Comfer or any successor agency will grant all of the approvals.

The
Broadcasting Law provides that Comfer may cancel licenses because of, among other things:



In
the past, the application of the regulatory framework by Comfer has resulted in numerous and, in the aggregate, substantial fines. Comfer also periodically agreed to "payment
programs" that resulted in material discounts from the face value of the fines imposed and deferrals of payment dates. On November 20, 2002, Comfer issued Resolution No. 830/02, adopting
a new regime for imposing sanctions for violations of the Broadcasting Law. Resolution No. 830/02 classifies each violation as afalta grave(severe violation) or as afalta leve(minor violation). Minor violations are sanctioned byllamados de
atención(reprimands) andapercibimientos(warnings). Severe violations, such as the broadcast of obscene
programs or the illegal installation and operation of a cable system, are subject to incremental fines, which may, in the case of numerous severe violations, eventually lead to the revocation of the
license. We can give no assurance that we will not be sanctioned or have any of our licenses revoked under Resolution No. 830/02.

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Antitrust Considerations

Our operations are subject to the Argentine antitrust law (Law No. 22,262, enacted in 1980, as amended in 1995 by Law No. 24,481) which provides
that certain acts, including:



may
give rise to penalties. Penalties include fines payable by the entity engaged in the prohibited practice and its directors, legal representatives, attorneys-in-fact,
managers, statutory auditors or members of the supervisory committee, all of which are jointly and severally liable. In addition, Argentine antitrust law vests the Comisión Nacional de Defensa de la
Competencia, or National Commission for the Defense of Competition ("CNDC") with the power to order a party to abstain from or cease any anti-competitive
activities, and to request the relevant court to liquidate or dissolve companies violating the law.

Organizational Structure

The following table sets forth our significant subsidiaries, as of December 31, 2003, including the country of incorporation, ownership interest and
percentage of voting power held.

|Subsidiary                             |  | Country of
Incorporation |  | Ownership
Interest*
|-------------------------------------- |  | ------------------------ |  | -------------------
|AVC Continente Audiovisual S.A.        |  | Argentina                |  | 90%                
|CV Berazategui S.A.                    |  | Argentina                |  | 70%                
|Delta Cable S.A.                       |  | Argentina                |  | 84%                
|San Lorenzo TV Cable S.A.              |  | Argentina                |  | 100%               
|TV Cable San Francisco S.A.            |  | Argentina                |  | 100%               
|Telesur Teledifusora Río Cuarto S.A.   |  | Argentina                |  | 100%               
|Televisora Privada del Oeste S.A.      |  | Argentina                |  | 51%                
|Bridge Management Holdings Corp.(1)    |  | Panamá                   |  |                    
|La Capital Cable S.A.                  |  | Argentina                |  | 50%                
|Chaco TV Cable Color S.R.L.            |  | Argentina                |  | 100%               
|Teledifusora San Miguel Arcángel S.A.  |  | Argentina                |  | 50%                
|Tevemundo S.A.                         |  | Argentina                |  | 100%               
|Cable Imagen S.R.L.                    |  | Argentina                |  | 100%               
|Televisión Dirigida S.A.E.C.A.         |  | Paraguay                 |  | 89%                
|Orange Television Productions S.A.(2)  |  | Paraguay                 |  |                    
|Cablepar S.A.(2)                       |  | Paraguay                 |  |                    
|Cablevisión Communicaciones S.A.E.C.A. |  | Paraguay                 |  | 90%                
|Tres Arroyos Televisora Color S.A.     |  | Argentina                |  | 71%                
|Wolves Televisión S.A.                 |  | Argentina                |  | 100%               
|Adesol S.A.                            |  | Uruguay                  |  | 100%               
|Cable Video S.A.                       |  | Argentina                |  | 100%               
|Pem S.A.                               |  | Argentina                |  | 100%               
|Dorrego Televisión S.A.                |  | Argentina                |  | 100%               
|Cable Video Sur S.R.L.                 |  | Argentina                |  | 100%               

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All
of our subsidiaries are cable television operators except for Pem S.A., Adesol S.A., San Lorenzo TV Cable S.A, TV Cable San Francisco S.A and Telesur Teledifusora
Río Cuarto S.A.

Property, Plants and Equipment

We own most of our principal physical assets, which consist of:



Our
cable distribution system is generally attached to utility poles, and we either own or lease space on these poles from local public utilities. In addition, some of our distribution
systems are located on building rooftops under arrangements with the owners of the buildings, or are located in underground ducts under lease arrangements with local subway authorities. We have
entered into an agreement with Autopistas del Sol S.A. pursuant to which we have the ability to place distribution systems under certain highways serving the City of Buenos Aires and can thereby avoid
locating a significant portion of these systems in underground ducts, which are less readily accessible. The physical components of our cable systems require maintenance and periodic upgrading to keep
pace with technological change.
We own our service vehicles, data processing facilities and test equipment and either own or lease our business offices and customer service center locations.

We
lease roof rights and space on utility poles and in underground ducts for the placement of our cable and certain equipment from third parties.

We
believe that our properties, both owned and leased, are in good operating condition and are suitable and adequate for our business purposes. Despite the adverse economic conditions
affecting our market and our company, the book value of our assets reflects our current plans and cash-flow projections, based on information available to us. We are planning to start
investing in our network to provide Internet services but currently have no plans to improve other facilities. These plans and projections assume that we continue to operate and that the economy
continues to recover. We cannot assure you that the current book value of our assets can or will be recovered.

Capital Expenditures and Divestitures

During 2001, our investment in purchases of property and equipment was Ps.46.6 million, and we generated Ps.315.5 million from sales of investments,
net of acquisitions. During the year ended December 31, 2002, we invested Ps.11.3 million in purchases of property and equipment and Ps.1.0 million in our acquisition of cable
systems. During the year ended December 31, 2003, we invested Ps.16.6 million in purchases of property and equipment, and used cash of Ps.8.3 million to pay obligations related to
the prior acquisition of cable systems and contributions to Fintelco S.A. These capital expenditures were made with funds generated by our operations and financings.

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Item 5. Operating and Financial Review and Prospects

Overview

The following discussion should be read in conjunction with the consolidated financial statements and related notes. The financial information included in the
discussion below as at December 31, 2003 and 2002 and for the three years ended December 31, 2003 is derived from the consolidated financial statements included in this
Form 20-F. Except as discussed in the following paragraphs, we have prepared our financial statements in accordance with Argentine GAAP and the regulations of the CNV, which differ
in certain respects from U.S. GAAP. We are an Argentine company, subject to the laws of Argentina and the regulations of the local authorities, and therefore prepare our financial statements in
accordance with Argentine GAAP. See Note 15 to the consolidated financial statements, describing the principal significant differences between Argentine GAAP and U.S. GAAP, as they relate to
us. Note 16 to the consolidated financial statements provides a reconciliation to U.S. GAAP of net gain (loss) for the years ended December 31, 2003, 2002 and 2001 and shareholders'
equity (deficit) as of December 31, 2003 and 2002 and Note 17 to the consolidated financial statements provides certain additional disclosures required under U.S. GAAP.

As
discussed in Note 2.6.(k) to our consolidated financial statements, in order to comply with regulations of the CNV, we recognized deferred income tax assets and liabilities on
a non-discounted basis. This accounting practice represents a departure from generally accepted accounting principles in Argentina. However, we believe that such departure has not had a
material effect on the accompanying financial statements.

Our
consolidated financial statements included the effects of inflation through August 31, 1995, utilizing the inflation restatement methodology established in Technical
Resolution No. 6 of CPCECABA. Effective September 1, 1995, as required by rules issued by the CNV, we discontinued the restatement methodology, maintaining the effects of inflation
accounted for in prior periods. Prior to March 6, 2002, accounting principles did not differ from applicable regulations provided that the annual variation in the WPI did not exceed 8% per
annum. During the years ended December 31, 2001, 2002 and 2003 the WPI decreased by 5.3%, increased by 118.0%, and increased by 2.0%, respectively.

To
counter both the high inflation rates brought about by the end of the convertible monetary system in Argentina at the beginning of 2002, and the distortion this caused in Argentine
companies' financial statements, the Argentine government issued Decree No. 1269/02 on July 17, 2002. This decree provides for the reestablishment of the restatement of financial
information to account for inflation and instructs the CNV to issue specific regulations regarding its application to companies such as us subject to the CNV's jurisdiction. Consequently, on
July 25, 2002, the CNV issued Resolution No. 415/02, providing that financial statements filed subsequent to the date of the resolution be restated to recognize changes in the purchasing
power of the peso, starting January 1, 2002. On March 25, 2003 the Argentine government issued Decree No. 664/03 providing that financial statements for periods ending on a date
subsequent to the date of that decree be expressed in nominal currency. Consequently, the CNV issued Resolution No. 441/03 providing for the elimination of inflation adjustment for all
financial statements effective March 1, 2003. On October 10, 2003, the CPCECABA issued Resolution MD No. 041/03 eliminating the inflation adjustment for all financial statements,
as from October 1, 2003. In accordance with CNV resolutions, we discontinued the restatement of our financial statements as from March 1, 2003. Accordingly, our results for any period
prior to March 1, 2003 have been restated as follows:



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Financial
results have been valued net of general inflation on the related assets and liabilities. The income statement for the year ended December 31, 2003 reflects the effects
of inflation on our net holdings of monetary assets and liabilities during January and February 2003. Assets and liabilities are considered "monetary" for purposes of restatement for
wholesale-price level changes if their values are fixed by contract or otherwise in terms of number of currency units, regardless of changes in specific prices or in the WPI. Examples of "monetary"
assets and liabilities include peso-denominated accounts receivable, accounts payable and cash. The restatement of the income statement to reflect wholesale price level changes merely
reflects the effects of inflation, and does not imply either a generation or use of funds.

Additionally,
amounts for the year ended December 31, 2002, presented herein for comparative purposes, are presented in constant pesos of February 28, 2003 using a
conversion factor equal to 1.0074, which represents the inflation index rate (based on wholesale prices) for the
two-month period ended February 28, 2003. As described above, inflation adjustment was discontinued as of March 1, 2003. This criterion is not in line with prevailing
professional accounting standards, under which financial statements are to be restated until September 30, 2003. Had the provisions of those standards been applied, our shareholders equity and
results for the year would have decreased by Ps.35 million and Ps.32 million, respectively.

Our
consolidated financial statements have been audited by our independent auditors, whose report is included herein. Our financial statements as of and for the year ended
December 31, 2003 have been prepared on the assumption that we will continue to operate as a going concern. Our independent auditors have issued reports stating that we failed to make scheduled
payments on all of our negotiable obligations and we were notified of the filing of various petitions for bankruptcy against us. We have undertaken a financial debt restructuring process by means of
the APE. In addition, we are involved in a Section 304 proceeding in U.S. Bankruptcy Court in order to ensure the validity of the APE. As of the date of this Form 20-F, we
cannot determine whether our APE restructuring process will be consummated without further legal challenge or what the final outcome of our U.S. Section 304 proceeding will be. We believe that
if the APE process is unsuccessful, we will likely have to file for aconcurso preventivo. The financial statements as of and for the year ended
December 31, 2003 do not include any adjustments that might result from the outcome of this uncertainty. See "Item 3. Key InformationRisk FactorsRisks Relating to
Multicanal" and "Item 13. Defaults, Dividend Arrearages and Delinquencies."

Assets
and liabilities in currencies other than the Argentine peso, as of December 31, 2001, were valued at an exchange rate of Ps.1.00 per U.S.$1.00, or the equivalent in the
currency of denomination, as of the date of the suspension of the foreign exchange market in accordance with General Resolution No. 392 of the CNV. Our total consolidated bank and financial
debt as of December 31, 2003 amounted to U.S.$647.1 million (including accrued interest and seller debt) and Ps.73.1 million (including accrued interest). The effects of the
devaluation of the Argentine peso were reflected in the 2002 consolidated financial statements in accordance with Argentine GAAP. Net losses originating from the application of foreign exchange rates
to foreign currency-denominated assets and liabilities as of the effective date of the Public Emergency Law are only deductible for income tax purposes up to 20% per annum in each of the first five
fiscal years ended after the effective date of the Public Emergency Law. See "Item 5. Operating and Financial Review and ProspectsLiquidity and Capital Resources."

Our
revenues are realized principally through monthly fees charged to our subscribers payable in pesos. Although substantially all of our financial expenses are denominated in U.S.
dollars, we have not used financial instruments to hedge our currency risk. The significant devaluation of the peso beginning in January 2002 has resulted in an increase in the cost of
servicing our debt and, therefore, has had a

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material
adverse effect on our results of operations. Since February 2002, we have defaulted on all payments on our Existing Notes and on all principal payments and a significant portion of our
interest payments on peso-denominated loans extended by various Argentine banks, as well as local branches of foreign banks (together, the "Bank Loans").

As
of June 24, 2004, we have been served with process on 34quiebrapetitions. Of those 34 petitions, one has been suspended and 33
have been dismissed by the court because the court deposits made by us to pay for the petitioners' claims were, in the view of the court of original jurisdiction, sufficient to disprove that we were
unable to pay our debts as they fell due. The lower court's decision dismissing the petitions has been affirmed by the court of appeals.

The Argentine Economy

We are an Argentinesociedad anónima(corporation) and substantially all of our facilities and
approximately 88% of our subscribers are presently located within Argentina. In the fourth quarter of 1998, the Argentine economy entered into a recession that caused GDP to decrease by 3.4% in 1999,
0.8% in 2000, 4.4% in 2001 and 10.9% in 2002. During 2003, GDP increased by 8.7%. The unemployment rate increased from 14.5% in May 1999 to 15.4% in May 2000 to 16.4% in May 2001
to 21.5% in May 2002, then decreased to 17.8% in October 2002. As of January 1, 2003, theInstituto Nacional de Estadisticas y
Censos,or National Institute of Statistics and Censuses, changed the methodology it uses to calculate the unemployment rate. The new methodology calculates the unemployment
rate on a quarterly basis. Accordingly, the unemployment rate for 2003 in the first quarter was 20.4%, in the second quarter it was 17.8%, in the third quarter it was 16.3% and in the fourth quarter
it was 14.5%.

Measures
taken by the Argentine government during 2001 were insufficient to restore investor confidence, and spreads on Argentine government securities reached record highs, as
speculation increased that Argentina would cease honoring its debt obligations. The government responded to the lack of investor confidence by adopting additional measures designed to further control
public sector spending, such as the Zero Deficit Law No. 25,453, passed on July 30, 2001, which provided that the government's monthly expenditures could not exceed the revenues of such
month (excluding the proceeds of any financing) and empowered the Secretary of the Treasury to eliminate dispensable expenditures to meet the balanced budget requirement. In addition, in
December 2001, the Argentine government adopted severe measures to safeguard the viability of the banking system in light of increasing withdrawals of deposits in the second half of 2001. These
measures barred transfers of funds outside Argentina, except (i) trade related payments, (ii) payments or withdrawals through credit or debit cards issued in Argentina, and
(iii) payments on financial transactions approved by the Central Bank.

On
December 1, 2001, in the face of increasing withdrawals of deposits from the financial system, the Argentine government imposed restrictions on the amount of money holders
could withdraw from banks and introduced exchange controls restricting capital outflows. As of December 3, 2001, remittances of foreign exchange, including for the payment of debt obligations,
were subject to Central Bank approval with certain exceptions.

On
December 19, 2001, President de la Rúa and his entire cabinet resigned, effective December 20, 2001, amidst continued economic turmoil and social unrest.
After a series of interim presidents, on January 1, 2002, at a joint session of Congress, Eduardo Duhalde, a Peronist senator who had been defeated by
former President de la Rúa in 1999, was elected to complete Mr. de la Rúa's term through the end of 2003.

On
January 6, 2002, Congress enacted the Public Emergency Law, which amended certain provisions of the Convertibility Law and eliminated the requirement that the Central Bank's
reserves in gold and foreign currency be at all times equivalent to at least 100% of the monetary base. The Public

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Emergency
Law abolished the U.S. dollar to peso parity regime and granted the executive branch the power to set the exchange rate between the peso and foreign currencies and to issue regulations
related to the foreign exchange market. The peso now floats freely and on June 24, 2004 traded at an exchange rate of Ps.2.95 per U.S.$1.00.

Since
January 6, 2002, additional regulations have been approved by the Argentine government, including:



Although
the long-term effect of the economic crisis of the past few years and the resulting governmental measures still remain uncertain, they have had an immediate and
materially adverse effect on our liquidity, financial condition, anticipated results of operations and business prospects, including eliminating expectations that we may be able to raise in the
capital or banking markets the funds needed to refinance significant maturities that became due in 2002 and 2003.

In
late 2002, as the foreign exchange and capital flows began to stabilize, the Argentine government gradually began to lift some of the monetary and exchange control measures it had
implemented to prevent a collapse of the banking system. The lifting of these measures served to boost economic activity.

Presidential
elections took place on April 27, 2003, resulting in the election of Néstor Kirchner, who took office on May 25, 2003. In 2003, the Argentine
economy began to recover, with GDP growing at a rate of 8.7%. This recovery, at first based almost exclusively on import substitution, broadened as the level of consumption and investment increased.
Reflecting the economic recovery, Argentine stock exchange indices displayed great dynamism in 2003, and both labor indicators and salary purchasing power registered consistent improvements during the
year.

The
long-term evolution of the Argentine economy, however, remains uncertain. While economic, political and social conditions have improved, the country still faces
significant challenges, including the restructuring of its sovereign debt, the renegotiation of utility contracts, the restructuring of the financial system and reforms to its tax regime. In light of
this uncertain situation, the following discussion may not be indicative of our current or future results of operations, liquidity or capital resources and may not contain all of the necessary
information to help you understand the information contained in this discussion with results from previous or future periods. Accordingly, the following discussion should be read in conjunction with,
and is qualified in its entirety by, the risk factors contained in this Form 20-F.

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Other Factors Affecting our Results and Financial Condition

Source of Revenues.Since our formation in 1991, we have generated approximately 90% of our revenues from monthly customer
charges for basic cable service and the balance from connection fees and advertising. More recently, we have also generated revenues from premium and pay-per-view fees. A
decrease in the number of subscribers has a direct impact on net revenues, although it also causes a reduction in certain of our operating expenses. During 2003, our subscriber base increased by
approximately 32,000 subscribers. We believe that this increase is primarily attributable to the recovery of the Argentine economy.

Effects of Inflation.For almost ten years, Argentina experienced very low levels of inflation and in certain years,
deflation. During several of these years, the purchasing power of a large segment of the population increased, together with consumer confidence. We initiated our business during that period, and our
growth internally and through acquisitions reflects the overall increase in the level of economic activity. The recession that affected the country since 1998 gradually undermined the purchasing power
of many of our customers, induced an increase in our churn and adversely affected our results of operations. These adverse trends accelerated with the significant devaluation and the inflation that
followed. During 2003, the WPI increased by 2.0%, compared to an increase of 118.0% during 2002. During periods of high inflation, effective wages and salaries tend to fall and consumers adjust their
consumption patterns to eliminate unnecessary expenses, including cable television services. Our financial condition and results of operations may deteriorate if the rates of inflation experienced in
2002 return.

Acquisition and Internal Growth.We operate primarily in Argentina. A principal element of our strategy in the past was to
increase our subscriber base through the acquisition of cable television companies and the expansion of our existing systems. We acquired 121 companies between 1991 and 2003, with approximately
1,242,400 subscribers at acquisition. However, most of those acquisitions were completed between 1991 and 1998. From 1998 through 2003 we have focused primarily on internal growth. Approximately
32,000 subscribers joined our cable systems during 2003.

We
seek to improve operating performance and cash flow through the consolidation of our systems. These efforts have resulted in a significant improvement in our results of operations
since 1996. In addition, we absorbed 71 of our wholly-owned subsidiaries and further consolidated our operations through the elimination of duplicative administrative functions. At December 31,
2003, we served directly approximately 80% of our subscriber base combined with that of our subsidiaries, with the remaining 20% serviced by our subsidiaries, including the Uruguayan and Paraguayan
subsidiaries.

We
do not expect any significant increase in our subscriber base through either internal growth or acquisitions, unless the economy stabilizes in the long-term and conditions
for growth in the service sectors of the economy are restored.

Factors Affecting Period-to-Period Comparability.Period-to-period
comparisons of our financial results for prior periods are affected by differences in the classification of certain revenues and expenses by our companies. These classification differences are
eliminated on a going forward basis as acquired businesses are integrated into our system. We believe these classification differences are not material within the context of our financial statements,
taken as a whole. The difference between the book value of the assets of companies we acquired and the price paid for those companies is recorded as goodwill. At December 31, 2003, goodwill
amounted to Ps.1,172.7 million and represented 49.7% of our total assets and 642.0% of our shareholders' equity. As of the date of this Form 20-F, Comfer has not approved
some of our more recent acquisitions. As of the date of this Form 20-F, Comfer has approved us as shareholder of 25 licensees out of 99 licensees we have acquired.

Period-to-period
comparisons of financial results for future periods are likely to be affected by inflation. While inflation accounting improves the comparability
of financial statements, it does not

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eliminate
or correct many of the distortions created by inflation that affect period-to-period comparisons of our financial results.

Tax Reform.In May 2001, the cable television industry signed an agreement with the Argentine Federal Government to
improve the competitiveness of the sector. Under its terms, companies that acceded to the agreement could:



We
acceded to the agreement and became eligible for its benefits as of August 2001, which benefits only applied until March 2003. Also, on August 13, 2001, the
Argentine government issued Decree No. 1008/01 allowing us to reduce our payment obligations on account of VAT by the amounts previously paid to Comfer that were not previously applied to
reduce our payment obligations on account of VAT. The amounts paid to Comfer that are not applied in a given fiscal period can be transferred to any future fiscal period. On March 31, 2003, the
"competition tax regime" created in 2001 expired along with the tax benefits arising under that regime. In our case, this resulted in (1) the re-imposition of the minimum notional
income tax, and (2) the inability to credit payments made to SADAIC, Fondo Nacional de las Artes, Argentores, and AADI-CAPIF against VAT.

In
April 2003, the Argentine government issued Decree No. 746/03, allowing companies in our industry to partially credit social security taxes accrued in the period between
April 1, 2003 and July 31, 2003 against VAT. As of August 1, 2003 we can no longer utilize this tax benefit.

Critical Accounting Policies

In connection with the preparation of the financial statements included in this Form 20-F, we have relied on variables and assumptions derived
from historical experience and various other factors that we deemed reasonable and relevant. Although we review these estimates and assumptions in the ordinary course of business, the portrayal of our
financial condition and results of operations often requires our management to make judgments regarding the effects of matters that are inherently uncertain on the carrying value of our assets and
liabilities. Actual results may differ from those estimated under different variables, assumptions or conditions. In order to provide an understanding about how management forms its judgments about
future events, including the variables and assumptions underlying the estimates, and the sensitivity of those judgments to different variables and conditions, we have included the following comments
related to each critical accounting policy described below.

Allowances for Doubtful Accounts

Management makes estimates of the uncollectability of its accounts receivable and maintains allowances for doubtful accounts for estimated losses resulting from
customers' failure to make required payments. If the future payments by our customers were to differ from the estimates, we would need to increase or decrease the allowances for doubtful accounts,
which could affect the reported results of operations.

Provision for Obsolescence of Materials

Provision for potentially obsolete or slow-moving materials is made based on management's assumptions about future consumption.

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While,
based on our experience, losses due to obsolescence of materials have been within expectations and the provisions established, if circumstances change (i.e., significant changes
in technology), management's estimates of the recoverability of these materials could be reduced by a material amount. In this case, our results of operations, financial condition and net worth would
be further materially and adversely affected.

Loss Contingencies

Loss contingencies are accrued when it is reasonably certain that the loss will be incurred, but uncertainty exists relating to the amount or the date on which
they will arise. Accruals for such contingencies reflect a reasonable estimate of the losses to be incurred based on information available as of the date of preparation of the financial statements.
However, if reserves prove to be inadequate and we incur a charge to earnings, such charges could have a material adverse effect on our earnings and liquidity for the applicable period.

Impairment of Long Lived Assets and Goodwill

Our accounting policies require that we test long-lived assets for impairment whenever indicators of impairment exist. Additionally, beginning in
2003, goodwill must be evaluated for impairment at least annually. If any impairment were indicated as a result of such reviews, we would measure it using techniques such as comparing the discounted
cash flows of the business to our book value or by obtaining appraisals of the related business. Until December 31, 2002, Argentine GAAP required that if the sum of the future discounted cash
flows expected to result from the assets was less than a company's reported value of the assets, then the asset was not recoverable and the company must recognize an impairment. As from
January 1, 2003, undiscounted cash flows are used for comparison purposes. The amount of impairment to be recognized is the excess of the reported value of the assets over the fair value of
those assets.

Management
has reviewed our long-lived assets, primarily property and equipment to be held and used in the business, long-term investments and goodwill for the
purposes of determining and measuring impairment. Given the significant negative impact on our operating results as a result of the devaluation, the pesification and the continued macro-economic
slowdown in Argentina, and as management's best estimate of discounted future cash flows was below the carrying value of our long-lived assets, under Argentine GAAP we recorded impairment
charges during the years ended December 31, 2002 and 2001 amounting to Ps.315.0 million and Ps.328.5 million, respectively.

We
believe that the accounting estimate related to this asset impairment is a "critical accounting estimate" because: (1) it is highly susceptible to change from period to period
because it requires management to make assumptions about future revenues and costs; and (2) the impact that recognizing an impairment has on the assets reported on our balance sheet as well as
our net loss is material. Management's assumptions about future revenues, as well as future number of subscribers, operating costs and selling, general and administrative costs require significant
judgment because actual revenues and subscribers have been seriously affected by the recent macro-economic slowdown and continued economic volatility in Argentina. In estimating future revenues, as
well as future number of subscribers, operating costs and selling, general and administrative costs, we used our internal projections.

Although
we believe our estimates are appropriate, significant differences in the actual performance of the asset or group of assets may materially affect our asset values and results of
operations.

Under
U.S. GAAP, on January 1, 2002 we adopted Statement of Financial Accounting Standards ("SFAS") No. 142, "Goodwill and Other Intangible Assets." In accordance with such
adoption, we identified all reporting units in conjunction with the provisions of SFAS No. 142 and allocated all goodwill between the reporting units identified to determine the net assets of
each reporting unit to be

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tested
for impairment. Beginning in 2002, goodwill was evaluated for impairment annually, or whenever events or changes in circumstances indicate that the carrying amount of goodwill may not be
recoverable. We tested goodwill for impairment using the two-step process prescribed in SFAS No.142. The first step is a comparison of the fair value of the reporting unit with its
carrying amount, including goodwill. If this step reflects impairment, then, in the second step, the loss would be measured as the excess of recorded goodwill over its implied fair value. Implied fair
value is the excess of the fair value of the reporting unit over the fair value of all recognized and unrecognized assets and liabilities.

Under
U.S. GAAP we recorded a Ps.302.0 million impairment charge during the year ended December 31, 2002 and Ps.184.8 million as the cumulative effect of the
adoption of SFAS No. 142. The fair value of the reporting units was estimated using the expected present value of future cash flows. We did not record any impairment charge during the year
ended December 31, 2003.

Although
we believe our estimates are appropriate, significant differences in the actual performance of the reporting units may materially affect our goodwill values and results of
operations.

Deferred Income Taxes

Deferred income taxes are provided to reflect the net tax effects of temporary differences between the financial reporting and the tax bases of assets and
liabilities and are measured using the currently enacted tax rates and laws in each of the relevant jurisdictions. Deferred income taxes reflect management's assessment of actual future taxes to be
paid on items reflected in the financial statements, giving consideration to both timing and probability of realization.

Deferred
tax assets are reduced by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax assets
will not be realized. Actual income taxes could vary from these estimates due to future changes in income tax law or results from final review of our and our subsidiaries' tax returns by the taxing
authorities.

We
have recorded a valuation allowance under Argentine GAAP of Ps.118.3 million as of December 31, 2003 due to uncertainties related to our ability to utilize certain
deferred tax assets, primarily consisting of tax losses carried forward, before they expire. We have considered the reversal of the deferred income tax liabilities, tax planning and taxable income
projections based on our best estimates in assessing the need for the valuation allowance. However, in the event management was to determine that it would be able to realize its deferred tax assets in
the future in excess of its net recorded amount, an adjustment to the deferred tax asset would increase income in the period such determination was made.

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Operating Results

The following table sets forth, for the periods indicated, certain statements of income data in thousands of pesos and as a percentage of net revenues:

|                                                        |  | Year Ended December 31, |  
|------------------------------------------------------- |  | ----------------------- | -
|
|
|Net revenues                                            |  | 507,498                 |  
|Direct operating expenses                               |  | (245,004                | )
|Selling, general, administrative and marketing expenses |  | (94,483                 | )
|Depreciation and amortization                           |  | (150,086                | )
|Operating gain (loss)                                   |  | 17,926                  |  
|Financial results, net                                  |  | 26,054                  |  
|Other non-operating income (expenses), net              |  | 4,013                   |  
|Gain on sale of investees                               |  |                        |  
|Income taxes and/or tax on minimum notional income      |  | 8,069                   |  
|Net gain (loss)                                         |  | 61,551                  |  

|                                                        |  | Year Ended December 31, |  
|------------------------------------------------------- |  | ----------------------- | -
|
|
|Net revenues                                            |  | 100.0                   | %
|Direct operating expenses                               |  | (48.3                   | )
|Selling, general, administrative and marketing expenses |  | (18.6                   | )
|Depreciation and amortization                           |  | (29.6                   | )
|Operating gain (loss)                                   |  | 3.5                     |  
|Financial results, net                                  |  | 5.1                     |  
|Other non-operating income (expenses), net              |  | 0.8                     |  
|Gain on sale of investees                               |  |                        |  
|Income taxes and/or tax on minimum notional income      |  | 1.6                     |  
|Net gain (loss)                                         |  | 12.1                    |  

Set
forth below is a discussion and analysis of our results of operations for the years ended December 31, 2003, 2002, and 2001.

Years ended December 31, 2003 and 2002

Net Revenues.Net revenues were Ps.507.5 million for the year ended December 31, 2003. This figure represents a
decrease of 12.8% compared to net revenues of Ps.582.1 million for the year ended December 31, 2002. The decrease in net revenues in this period as compared to the year ended
December 31, 2002 is attributable to our inability to increase the basic fees for our services at a rate equal to or greater than the general rate of inflation (between January 1, 2002
and December 31, 2003 we increased prices approximately 54% compared with an increase in the WPI in the same period of 122.2%), the lower yearly average number of subscribers in 2003 compared
to 2002 (a 12.8% decrease in the number of yearly average subscribers) and a reduction in advertising sales of Ps.1.3 million. This decrease in net revenues was partially offset by an increase
in other sales of Ps.0.6 million, as well as a decrease of charges for the allowance for doubtful accounts of Ps.32.7 million. There was also a decrease in revenues from international
sources (Uruguay and Paraguay) during the year ended December 31, 2003 of Ps.16.6 million primarily due to the appreciation of the peso compared to the Uruguayan and Paraguayan
currencies. Our revenues are presented net of charges for the allowance for doubtful accounts.

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Direct Operating Expenses.Our direct operating expenses were Ps.245.0 million for the year ended December 31,
2003. This figure represents a decrease of 21.5% over our direct operating expenses of Ps.312.2 million in the year ended December 31, 2002, which is mainly attributable to decreases in
charges for programming rights of Ps.29.5 million, payroll and social security of Ps.14.9 million, printing and distribution of magazines of Ps.8.8 million, taxes, rates and
contributions of Ps.3.1 million, rentals of Ps.1.8 million and sundry of Ps.8.2 million. These decreases are mainly attributable to lower increases in costs compared to the
general rate of inflation.

Direct
operating expenses consist principally of:



Selling, General, Administrative and Marketing Expenses.Our selling, general, administrative and marketing expenses were
Ps.94.5 million in the year ended December 31, 2003. This figure represents a decrease of 25.3% from Ps.126.5 million in the year ended December 31, 2002, which is
attributable principally to decreases in charges for payroll and social security of Ps.10.8 million, sales commissions of Ps.1.7 million, taxes, rates and contributions of
Ps.0.9 million, fees and compensation for services of Ps.2.5 million, publicity and advertising of Ps.2.1 million, sundry of Ps.8.7 million, building expenses of
Ps.1.9 million, and employee dismissals of Ps.1.1 million. On March 31, 2003, the "competition tax regime" created in 2001 expired along with the tax benefits arising under that
regime. In our case, this resulted in the re-imposition of the minimum notional income tax and the inability to credit payments made to SADAIC, Fondo Nacional de las Artes, Argentores, and
AADI-CAPIF against VAT.

Our
selling, general, administrative and marketing expenses consist of:



Depreciation and Amortization.Depreciation and amortization expenses were Ps.150.1 million in the year ended
December 31, 2003. This figure represents a decrease of 51.4% compared to depreciation and amortization expenses of Ps.309.1 million in the year ended December 31, 2002. This
decrease in our depreciation and amortization expenses was mainly due to the discontinuance of the amortization of goodwill according to the application of the new accounting rules issued by the
CPCECABA.

Financial Results, Net.Our net financial gains were Ps.26.1 million in the year ended December 31, 2003,
compared with net financial expenses of Ps.475.0 million in the year ended December 31, 2002. The net financial gains for the year ended December 31, 2003 are attributable
principally to the impact of the appreciation of the peso in relation to the U.S. dollar on our U.S. dollar-denominated debt and assets (Ps.255.9 million), compared to a loss of
Ps.839.2 million due to the effect of the devaluation of the peso in the year ended December 31, 2002. Net loss resulting from the impact of inflation on our monetary assets and
liabilities during the year ended December 31, 2003 was Ps.1.4 million compared to a gain of Ps.178.1 in the year ended December 31, 2002.

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Other Non-Operating Income (Expenses), Net.Other non-operating income net, was Ps.4.0 million
in the year ended December 31, 2003, compared to other non-operating expenses, net, of Ps.311.8 million in the year ended December 31, 2002. Other
non-operating income, net, for 2003 compared to other non-operating expenses for 2002, is attributable mainly to the fact that for the year ended December 31, 2003 we
did not record any impairment charges, while for the year ended December 31, 2002 we recorded impairment charges of Ps.315.0 million, and provisions for recovery of investments.

Income Taxes and/or Tax on Minimum Notional Income.We recorded an income tax benefit during the year ended
December 31, 2003 of Ps.8.1 million compared to a benefit of Ps.246.9 million during the year ended December 31, 2002. The beneift recorded during the year ended
December 31, 2003 is mainly due to the decrease in the deferred tax allowance net of the income tax charge resulting from the gain of the year. The benefit recorded in 2002 reflects mainly a
tax loss carry-forward generated by the impact of the devaluation on our U.S. dollar-denominated debt. Such tax loss carry-forward was recorded during the year ended December 31, 2002 according
to the deferred income tax method, and we expect it to be recovered in the future. Additionally, in October 2001 we were added to the register of beneficiaries of the agreements to improve
competitiveness and employment and, as a result, we were exempted from the tax on minimum notional income for fiscal year 2001 and future years. That exemption as originally contemplated in the
competitiveness law expired on March 31, 2003. In our case, this resulted in the reimposition of the minimum notional income tax.

Net Gain (loss).We recorded a net gain of Ps.61.6 million for the year ended December 31, 2003, as compared to
a net loss of Ps.689.9 million for the year ended December 31, 2002, as a result of the factors described above, including a decrease in direct operating expenses, a decrease in selling,
general administrative and marketing expenses, a decrease in depreciation and amortization expenses, the appreciation of the peso against the dollar, and the absence of impairment charges in 2003.

Years Ended December 31, 2002 and 2001

Net Revenues.Net revenues were Ps.582.1 million for the year ended December 31, 2002. This figure represented
a decrease of 41.8% compared to net revenues of Ps.999.7 million for the year ended December 31, 2001. The decrease in net revenues in this period as compared to the year ended
December 31, 2001 was attributable to our inability to increase the basic fees for our services at a rate
equal to or greater than the general rate of inflation (during the year ended December 31, 2002, we increased prices approximately 48% compared with an increase in the WPI of 118%), the
continued loss of subscribers (approximately 352,000 over the year ended December 31, 2002) and a reduction in advertising sales of Ps. 16.5 million. The decrease in Argentine net
revenues was partially offset by an increase in revenues (in peso terms) from our international operations (Uruguay and Paraguay), a decrease of charges for the allowance for doubtful accounts of
Ps.33.0 million and an increase in other sales of Ps.1.7 million. There was also a gain in revenues from international sources (Uruguay and Paraguay) of Ps.0.5 million in the year
ended December 31, 2002.

Direct Operating Expenses.Our direct operating expenses were Ps.312.2 million for the year ended December 31,
2002. This figure represents a decrease of 37.6% over our direct operating expenses of Ps.500.0 million in the year ended December 31, 2001, which was mainly attributable to decreases in
programming rights of Ps.99.9 million, payroll and social security of Ps.28.1 million, printing and distribution of magazines of Ps.13.5 million, taxes, rates and contributions of
Ps.18.8 million, rentals of Ps.10.9 million and sundry of Ps.12.9 million.

Direct
operating expenses consist principally of:



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Selling, General, Administrative and Marketing Expenses.Our selling, general, administrative and marketing expenses were
Ps.126.5 million in the year ended December 31, 2002. This figure represents a decrease of 26.0% from Ps.170.9 million in the year ended December 31, 2001, which was
attributable principally to decreases in payroll and social security of Ps.30.2 million, sales commissions of 14.4 million, personnel expenses of Ps.5.0 million, building expenses
of Ps.5.4 million and sundry of Ps.5.8 million, and
was partially offset by increases in employee dismissals of Ps.1.6 million and in taxes, rates and contributions of Ps.21.9 million.

Our
selling, general, administrative and marketing expenses consist of:



Depreciation and Amortization.Depreciation and amortization expenses were Ps.309.1 million in the year ended
December 31, 2002. This figure represents a decrease of 7.6% compared to depreciation and amortization expenses of Ps.334.6 million in the year ended December 31, 2001. This
decrease in our depreciation and amortization expenses was mainly due to the decrease in the value of intangible assets as a result of the impairment charge recorded as of December 31, 2001.

Financial Results, Net.Our net financial expenses were Ps.475.0 million in the year ended December 31, 2002.
This figure represented an increase of 111.9% from net financial expenses of Ps.224.1 million in the year ended December 31, 2001. This increase was attributable principally to the
impact of the devaluation of the peso in relation to the U.S. dollar on our U.S. dollar-denominated debt (Ps.839.2 million) and was partially offset by the gain on cancellation of Notes
acquired in the open market (Ps.420.9 million) and the net gains resulting from the impact of inflation on our monetary assets and liabilities (Ps.178.1 million).

Other Non-Operating Income (Expenses), Net.Other non-operating expenses, net, were
Ps.311.8 million in the year ended December 31, 2002, compared to other non-operating expenses, net, of Ps.358.9 million in the year ended December 31, 2001.
Other non-operating expenses, net, during the year ended December 31, 2002 decreased mainly due to a lower impairment charge recorded in the year ended December 31, 2002
(Ps.315.0 million) as compared to the impairment charge recorded in the year ended December 31, 2001 (Ps.328.5 million), a lower provision for employee dismissals, lower
provisions made on account of contingent liabilities, and a decrease in sundry.

Gain on Sale of Investees.Gains on sale of investees were Ps.324.9 million during the year ended December 31,
2001, as a result of the sale of our interest in DirecTV Latin America LLC. There were no gains or losses on sale of investees during the year ended December 31, 2002.

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Income Taxes and/or Tax on Minimum Notional Income.We recorded an income tax benefit during the year ended
December 31, 2002 of Ps.246.9 million compared to an income tax expense of Ps.64.8 million during the year ended December 31, 2001. The benefit recorded in 2002 reflected
mainly a tax loss carry-forward generated by the impact of the devaluation on our U.S. dollar-denominated debt. Such tax loss carry-forward was recorded during the year ended December 31, 2002
according to the deferred income tax method, and a portion is expected to be recovered in the future based upon our projections. Additionally, in October 2001 we were added to the register of
beneficiaries of the agreements to improve competitiveness and employment and, as a result, we were exempted from the tax on minimum notional income for the fiscal years 2001 and 2002.

Net Loss.We had a net loss of Ps.689.9 million in the year ended December 31, 2002, as compared to a net loss
of Ps.207.1 million in the year ended December 31, 2001, as a result of the factors described above, including a decrease in net revenues due to a loss of subscribers and a reduction in
advertising sales and an increase in financial expenses due to the devaluation of the peso.

U.S. GAAP Reconciliation

Net gain (loss) determined in accordance with U.S. GAAP would have been Ps.386.1, million, Ps.(53.2) million, and Ps.(1,556.3) million for the years ended
December 31, 2003, 2002, and 2001, respectively, as compared with net gain (loss) of Ps.61.6 million, Ps.(689.9) million, and Ps.(207.1) million, determined under Argentine GAAP for the
same periods. The principal differences affecting the determination of net gain (loss) are (i) organizational and preoperating costs have been written off for U.S. GAAP purposes and,
accordingly, the amortization charge is reversed; (ii) the effects on depreciation and amortization of the different bases for determination of the underlying net asset acquired and the
goodwill on the combination of businesses which have been treated on the purchase method; (iii) the effect on the amortization of goodwill of the discounting of non-interest bearing
acquisition related debt; (iv) differences in the recognition of deferred income tax; (v) the discounting of non-interest bearing acquisition related debt;
(vi) interest capitalization; (vii) foreign currency translation adjustment; (viii) the reversal of the provision for severance indemnities; (ix) foreign exchange
differences; (x) transfer of financial assets; (xi) impairment adjustment; (xii) deferral of hook up revenues; and (xiii) the effects on deferred taxes, investments carried
under the equity method and minority interest of the above reconciling items. Shareholders' (deficit) determined in accordance with U.S. GAAP would have been Ps.(251.9) million and Ps.(640.9) million
as of December 31, 2003 and 2002, respectively. The principal differences affecting the determination of shareholders' (deficit) are those described above. For a discussion of the principal
differences between Argentine and U.S. GAAP as they relate to our consolidated net loss and shareholders' deficit, see Note 15 to the consolidated financial statements and for a quantitative
reconciliation of such differences, see Note 16 to the consolidated financial statements.

Liquidity and Capital Resources

We operate in a capital intensive industry which requires significant investments. In the past, our growth strategy has involved the acquisition of other cable
television companies and the active improvement and expansion of our existing and acquired networks and equipment. We have historically relied on four main sources of funds:



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The
conditions affecting the Argentine economy since 1998 and the uncertainties as to future developments have prevented us from raising the funds required to discharge our debt
obligations as they became due in 2002 and 2003. As a result, we have defaulted on all payments on our Existing Notes, and all principal payments and a substantial portion of our interest payments on
our Bank Loans since February 2002. As a result of these payment defaults, all of our Existing Notes that have not yet matured could be declared immediately due and payable by the holders.
Furthermore, our decision to seek a restructuring of substantially all our financial debt may be considered to give rise to an automatic acceleration under our existing Indentures. Since
February 2002, we have devoted our cash flow from operations primarily to ensure the continuation of our operations. As of June 24, 2004, we have been served with process on 34 quiebrapetitions. Of those 34 petitions, one has been suspended and 33 have been dismissed by the court because the court deposits made by us to pay
for the petitioners' claims were, in the view of the court of original jurisdiction, sufficient to disprove that we were unable to pay our debts as they fell due. The lower court's decision dismissing
the petitions has been affirmed by the court of appeals. If the court order of April 14, 2004 is not affirmed we will likely commence aconcurso
preventivo. The filing of aconcurso preventivomay result in a partial or total loss of an investment in our Existing Notes and
our Existing Debt.

From
our formation through December 31, 2003, we received U.S.$875.1 million in equity contributions. During October 1997 we received a U.S.$500 million
contribution as an advance on future share issues from a company controlled by the Clarín Shareholders. The U.S.$500 million contribution was applied to the payment of the
purchase price for interests in various cable companies, including the 50% interest in VCC, the Bahía Blanca Systems and the Santa Fe Systems. This capital contribution from the
Clarín Shareholders was capitalized on April 7, 1998. Additionally, on December 12, 2003, our controlling shareholder contributed U.S.$15 million to a trust to
effect, upon the affirmation of the court ruling confirming the APE, together with funds provided by us, the cash payment in connection with the cash option in our APE.

Fintelco
S.A. and its wholly-owned subsidiaries continue to be jointly owned by us and Cablevisión and will continue operations with their remaining assets of
Ps.0.5 million and liabilities of Ps.30.3 million at November 30, 2003, until the residual liabilities have been paid off. We have agreed with Cablevisión to make
capital contributions in Fintelco S.A. in proportion to our equity interests in that company in order to enable VCC to discharge its remaining liabilities. Fintelco S.A. had a shareholders' deficit as
of November 30, 2003. Under the Corporations Law this could result in its dissolution unless its capital is restored to the level required by Law No. 19,550. Cablevisión
S.A. and us each hold 50% of the equity of Fintelco S.A. and, in that proportion, we have undertaken to make the contributions required to pay the liabilities of Fintelco S.A. and its subsidiaries
when due.

Net
cash used in financing activities (excluding shareholders' contributions) amounted to Ps.3.4 million for the year ended December 31, 2003, Ps.257.6 million for
the year ended December 31, 2002, and Ps.206.9 million for the year ended December 31, 2001. Cash provided by financing activities were proceeds from the issuance of our
negotiable obligations, bank debt and seller financing, as described below.

At
December 31, 2003, our consolidated indebtedness was Ps.1,972.3 million (U.S.$647.1 million and Ps.73.1 million). This indebtedness was comprised of:



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On
February 1, 2002, we defaulted on the payment of principal and interest on our 91/4% Notes due 2002 and interest payments on our 101/2% Notes due
2007 due to the situation of the Argentine economy and the political and social crisis that resulted from the economic, exchange, and regulatory measures. For the same reasons, on February 26,
2002, we defaulted on interest payments on our Series J Floating Rate Notes due 2003, and on April 15, 2002, defaulted on interest payments on our Series C 101/2%
Notes due 2018 and our Series E 13.125% Notes due 2009. See "Item 3. Key InformationRisk FactorsRisks Relating to MulticanalRecent losses and default."

As
a result of these payment defaults, cross-default and cross acceleration provisions of our agreements with certain creditors permit these creditors to declare the indebtedness in
default and accelerate the maturity thereof. We have submitted a restructuring proposal to our creditors under the Argentine Insolvency Law that obtained the requisite approval by financial creditors
and was confirmed by the Buenos Aires Court on April 14, 2004. The Buenos Aires Court's order has been appealed. See "Item 3. Key InformationRisk FactorsRisks Relating
to MulticanalCertain holders have challenged our restructuring proposal" and "Item 13. Defaults, Dividend Arrearages and Delinquencies".

In
addition, the significant devaluation of the Argentine currency since January 6, 2002 has had a material adverse impact on our financial position due to the exposure of our
debt, most of which is denominated in dollars.

On
April 28, 1998, we received approximately U.S.$144.3 million of net proceeds, after deduction of underwriting fees and related expenses, from the issuance of our
U.S.$150 million 101/2% Series C Notes due 2018, pursuant to the Indenture dated January 7, 1998 as supplemented and amended by a Third Supplemental Indenture dated
April 28, 1998. We used the net proceeds of the Series C Notes to refinance debt incurred in connection with the purchase of cable television systems, other short-term bank
debt and other indebtedness and related costs and expenses. The Series C Notes contain customary affirmative and negative covenants.

On
April 15, 1999, we received approximately U.S.$170.5 million of net proceeds from the sale of our U.S.$175 million Series E Notes due 2009 pursuant to the
Indenture dated February 11, 1999 as supplemented and amended by a Second Supplemental Indenture dated April 15, 1999. We used the net proceeds of the Series E Notes to refinance
indebtedness. The Series E Notes contain customary affirmative and negative covenants. The holders of the Series E Notes also had the option to require us to repurchase all or part of
the Series E Notes on April 15, 2004. No holders exercised this option prior to its expiration.

On
August 24, 2001, we received approximately U.S.$139.4 million of net proceeds from the issuance of our U.S.$144 million Series J Floating Rate Notes due
2003 pursuant to an Indenture dated February 11, 1999 as supplemented and amended by a Fifth Supplemental Indenture dated February 18, 2000 and by an Eighth Supplemental Indenture dated
August 24, 2001. We used the net proceeds of the Series J Floating Rate Notes due 2003, plus U.S.$24.6 million generated by us in the ordinary course of business,
to repay in full our issuance of U.S.$150 million Series G Floating Rate Notes due 2001 and U.S.$14.0 million Series I Notes due 2001.

Pursuant
to the terms of the Series J Floating Rate Notes, we must comply with certain covenants, including, without limitation, obligations that restrict:
(i) indebtedness; (ii) dividend payments or the making of certain restricted payments; (iii) the granting of certain pledges; and (iv) the sale of certain assets of ours
and certain of our subsidiaries. In addition, we agreed that our net debt (bank and financial debts plus acquisition-related debt less cash and cash equivalents) would not exceed U.S$700,000,000, that
we will not invest in fixed or capital assets in excess of U.S.$40,000,000 during

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any
12-month period, and that the balances resulting from the sale of our investment in DirecTV Latin America, LLC to Raven Media Investment, LLC would be applied to discharge financial
debt.

We
generated cash flows from operating activities of Ps.109.3 million for the year ended December 31, 2003, Ps.188.7 million for the year ended December 31,
2002, and Ps.43.8 million for the year ended December 31, 2001. The increase in cash flows from operating activities in the years ended December 31, 2002 and 2003 compared to the
year ended December 31, 2001 was mainly due to our decision to default on our existing financial obligations and defer payments of interest. We used cash to pay obligations related to the prior
acquisition of cable systems and in increase in goodwill and intangible assets of Ps.8.3 million for the year ended December 31, 2003 and Ps.1.0 million for the year ended
December 31, 2002. We generated cash in sales of investments, net of cash used in acquisitions of cable systems, of Ps.315.5 million for the year ended December 31, 2001.

Purchase
of property and equipment (net of proceeds from sales) of Ps.16.6 million for the year ended December 31, 2003, Ps.11.3 million for the year ended
December 31, 2002, and Ps.46.6 million for the year ended December 31, 2001, have been related to the continued construction, expansion and upgrading of our existing systems. From
our formation through December 31, 2003, we have increased our subscriber base primarily through internal growth, by expanding our existing systems and increasing penetration of these systems.
We have only minimal commitments to capital expenditures required by the terms of our operating licenses. We were required to bring our cable systems fully into compliance with municipal regulations
relating to the installation of cables in several areas of the City of Buenos Aires Region by late 2002, and in the City of Mar del Plata by November 2001. We are not in compliance with the
City of Buenos Aires and the City of Mar del Plata regulations as of the date of this Form 20-F. We have filed with both the City of Buenos Aires and the City of Mar del Plata
requests for an extension of the terms granted and are still awaiting responses to our requests. However, we cannot assure you that the terms granted will be extended to allow us to bring our cable
systems into compliance. If we have sufficient cash flow and financing is available at commercially attractive rates, we will upgrade our existing cable systems, including any network upgrades or
modifications required by regulatory or local authorities.

We
have often financed acquisitions of cable systems directly with the sellers of the acquired companies. As of December 31, 2003, we owed an aggregate amount of
U.S.$2.8 million in connection with these seller financings. All outstanding seller financing obligations, which are connected to the Telemás S.A. acquisition, originally matured
not later than June 30, 2002 and have been renegotiated and are being paid in 24 monthly installments that commenced in July 2002. As per an addendum dated November 2002,
we have partially renegotiated the financial obligations due in October 2002 through March 2003. On June 23, 2003 we renegotiated the financing obligations due on April through
December 2003. These financing obligations will be paid as follows: U.S.$90,000 was paid on June 23, 2003 and the sum of U.S.$180,000 was paid in six monthly installments of U.S.$30,000
each from July 15, 2003 through December 15, 2003. The balance of U.S.$1,352,250 will be payable on August 15, 2004 and the installment due in July 2004 of U.S.$417,889
will be payable on July 15, 2004. See "Item 4. Information on the CompanyBusiness OverviewAcquisitions of Cable NetworksForeign Operations."

In
the year ended December 31, 2003, we recognized a shortfall in consolidated working capital amounting to Ps.1,841.5 million. Continuing adverse market conditions and
their negative effect on our cash flows, coupled with limited liquidity, are likely to limit our ability to meet our obligations. All of these matters raise substantial doubt about our ability to
continue as a going concern. See "Item 3. Key InformationRisk FactorsRisks Relating to MulticanalAuditor's doubt as to our ability to operate as a going
concern."

In
addition, as a result of the recording of the shortfall in consolidated working capital mentioned above, our accumulated losses have exceeded 50% of our capital and 100% of our
reserves. Although

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section 206
of the Argentine Companies Law establishes mandatory capital reduction in such situations, by means of Decree No. 1293/03 the government suspended enforcement of this
regulation until December 10, 2004. We cannot assure you that the government will continue to suspend enforcement of this regulation after December 10, 2004.

Off-balance Sheet Arrangements

There are no transactions, agreements or other contractual arrangements to which an entity unconsolidated with us is a party that are not currently reflected on
our balance sheet.

Contractual Obligations

The following table details our known contractual obligations as of December 31, 2003.

|                                                                                          |  | Payments due by period
|----------------------------------------------------------------------------------------- |  | ----------------------
|
|
|Contractual Obligations                                                                   |  |                       
|Long-Term Debt Obligations(1)                                                             |  | 8,498                 
|Purchase Obligations                                                                      |  | 191,964               
|Other Long-Term Liabilities Reflected on the Company's Balance Sheet under Argentine GAAP |  | 257                   
|                                                                                          |  |                       
|Total                                                                                     |  | 200,719               

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Item 6. Directors, Senior Management and Employees

Directors and Senior Management

We are managed by our Board of Directors. In accordance with our charter, the shareholders elect each director for a term of one year. As of the date of this
Form 20-F, the current term expires on December 31, 2004, but the directors continue to serve until the next shareholders meeting designates new directors. The shareholders
also elect alternate directors for one year terms who replace principal directors during absences. Executive officers serve at the discretion of the Board of Directors. We also have a Comisión
Fiscalizadora, or Supervisory Board, which is in charge of the supervision of our legal matters. The Supervisory Board consists
of three members,síndicosor syndics, and three alternate syndics appointed annually by the shareholders.

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Listed
below is selected information concerning our directors and executive officers:

|Name                         |  | Position                                                    |  | Age
|---------------------------- |  | ----------------------------------------------------------- |  | ---
|Saturnino L. Herrero Mitjans |  | President of the Board                                      |  | 70 
|Alejandro Alberto Urricelqui |  | Director of Multicanal and Alternate President of the Board |  | 44 
|Vicente Gabriel Di Loreto    |  | Director of Multicanal                                      |  | 37 
|Ignacio Jorge Rosner         |  | Director of Multicanal                                      |  | 45 
|Jorge Carlos Rendo           |  | Director of Multicanal                                      |  | 51 
|Ignacio Rolando Driollet     |  | Director of Multicanal                                      |  | 42 
|Horacio Eduardo Quirós       |  | Director of Multicanal                                      |  | 54 
|Carlos Alberto Moltini       |  | Chief Executive Officer                                     |  | 43 
|Adrián Jorge Mészaros        |  | Chief Financial and Administrative Officer                  |  | 38 
|Antonio José Alvarez         |  | Programming Manager                                         |  | 39 

Listed
below is selected information concerning the members of our Supervisory Board:

|Name                       |  | Position                           |  | Age
|-------------------------- |  | ---------------------------------- |  | ---
|Carlos A.P. di Candia      |  | President of the Supervisory Board |  | 55 
|Raúl Antonio Morán         |  | Syndic                             |  | 58 
|Hugo Ernesto López         |  | Syndic                             |  | 47 
|Eduardo Germán Padilla Fox |  | Alternate Syndic                   |  | 62 
|Juan María de la Vega      |  | Alternate Syndic                   |  | 41 
|Horacio Marcelo Silva      |  | Alternate Syndic                   |  | 37 

Biographical Information

Saturnino L. Herrero Mitjanshas been the President of our Board of Directors since 2000. Mr. Herrero is
the President of several Argentine companies including AGEA, Radio Mitre S.A. ("Mitre"), Prima, and Editorial La Razón S.A. ("La Razón"), among others. Mr. Herrero
holds a degree in Business Administration from the Universidad Argentina de la Empresa.

Alejandro Alberto Urricelquihas been a member of the Board of Directors as both an alternate director since February 1996 and a
director since September 1997. He is currently the Alternate President of the Board of Directors. Mr. Urricelqui joined Grupo Clarín in 1990, and held the position of CFO
of Grupo Clarín until 1994. From 1994 to date, he has been Corporate Chief Financial Officer of Grupo Clarín. Before joining Grupo Clarín,
Mr. Urricelqui was Chief Financial Officer of Grupo Juncal.

Vicente Gabriel di Loretohas been a member of the Board of Directors since 2000. Mr. Di Loreto also serves on the boards of
several Argentine companies including various subsidiaries of Grupo Clarín, such as La Razón, Arte Radiotelevisivo Argentino S.A. (Artear), Teledifusora Bahiense S.A.,
Mitre, Pem S.A., Prima, Clarín Global S.A., GC Gestión Compartida S.A., Unir S.A., and Diario Los Andes Calle S.A. He has been with Grupo Clarín since
1998. Mr. Di Loreto has held positions at Molinos Rio de la Plata, Bunge y Born, Pepsi Co. and Arthur Andersen. Mr. Di Loreto graduated as a Certified Public Accountant from the
Universidad de Buenos Aires and later obtained a Masters Degree in Business Administration from I.A.E. Management and Business School.

Ignacio Jorge Rosnerhas been a member of the Board of Directors since September 1997. He joined Grupo Clarín in
August 1997 as Corporate Business Director and was appointed director of Grupo Clarín in 1999, a position he currently holds. Mr. Rosner also serves on the boards of
several Argentine companies, including Cablevideo S.A., Pem S.A., CIMECO S.A., Diario La Voz del Interior, Diario Los Andes Hermanos Calle S.A., Papel Prensa SAICFyM and Agropecuaria
Orán S.A. Mr. Rosner acted as Vice Chairman of the Board of Compañía de Teléfonos del Interior S.A. for seven

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years
until March 2003. Before joining Grupo Clarín, Mr. Rosner was Chief Executive Officer of Piedra del Aguila S.A. and CT Güemes S.A. (both subsidiaries
of Duke Energy Corporation), as well as Director of Compañia Administradora del Mercado Mayorista Eléctrico S.A. Mr. Rosner graduated with a degree in civil
engineering from Universidad Católica Argentina and has completed several management programs at IAE (Argentina), Harvard Business School, the Wharton School of the University of
Pennsylvania and the Massachusetts Institute of Technology.

Jorge Carlos Rendohas been a member of the Board of Directors since 2001. He joined Grupo Clarín in 1998, and is currently
the Director of External Relations of Grupo Clarín. He graduated with a law degree from Universidad de Buenos Aires and later obtained a Masters degree from the Wharton School of the
University of Pennsylvania. Mr. Rendo also serves on the boards of several other Argentine companies, including: Papel Prensa y de Mandatos S.A.C.I.F., Prima, Clarín Global S.A.,
Artear, Artes Gráficas Rioplatense S.A. and Mitre.

Ignacio Rolando Driollethas been a member of the Board of Directors since 2002. He joined Grupo Clarín in 1992, and served
until 1994 as Deputy of Institutional Relations. Until December 1997, Mr. Driollet led Grupo Clarín's New Development Projects Group and during 1997, also served as
Manager of Strategic Analysis. From 1998 to date, he has been the Director of Corporate Strategy. Mr. Driollet graduated with a law degree from Universidad Católica Argentina.

Horacio Eduardo Quiróshas been a member of the Board of Directors since 2002. Since 1997, Mr. Quirós
has served as Director of Corporate Human Resources at Grupo Clarín. Previously he has worked in the human resources area at various businesses in the automotive, industrial
agriculture, and communications media sectors. He has also served as President to the AMCham Commission on Industrial Relations and is currently President of the Argentina Association of Human
Resources (ADRHA) and regional Vice President of the Inter-American Federation of Professional Associations for Human Resources. Mr. Quirós graduated from the Universidad
Argentina de la Empresa in 1992 with a degree in Industrial Relations.

Carlos Alberto Moltiniwas appointed our Chief Executive Officer in October 2001 after one year as Vice Chief Executive Officer.
Mr. Moltini joined us after seven years as the Chief Financial Officer of Artear, a leading broadcasting channel in the City of Buenos Aires, owned by Group Clarín since 1990.
Previously Mr. Moltini worked at Bagley and other companies in the broadcasting sector.

Adrián Jorge Mészarosjoined us as Chief Financial Officer in 1994. Previously, he was senior business
officer in the media and communications division of corporate banking for BankBoston in Buenos Aires. Before his career with BankBoston, Mr. Mészaros worked as head of financial
operations at IMAR S.A., a metallurgy products company.

Antonio José Alvarezjoined us in 1992 and was appointed programming manager in 1999. Prior to joining us, he worked as
relationship manager at Banco Río de la Plata S.A., from 1989 to 1992, and head of investments at Financiera Bullrich, from 1986 to 1989.

Duties and Liabilities of Directors

Under Argentine law, directors have the obligation to perform their duties with the loyalty and the diligence of a prudent business person. Directors are jointly
and severally liable to us, our shareholders and third parties for the improper performance of their duties, for violating the law, our bylaws or regulations, if any, and for any damage caused by
fraud, abuse of authority or gross negligence. Under Argentine law, specific duties may be assigned to a director by our bylaws or by a resolution of a shareholders' or board meeting. In such cases, a
director's liability will be determined with reference to the performance of such duties, provided that certain recording requirements are met. Under Argentine law, directors are prohibited from
engaging in activities that are against the interest of the company on whose board they serve. Certain transactions between directors and us are subject to

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ratification
procedures established by Argentine law; these procedures do not apply in connection with transactions between affiliates of directors and us or between shareholders and us. A director
must inform the Board of Directors of any conflicting interest he may have in a proposed transaction and must abstain from voting thereon.

In
general, a director will not be liable if, notwithstanding his presence at the meeting at which a resolution was adopted or his knowledge of such resolution, a written record exists
of his objection thereto and he reports his objection to the Supervisory Board before any complaint against him is brought to the Board, the Supervisory Committee, a shareholders' meeting, the
competent governmental agency or the courts. Except in the event of our mandatory liquidation or bankruptcy, shareholder approval of a director's performance terminates any liability of a director vis-à-visus,providedthat shareholders representing at least 5%
of our capital stock do not object and provided further that such liability does not result from a violation of the law or the bylaws.

We
may initiate causes of action against directors upon a majority vote of shareholders. If a cause of action has not been initiated within three months of a shareholders' resolution
approving its initiation, any shareholder may start the action on behalf and on our account. A cause of action against the directors may be also initiated by shareholders who object to the approval of
the performance of such directors if such shareholders represent, individually or in the aggregate, at least 5% of our capital stock.

Compensation and Board Practices

Each of the three executive officers referred to above receives annual remuneration from us exceeding Ps.100,000. For the year ended December 31, 2003, the
aggregate compensation of these three executive
officers was approximately Ps.1.0 million. There are no service contracts between us and our directors or members of our Supervisory Board. There are no contracts between our directors and us,
members of our Supervisory Board or executive officers in violation of Section 271 of the Argentine Corporation Law. Our directors are appointed for one-year terms ending on
December 31 of each year. We do not have an audit or remuneration committee.

Employees

As of December 31, 2003, we had 2,473 employees distributed as follows (by location and activity):

|           |  | Argentina |  | Uruguay |  | Paraguay |  | Total
|---------- |  | --------- |  | ------- |  | -------- |  | -----
|MSO        |  | 439       |  |        |  |         |  | 439  
|Operations |  | 1,734     |  | 123     |  | 177      |  | 2,034
|           |  |           |  |         |  |          |  |      
|Total      |  | 2,173     |  | 123     |  | 177      |  | 2,473

Approximately
71% of our total employees are unionized and are represented by theSindicato Argentino de la Televisión, or
Argentinean Television Union. A 1975 collective bargaining agreement with theSindicato Argentino de la Televisióngoverns relations with
the television industry. The bargaining agreement was amended on August 9, 2002, and the amended bargaining agreement now governs our labor relationships with our unionized employees. This
latest amendment has not been confirmed by
the Labor Ministry. In addition to the 1975 bargaining agreement, as amended, our labor relations with employees are also subject to various agreements with theSociedad
Argentina de Locutores, or Argentine Association of Newscasters, based on the particular duties of the employee. We believe that our relations with our employees are good.

Share Ownership

None of the persons listed in "Item 6. Directors and Senior Management," owns any of our shares.

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Item 7. Major Shareholders and Related Party Transactions

Major Shareholders

We currently have two classes of shares of common stock issued and outstanding:



The
following table sets forth the ownership of our share capital, all of which is held in Argentina, as of the date of this Form 20-F.

|Title of Class |  | Identity of Owner                     |  | Amount Owned |           | % of Class |  
|-------------- |  | ------------------------------------- |  | ------------ | --------- | ---------- | -
|Class A Shares |  | Grupo Clarín S.A.                     |  | 202,963,617  | (1)(4)    | 100        | %
|Class B Shares |  | Grupo Clarín S.A.                     |  | 50,521,104   | (2)(3)(4) | 30         | %
|Class B Shares |  | Arte Gráfico Editorial Argentino S.A. |  | 118,150,382  | (5)       | 70         | %

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Overview of Grupo Clarín

We were acquired by the Clarín Shareholders in October 1992 but are currently directly controlled by Grupo Clarín. Grupo
Clarín is Argentina's leading media group and produces programming content, including sports, entertainment and news.

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In the second half of 1999, the Clarín Shareholders effected a roll up transaction pursuant to which they contributed their shares of Multicanal to Grupo
Clarín, an Argentine holding company, and Multicanal Holding L.L.C., a Delaware limited liability company that has since been dissolved. In December 1999, the
Clarín Shareholders sold a minority interest in each of Grupo Clarín and Multicanal Holding L.L.C. to affiliates of The Goldman Sachs Group, Inc. and other
investors. Grupo Clarín, directly or indirectly, currently beneficially owns 100% of our capital stock. In connection with and as a condition to the sale of the minority interest in
each of Grupo Clarín and Multicanal Holding L.L.C., our corporate charter was amended to require among other things, that a number of corporate actions (including the incurrence of net
debt in excess of U.S.$899 million) be approved by a shareholders' resolution. The approval of a shareholders' resolution on these matters requires, in turn, the approval by the board of
directors of Grupo Clarín, where directors appointed by The Goldman Sachs Group, Inc. hold certain veto rights. This amendment was approved by the IGJ on March 23, 2000.

Grupo
Clarín also owns:



Related Party Transactions

In the ordinary course of business, we purchase programming from Torneos y Competencias S.A. ("TYC"), a company in which Grupo Clarín owns 50% of
the capital stock, at market prices. The amounts invoiced by TYC to us for programming were approximately Ps.70.2 million for the year ended December 31, 2003. In addition, also in the
ordinary course of business, we place advertising in media owned by Grupo Clarín, such as newspapers, and television and radio stations, at market prices. Grupo Clarín
also purchases advertising time from us, and we and Grupo Clarín occasionally exchange advertising space and air time with each other. In the year ended December 31, 2003, the
aggregate amount invoiced by us to Grupo Clarín for advertising was approximately Ps.1.6 million. The aggregate amount invoiced by Grupo Clarín to us for
advertising was approximately Ps.5.2 million for the year ended December 31, 2003. Our monthly subscriber magazine is published by Artes Gráficas Rioplatense S.A. ("AGR"),
a wholly-owned subsidiary of Grupo Clarín, and the amounts invoiced by AGR to us related to the magazine were approximately Ps.5.2 million for the year ended December 31,
2003. In the year ended December 31, 2003, the aggregate amounts invoiced by us to such related parties for new business were approximately Ps.0.9 million. Related parties balances at
December 31, 2003 were as follows: accounts receivable of Ps.3.7 million and accounts payable of Ps.28.0 million.

During
the year ended December 31, 2003, GC Gestión Compartida S.A., a wholly-owned subsidiary of Grupo Clarín, invoiced to us the aggregate amount
of Ps.3.6 million for fees for financial and administrative services, human resources, information technology and purchasing logistical services.

Item 8. Financial Information

See "Item 18. Financial Statements" beginning on page F-1.

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Legal Proceedings

Antitrust Litigation

We are a party to the following administrative proceedings initiated against us under the Argentine Antitrust Law. In each case, as of the date of this
Form 20-F, a final decision has not been issued:



Paraguay Acquisitions

We are also involved in a lawsuit filed by the seller of several cable television companies located in Asunción, the Greater
Asunción area and several interior regions of Paraguay. On December 12, 1997, we signed two agreements granting us the option to acquire 100% of the subscribers, assets and
liabilities of these cable television companies. We paid an initial sum of U.S.$0.3 million on June 30, 1997 and exercised our options on October 24, 1997. The closing was
scheduled to occur November 15, 1997, and was subject to the satisfaction of certain conditions by the seller, including the granting of

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several
regulatory approvals by the Paraguayan government, which did not occur. We subsequently agreed with the seller to reschedule the payments and postpone the closing to April 30, 1998. On
the date of this agreement we paid a first installment of U.S.$2.0 million, leaving a balance of U.S.$16.7 million on the purchase price. The seller delivered a promissory note for
U.S.$2.3 million and pledged the shares of some of the Paraguayan companies in our favor as security if the seller failed to meet the closing conditions. The closing was not completed because
the seller failed to satisfy the closing conditions. We demanded payment on the U.S.$2.3 million promissory note, but the seller initiated an action for damages and/or specific performance
before the Paraguayan courts and obtained a preliminary injunction. The seller filed a motion with the Argentine courts seeking an order to compel us to furnish the seller a number of documents and
information in connection with the action before the Paraguayan courts. We requested that the Paraguayan court both lift the preliminary injunction and dismiss the action on the grounds that the
seller had not paid the required Paraguayan court tax with respect to the Paraguayan action. Although the court did not dismiss the action, it did lift the preliminary injunction restricting our
ability to demand payment on the U.S.$2.3 million promissory note. The court of appeals later confirmed this decision on November 30, 2003. We cannot assure you that we will be able to
collect on this promissory note once the injunction is lifted following the assessment of attorneys' fees.

On
June 19, 2001, the seller communicated to the court the assignment of rights and lawsuits in favor of Lisker S.A. When we were informed of this assignment we filed an appeal
challenging the court's decision pursuant to which Lisker S.A. was assigned seller's rights on the grounds that the agreement had an "intuitu personae"(an agreement that is entered into with a person because of that person's qualifications, and cannot be assigned) nature and that, according to the agreement, the seller was restricted from assigning
rights. Through a resolution dated August 17, 2001, the court approved the appeal and revoked the rights assigned to Lisker S.A. Lisker S.A. appealed that ruling and the appeal
was dismissed. Subsequently, Lisker S.A. filed an appeal with the Supreme Court of Justice of Paraguay claiming unconstitutionality. This action is still pending.

Supercanal Proceedings

We own, directly and indirectly, a minority equity interest in Supercanal Holding S.A., an Argentine company that operates cable systems in the city of Mendoza
and the northwestern and southern regions of Argentina, which, together with its subsidiaries,we refer to as the Supercanal Group. On March 26,
2000, the Supercanal Group initiated judicial proceedings for composition of creditors prior to an adjudication of bankruptcy. These proceedings were commenced pursuant to a decision taken by the
board of directors of Supercanal Holding S.A. The decision of the board of directors was ratified at a shareholders' meeting held on April 26, 2000.

The
terms of our investment in the Supercanal Group are governed by a shareholders' agreement, as supplemented by a second shareholders' agreement, that provides us with a number of
minority rights regarding corporate governance matters. We encountered significant obstacles in exercising the rights provided by the shareholders' agreement. Consequently, we have commenced several
judicial actions against Supercanal Holding S.A. seeking to annul several shareholders' resolutions adopted without our consent and to obtain a judicial declaration of dissolution and liquidation of
Supercanal Holding S.A. and the removal and replacement of the entire board of directors and the supervisory board with a court-appointed administrator.

On
December 12, 2001, we were notified of the filing of a claim by Supercanal Holding S.A. for damages caused by the granting of a preliminary injunction requested by us. We had
sought the injunction in connection with our action to declare null and void resolutions adopted in the extraordinary shareholders' meeting of Supercanal Holding S.A. on January 25, 2000 that
reduced the capital stock of and increased the capital of Supercanal Holding S.A. The preliminary injunction was subsequently revoked. It has been claimed that the suspension of the implementation of
the

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shareholders'
resolution of the meeting held on January 25, 2000 resulted in the cessation of payments to Supercanal Holding S.A. We answered the complaint and rejected the liability attributed
to us based on the fact that the cessation of payments had taken place before the date of the meeting that was suspended by the preliminary injunction, according to documentation provided by the
plaintiff itself. Based on the record of the case, we consider that the filed claim should be rejected in its entirety, and the legal costs should be borne by the plaintiff. However, we cannot assure
you that the court will reject the claim or that it will be resolved in our favor.

On
April 28, 2000, a mediation hearing requested by Supercanal Holding S.A. was held in connection with a claim brought against us by Supercanal Holding S.A. On May 10,
2000 the parties resolved to
conclude the mediation procedure. Consequently, Supercanal Holding S.A. is entitled to file whatever action it considers necessary to protect its interest. We have not been notified of any such
action. We cannot assure you that Supercanal Holding S.A. will not initiate such legal action.

We
cannot guarantee that the outcome of any of the judicial actions initiated by us or by the Supercanal Group will be favorable to our interests, or that the Supercanal Group or its
shareholders will not bring any other judicial actions against us.

Regulatory Proceedings

Administrative Proceedings.From January 1, 2001 through May 31, 2004, Comfer has notified us that it commenced
summary proceedings against us for 321 violations of minority age protection and content regulations of the Broadcasting Law and has imposed fines totaling Ps.130,770. We have appealed those fines but
cannot provide assurances that the appeals will be favorably resolved.

Violations
of minority age protection and content regulations constitutefaltas gravesor severe violations under the Broadcasting Law. In
particular, if we are penalized in connection with 46 or morefaltas gravesduring any year, Comfer may, in its discretion, revoke our broadcasting
licenses. In the past, Comfer has not revoked broadcasting licenses in such situations, but we cannot assure you that Comfer will not do so in the future. See "Item 4. Information on the
CompanyBusiness OverviewRegulatory Overview." A loss of our broadcasting licenses in a particular area would result in our being unable to provide cable service in that area
and force us to dispose of our cable assets in that area. Our opinion is that there are grounds in our favor to make Comfer review its position, but we cannot provide any assurances that our appeals
will be successful.

The
Executive Branch has, by various decrees, granted us a compensation-based moratorium with respect to any monetary penalties that may be imposed against us in summary proceedings
commenced by Comfer. The amounts owed under the moratorium may be offset against the broadcast value of any advertising of public interest campaigns by the Argentine government that is purchased from
us by Telam S.A., ("Telam") a state-owned news agency. The moratorium also provides for an automatic 85% reduction in the amount of any monetary fines that may be assessed against us.

We
have filed an installment plan pursuant to Decree No. 1201/98, as amended by Decree No. 644/99 and Decree No. 937/99, applicable to fines imposed against us in
summary proceedings commenced by Comfer for alleged violations of the Broadcasting Law occurring before December 9, 1999. Under this installment plan, Comfer will forgive 85% of the aggregate
amount of the fines that may be assessed against us, and will offer us the choice of either repaying the balance in cash or ceding advertising time to Telam for public interest advertising campaigns.
Following a dispute over the proper method of
determining the fine, Comfer calculated the amount to be settled as Ps.57,395. We have canceled such amount by ceding advertising time for public interest advertising campaigns. However, such time has
not yet been fully used.

Under
Decree No. 762/01 published on June 14, 2001, the Executive Branch approved an additional installment payment plan for fines imposed for violations of current legal
provisions relating

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to
broadcasting, applicable to violations occurring from December 10, 1999 through December 31, 2000. Under this installment plan, Comfer will forgive 70% of the aggregate amount of the
fines and the remaining 30% can be settled as follows: (a) up to 66%, by ceding advertising space and (b) the rest, which must be at least 34%, shall be paid in cash. Comfer will approve
a non-interest bearing payment plan of up to 24 monthly installments and each installment cannot be less than Ps.500 or greater than Ps.50,000. If the amount due cannot be paid in
24 months by means of installments under the Ps.50,000 cap, the installment payment plan can be extended. Furthermore, the additional plan extends the benefits of the installment payment plan
approved by Decree No. 1201, dated October 9, 1998, to cover infringements up to and including December 9, 2000.

On
July 10, 2001, we and certain merged subsidiaries (Circuito Cable Visión S.A., Difusora S.A. and TV Cable S.A.) and Chaco TV Cable S.R.L. filed a request for an
extension of the installment payment plan under Decree No. 1201/198, which was approved by Decree No. 762/01. On September 12, 2001, we agreed to the installment payment plan
instituted by Decree No. 762/01 to pay the fines imposed for violating legal provisions relating to broadcasting violations that occurred from December 10, 1999 through
December 31, 2000. Comfer calculated the amount to be settled at Ps.20,646,293. On October 1, 2001, we signed with Comfer an "Installment Payment AgreementDecree
No. 762/01," under which Comfer forgave 70% of the fine amount and the balance, in the amount of Ps.6,193,888, was to be paid as follows: Ps.4,087,966, by ceding advertising time and
Ps.2,105,922 to be paid in cash in forty-three non-interest bearing monthly and consecutive installments of Ps.48,975.

On
October 3, 2001, we signed an agreement with the Ministry of the Interior and Comfer under which the terms of the cash payments owed by us to Comfer under the Installment
Payment Agreement signed on October 1, 2001 were amended. As a result of such amendment, we agreed to pay to the Ministry of the Interior the cash amount previously owed to Comfer in the form
of advertising time. Additionally, we agreed that the Ministry of the Interior could assign such advertising time to duly registered political parties. After October 25, 2001, we filed
additional appeals against new rulings issued by the authorities that imposed new fines. As of the date of this Form 20-F, we are in compliance with the requirements pursuant to the
Installment Payment Agreement signed on October 1, 2001.

On
December 13, 2002, we filed for a new installment plan instituted by Decree No. 2362/02, which plan covers fines imposed for alleged violations of the Broadcasting Law
which occurred between January 1, 2001 and October 31, 2002. Pursuant to this decree, we may elect either to pay the fines in cash, or to cede advertising time for public interest
campaigns. We have elected to cede advertising time worth
Ps.422,390. Alleged violations of the Broadcasting Law which occurred after October 31, 2002 have not been resolved as of the date of this Form 20-F.

Demand for payment from Vidycom S.A.Comfer filed a claim whereby it demanded payment from Vidycom S.A. ("Vidycom"), a
company absorbed by us in 1995, of all the differences in our favor as a result of its participation in the tax exemption established by Resolution No. 393/93. The tax authorities based their
rejection of the aforementioned tax exemption on the following grounds: (a) Vidycom was asked to make payment on several occasions but did not comply with Comfer's requirements; (b) no
documentation supporting the investments committed by us was provided; and (c) no evidence was provided of the weather phenomenon as a result of which the previous shareholders had requested
the tax exemption. The amount of the claim, which would be equivalent to 30% of the rate paid in 1994, 20% of the rate paid in 1995 and 10% of the rate paid in 1996, plus the corresponding interest,
has not yet been determined.

We
believe that there are questions of fact and of law in our favor that would lead Comfer to reassess its position. Consequently, no amount has been recorded in the financial statements
at December 31, 2003. The grounds are as follows: (a) Comfer did not take into account that the notices

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had
to be served at our legal address, as we had absorbed Vidycom, a circumstance of which Comfer was aware; (b) although the administrative procedures had not been concluded, investments were
made by us; and (c) we provided evidence of the contingency giving rise to the request for exemption.

Claims based upon Comfer's rejection of requests for tax exemptions.Comfer has issued resolutions notifying several
companies absorbed by us of the rejection of the request for tax exemptions made under the terms of Resolution No. 393/93, which allowed various tax exemptions provided that the amounts
exempted were applied towards the purchase of new technology, and claiming payment of the unpaid amount plus compensatory interest. In some cases the amount payable has not yet been determined. In
certain cases where such amount has been determined we have filed an appeal. As in the case of Vidycom, we believe that there are questions of fact and of law in favor of those companies that would
lead Comfer to reassess its position.

Claims against Difusora S.A.On April 25, 2001, Comfer notified Difusora S.A. ("Difusora"), a company absorbed by us,
of the amount it must pay as a result of its participation in the payment facilities regime, or compensation based moratorium. The amount is Ps.107,106, which we elected to pay by ceding advertising
time.

In
addition, on February 8, 2002, Comfer notified Difusora that the amount to be settled corresponding to an action brought due to infringements of content and minority
age-protection regulations that allegedly occurred between May 1, 1999 and December 9, 1999 is Ps.17,054. Difusora
presented an appeal challenging this assessment but the appeal was rejected by Comfer. Difusora has agreed to pay this claim by ceding advertising time.

On
December 17, 2002, Comfer notified Difusora that the amount to be settled under the installment plan instituted by Decree No. 762/01 is Ps.23,708. Comfer forgave 70% of
such amount and the remaining 30% is to be cancelled by us as follows: (i) Ps.4,694 by ceding advertising time, and (ii) Ps.2,418 in cash payments. On April 15, 2003, Comfer
approved Difusora's filing and on May 29, 2003, Comfer and Difusora signed the "Installment Payment Agreement Decree No. 762/01" formalizing the agreement.

Other

We were also involved, as successor to Video Cable Privado, S.A. ("VCPSA"), in two lawsuits filed by:



We
acquired VCPSA in October 1992 and later merged it into Multicanal. The plaintiffs sought damages for lost profits from Multicanal, allegedly arising from VCPSA's rescission of
the concession agreement without cause in August 1991. We requested that both lawsuits be dismissed. The expert appraiser appointed by the court in both lawsuits reported damages of
approximately Ps.13 million. Both lawsuits were subsequently joined into one proceeding. On July 20, 2001 the judge issued a decision in which he awarded damages in the amount of
Ps.107,000 and lost profits to be determined in accordance with a complex formula to be applied by the expert appraiser. Both parties challenged the decision in the court of appeals, which court set
an amount of Ps.750,000, which we deposited in escrow. The plaintiffs were unsuccessful in challenging the court of appeals decision and in September 2003 we deposited the amount with the
court.

We
are also involved in other litigation in Argentina from time to time in the ordinary course of business. In management's opinion, the litigation in which we are currently involved in
Argentina, individually and in the aggregate, is not material to our financial condition or results of operations. For

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a
description of our APE proceeding, see "Item 3. Key InformationRisks Relating to MulticanalCertain holders have challenged our restructuring proposal" and "Item 13.
Defaults, Dividend Arrearages and Delinquincies."

Item 9. The Offer and Listing

Markets

Trading in the Notes takes place primarily in the over-the-counter-market. Accordingly, we have been unable to obtain reliable information
on such trading.

Item 10. Additional Information

Memorandum and Articles of Association

Set forth below is a brief summary of certain significant provisions of our bylaws and Argentine law. We do not have a memorandum or articles of association. This
description does not purport to be complete and is qualified by reference to our bylaws, which have been filed as an exhibit to this annual report. If our APE is finally judicially approved and we
consummate our restructuring, our bylaws will
be amended to reflect the terms of such restructuring. For a description of the provisions of our bylaws relating to our Board of Directors see "Item 6. Directors, Senior Management and Employees."

Register and Corporate Purpose

We are asociedad anónima(corporation) organized in Argentina. We were registered in the Public
Registry of Commerce of Buenos Aires on July 26, 1991 under the number 5225 of Book 109, Volume A of Corporations.

Our
corporate purpose, found in Section Three of our bylaws, is the installation and exploitation of broadcasting services pursuant to Argentine law, via closed television circuits;
community antennas; cable systems; UHF, VHF and MMDS air systems; satellite transmission and reception and private and public advertising in all their modalities.

Rights, Preferences and Restrictions Attaching to Shares

In the event of a capital increase, a holder of existing shares of a given series has a preferential right to subscribe for a sufficient number of shares of the
same series to maintain the holder's existing proportionate holdings of shares of that series. Preemptive rights must be exercised within the term fixed by the ordinary meeting of our Board of
Directors following the publication of notice in a newspaper of general circulation in Argentina. Under Argentine law, preemptive rights may be assigned and are instrumental upon request of the holder
against presentation of slips "to bearer" issued by us at no cost to the shareholder.

The
only difference in rights between our Class A and Class B shares is that Class A shares are entitled to five votes per share and Class B shares are
entitled to one vote per share.

Shareholders' Meetings

General shareholders' meetings may be ordinary meetings or extraordinary meetings. Extraordinary general meetings are those called to consider matters which
should not be considered by the ordinary meetings as specified in the Corporations Law No. 19,550, including amendment of the bylaws, liquidation, merger and transformation from one type of
company to another, as well as to consider the

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removal
of our shares from any local stock exchange or any foreign stock exchange. General meetings to consider all other matters are ordinary meetings.

The
quorum for an ordinary general meeting is 50% of the shares entitled to vote, and decisions may be adopted by an absolute majority of the votes present. If a quorum is not available,
a second meeting may be called at which decisions may be adopted by a majority of the votes present, regardless of the number of such votes present. The quorum for extraordinary meetings is 60% of the
shares entitled to vote. If a quorum is not available, a second meeting may be called and decisions may be adopted based on a majority of the votes present. There are no conditions of admission for
our shareholders' meetings.

Limitation on Rights to Own Securities

There are no limitations on the rights to own our securities in our bylaws. Pursuant to Section 123 of the Argentine Companies Law,
non-Argentine legal entities that own shares in Argentine corporations that are not listed and traded on the local stock exchange must register with the IGJ. Under Section 46 of the
Broadcasting Law the shareholders and partners of a licensee such as us are restricted to Argentine nationals without corporate, legal or other affiliation with foreign media or broadcasting entities,
shareholders or partners of a licensee. Law No. 25,750, passed on June 18, 2003, requires that corporations in media-related businesses be owned by Argentine persons and establishes a
maximum potential foreign ownership of such companies at 30% of the outstanding capital stock representing 30% of the voting rights. These requirements can be waived if the Executive Branch agrees and
there is a bilateral treaty granting non-discriminatory treatment. Currently, such treaties exist between Argentina and the United States, Italy and France.

Capital Stock

Our capital stock is Ps.371,635,103. Our capital stock may be increased by a resolution of an extraordinary meeting, as was done on August 8, 2003 when a
capital increase of Ps.4,814,066 was approved. The issuance of ordinary shares to be offered for subscription may be resolved by an ordinary meeting. If our shares join the public offering regime, the
meeting may delegate to our Board of Directors the power to establish the date and means of placement, as well as the issue price, subject to the guidelines established at the ordinary meeting.
Subject to the same conditions, preferred shares may be issued, the rights and characteristics of which are determined at an ordinary meeting. Preferred shares may have voting rights. On May 7,
2004, our Board of Directors approved an increase in our capital stock intended solely to enable us to comply with the terms of our restructuring if the Buenos Aires Court's order of April 14,
2004 is affirmed.

Enforceability of Civil Liabilities

We are organized under the laws of Argentina and our directors, officers and controlling persons reside outside the United States. As a result, it may be
difficult for investors to effect service of process within the United States on such persons. It may be difficult to enforce against them, either inside or outside the United States, judgments
obtained against them in U.S. courts, or to enforce in the U.S. court judgments obtained against them in courts in jurisdictions outside the United States, in any action based on civil liabilities
under the U.S. federal securities laws. There is doubt as to the enforceability against such persons in Argentina, whether in original actions or in actions to enforce judgment of U.S. courts, of
liabilities based solely on the U.S. federal securities laws.

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Material Contracts

We have not entered into any material contracts, other than our APE, attached hereto as Exhibit 2.1, and contracts entered into in the ordinary course of
business, for the two years preceding the filing of this Form 20-F.

Exchange Controls

The Argentine foreign exchange market was subject to exchange controls until December 1989, when a freely floating exchange rate was established for all
foreign currency transactions. From 1989 to December 3, 2001, there were no foreign exchange controls preventing or restricting the conversion of pesos into dollars. From December 3,
2001 until January 2, 2003, the transfer of foreign currency, except for certain transactions, was subject to prior authorization by the Central Bank, including for the payment by Argentine
debtors of principal on financial indebtedness and for the distribution of dividends. Effective January 2, 2003, the Central Bank's prior authorization for the transfer of funds abroad in order
to make payments of principal and/or interest was no longer required provided that certain conditions were met, as set out in Communication "A" 3843 dated December 26, 2002, as amended by
Communication "A" 3866 dated January 16, 2003.

On
February 8, 2002, the Central Bank issued Communication "A" 3471, which specified that, until June 13, 2002, transfers of funds abroad by the financial sector to effect
principal payments on certain indebtedness, such as the Notes, required Central Bank approval. On April 29, 2002, the Central Bank extended the effective date of "A" 3471 and the related
Communication "A" 3537 to August 12, 2002, pursuant to Communication "A" 3584. In addition, on February 3, 2002, the government required all banks to transfer all of their foreign
currency to the Central Bank. However, that measure was suspended on February 8, 2002.

On
May 6, 2003, the Argentine Central Bank issued Communication "A" 3944 repealing the prior consent requirement from the Central Bank in order to make payments of principal or
interest on financing debt obligations. Although there are currently no restrictions on the transfer of funds in payment of principal or interest out of Argentina for any existing debt, Communication
"A" 3944 requires that, if applicable, the paying debtor should comply with Central Bank Communication "A" 3602 that provides for disclosing information of existing debt. Notwithstanding the
foregoing, Communication "C" 35731 dated May 8, 2003 establishes certain conditions that must be met so as to be exempt from the Central Bank's prior authorization. On May 18, 2004, the
Argentine Central Bank issued Communication "A" 4142 authorizing access to the exchange market in connection with: (i) the payment of accrued interest on foreign debts, prior to the relevant
interest maturity date; and (ii) the total or partial payment of principal, at its nominal value, of private non-financial sector foreign debts deriving from financial loans, the
issuance of bonds and other debt instruments, within 90 calendar days prior to the maturity date, provided that a 180-day minimum term as from the entry of the foreign funds into the
exchange market has elapsed. If the Central Bank further restricts our ability to transfer dollars abroad, this will continue to affect our ability to pay principal and interest on our
dollar-denominated liabilities when they come due. See "Item 3. Key InformationRisk FactorsRisks Relating to ArgentinaExchange controls may prevent us from
servicing our external debt obligations," and "Item 3. Key InformationRisk FactorsRisks Relating to MulticanalRecent losses and default."

Taxation

General

The following is a general summary of certain Argentine and U.S. federal income tax considerations that may be relevant to the ownership or disposition of the
Notes. No assurance can be

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given
that the courts or fiscal authorities responsible for the administration of the laws and regulations described herein will agree with this interpretation or that changes to such laws will not
occur.

The
following discussion does not address tax consequences applicable to purchasers of the Notes in particular jurisdictions that may be relevant to such purchasers. Prospective
purchasers of the Notes are advised to consult their own tax advisers as to the consequences under the tax laws of the country of which they are residents of an investment in the Notes, including,
without limitation, the receipt of interest and the sale, redemption or any disposition of the Notes.

Argentine Tax Considerations

Income Tax

Except as described below, interest payments on the Notes, including any original issue discount, are currently exempt from Argentine income tax, provided that
the Notes were issued in accordance with the Negotiable Obligations Law and qualify for tax exempt treatment under Section 36 of this law. Under this section, interest on the Notes is exempt if
the following conditions (the "Section 36 Conditions") are satisfied:



The
Notes were issued in compliance with the Section 36 Conditions.

If
we do not comply with these conditions, Section 38 of the Negotiable Obligations Law makes us responsible for tax payments that would have otherwise been payable by the holders
with respect to interest received on the Notes. In this case, pursuant to the terms of the Notes, we will be liable for the payment of this tax so that holders would receive the amount of interest
provided in the Notes as if none of these taxes had been required.

Presidential
Decree No. 1,076 of June 30, 1992, as amended and ratified, eliminated the exemption described above for those taxpayers subject to the tax adjustment for
inflation rules under Title VI of the Argentine Income Tax Law. In general, these taxpayers are entities organized or incorporated under Argentine law, local branches of foreign entities, sole
proprietorships and individuals carrying on
certain commercial activities in Argentina. As a result of this Decree, interest paid to the holders that are subject to the tax adjustment for inflation rules is subject to withholding at a rate of
35%, as prescribed by Argentine tax regulations. The withholding is credited towards the assessed income tax, which is at a rate of 35% on net income.

Resident
and non-resident individuals and foreign entities not having a permanent establishment in Argentina are not subject to taxation on capital gains derived from the
sale or other disposition of the Notes if the Section 36 Conditions have been satisfied. As a result of Presidential Decree No. 1,076, those taxpayers subject to the tax adjustment for
inflation rules of the Argentine Income Tax Law are

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subject
to taxes on capital gains on the sale or other disposition of the Notes as prescribed by Argentine tax regulations.

Personal Assets Tax

In accordance with Law No. 23,966 dated August 20, 1991, as amended (the "Personal Assets Tax Law"), individuals domiciled and undivided estates
located in Argentina or abroad must include securities, such as the Notes, in the composition of their assets in order to determine their tax liability for the tax on personal assets. The annual rate
of this tax is 0.5%, if the year-end value of the assets does not exceed Ps.200,000, and 0.75%, if the year-end value of the assets exceeds Ps.200,000, with a
non-taxable amount of up to Ps.102,300 for individuals and undivided estates located in Argentina. Although Notes directly held by individuals domiciled and undivided estates located
outside Argentina would technically be subject to the tax on personal assets, the Personal Assets Tax Law provides no method or procedure for the collection of this tax for securities, including the
Notes, that are directly held by such individuals or undivided estates. Legal entities, whether domiciled in Argentina or abroad, are not subject to the tax on personal assets for the Notes.

In
addition, the Personal Assets Tax Law establishes a legal presumption, which does not allow proof of any kind to the contrary, that certain assets directly owned
("titularidad directa") by a foreign legal entity that is located in a country which does not require shares or private securities to be held in
registered form, are deemed to be owned by individuals domiciled or undivided estates located in Argentina. Therefore, these assets are subject to the tax on personal assets. In these cases, the law
imposes the obligation to pay the tax on personal assets at an increased rate of one and a half percent (1.5%) on any individual or legal entity domiciled or located in Argentina who is related to the
securities by means of, among other things, co-ownership, deposit, custody or administration. This individual or legal entity acts as a substitute obligor. The Personal Assets Tax Law also
authorizes the substitute obligor to seek recovery of the amount so paid, without limitation, by way of withholding or by foreclosing on the assets that gave rise to such payment.

The
above described legal presumption does not apply to the following foreign legal entities that directly own securities:



Notwithstanding
the above, Decree No. 812/96, dated July 24, 1996, establishes that the legal presumption discussed above does not apply to shares and
debt-related private securities, such as the Notes, whose public offering has been authorized by the CNV and which are tradable on the stock exchanges located in Argentina or abroad. In
order to ensure that this legal presumption will not apply to, and, correspondingly, that we will not be liable as a substitute obligor on, the Notes, we will keep in our records a duly certified copy
of the CNV resolution authorizing the public offering of the shares or debt-related private securities as well as the time limit that will be in effect as required by Resolution
No. 4203 of the AFIP dated August 1, 1996.

Law
No. 25,585, issued on May 15, 2002, amended requirements related to the registration of personal asset tax corresponding to holders of the capital stock of Argentine
corporations. As from January 1, 2002, issuers must register personal asset tax corresponding to shareholders who are Argentine individuals, foreign individuals or legal persons. The applicable
rate is 0.5% on the proportional net worth as of December 31 of each year.

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Minimum Notional Income Tax

Pursuant to a tax law approved by the Argentine Congress on December 7, 1998 (the "Tax Law"), Argentine entities are subject to a "minimum notional income"
tax at a rate of 1% of total assets. This tax may affect holders of Notes having a presence in or other relationship with Argentina, including corporations domiciled in Argentina, Argentine trusts and
open-ended investment funds, and permanent establishments in Argentina of foreign holders. This tax will not affect any other holders of the Notes.

As
mentioned above, in May 2001, the cable television industry signed an agreement with the Argentine Federal Government to improve the competitiveness of the sector. Under this
agreement, companies who acceded to the agreement could be exempted from the minimum notional income tax. We acceded to the agreement and became eligible for its benefits as of August 2001.
Because this benefit expired in March 2003 we were again subject to this tax beginning in April 2003. See "Item 5. Operating and Financial Review and
ProspectsOverviewOther Factors Affecting our Results and Financial ConditionTax Reform."

Value-Added Tax or VAT

Pursuant to the Negotiable Obligations Law, the satisfaction of the Section 36 Conditions with respect to the Notes also exempts interest payments on the
Notes from any value-added tax. Further, to the extent the Notes satisfy the Section 36 Conditions, any benefits related to the offering, subscription, underwriting, transfer, amortization,
interest and cancellation will be exempt from any value-added tax in Argentina. The Tax Law does not affect this exemption.

Stamp and Transfer Taxes

No Argentine stamp tax is payable by holders of the Notes under Section 35 of the Negotiable Obligations Law. No Argentine transfer taxes are applicable on
the sale or transfer of the Notes.

Court Tax

If it becomes necessary to institute enforcement proceedings in relation to the Notes in Argentina, a court tax (currently at a rate of 3%) will be imposed on the
amount of any claim brought before the Argentine courts sitting in the City of Buenos Aires.

Tax Treaties

Argentina has entered into tax treaties with several countries. There is currently no income tax treaty or convention between Argentina and the United States.

United States Federal Income Tax Considerations

The following is a summary of certain United States federal income tax considerations that may be relevant to a holder of a Note that is a
citizen or resident of the United States or a domestic corporation that otherwise is subject to United States federal income taxation on a net income basis with respect to the Note (a "U.S. Holder").
This summary deals only with U.S. Holders who will hold the Notes as capital assets and does not deal with special situations, such as those of dealers in securities or currencies, traders in
securities or currencies that elect mark-to-market treatment, financial institutions, life insurance companies, persons holding Notes as part of a hedging or conversion
transaction or a straddle or holder of Notes whose "functional currency" is not the U.S. dollar. This discussion does not deal with all aspects of United States federal income and estate taxation that
may be relevant to U.S. Holders in view of their particular circumstances, nor does it address the effect of any applicable state or local tax law. Furthermore, this discussion is based on current
provisions of the Internal Revenue Code of 1986, as amended (the

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"Code") and administrative and judicial interpretations thereof as of the date hereof, all of which are subject to change (possibly with retroactive effect) and to differing interpretations. For
purposes of the following discussion, it is assumed that the Notes will constitute debt for federal income tax purposes. Prospective U.S. Holders of Notes should consult their own tax advisors as to
the United States federal, state and local and the foreign tax consequences of the ownership and disposition of the Notes.

Taxation of Interest

The gross amount of interest and additional amounts, if any, payable with respect to the Notes to a U.S. Holder will be treated as interest income from sources
without the United States which is subject to federal income taxation as ordinary income at the time that such payments are accrued or are received (in accordance with the U.S. Holder's method of tax
accounting).

Taxation of Dispositions

Upon the sale, exchange or retirement of a Note, a U.S. Holder generally will recognize gain or loss equal to the difference between the amount realized on the
sale, exchange or retirement (not including any amounts attributable to accrued and unpaid interest) and the U.S. Holder's tax basis in such Note. Gain or loss recognized by a U.S. Holder will
generally be long-term capital gain or loss if the U.S. Holder has held the Note for more than one year at the time of the disposition. Long-term capital gains recognized by an
individual holder are subject to tax at a lower rate than short-term capital gains or ordinary income.

Non-U.S. Persons

Holders of the Notes who are not United States persons, which we refer to as Non-U.S. Holders, will not be subject to United States federal income
taxes, including withholding taxes, on payments of interest on the Notes so long as the requirements described under "Information Reporting and Backup Withholding" are satisfied, unless such income is
effectively connected with the conduct by the Non-U.S. Holder of a trade or business in the United States.

The
gain realized on any sale or exchange of the Notes by a Non-U.S. Holder will not be subject to United States federal income tax, including withholding tax, unless
(i) such gain is effectively connected with the conduct by the Non-U.S. Holder of a trade or business in the United States, or (ii) in the case of gain realized by an
individual Non-U.S. Holder, the Non-U.S. Holder is present in the United States for 183 days or more in the taxable year of sale and either (a) such gain or
income is attributable to an office or other fixed place of business maintained in the United States by such Non-U.S. Holder, or (b) such Non-U.S. Holder has a tax home
in the United States.

Information Reporting and Backup Withholding

Payment of the proceeds from a sale of Notes to or through a U.S. office of a broker will be subject to information reporting and backup withholding unless the
owner establishes an exemption. Any amount withheld under the backup withholding rules would be credited against the holder's federal income tax liability or refunded, providedthat the required
information is furnished to the Internal Revenue Service. Non-U.S. Holders may be required to comply with
applicable certification procedures to establish that they are not U.S. Holders in order to avoid the application of such information reporting requirements and backup withholding tax.

Documents on Display

The materials included in this annual report on Form 20-F, and exhibits thereto, may be inspected and copied at the U.S. Securities and
Exchange Commission's public reference rooms in Washington, D.C., New York, New York and Chicago, Illinois. Please call the Commission at 1-800-SEC-0330 for

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further
information on the public reference rooms. We will be filing the materials in this annual report on Form 20-F, and exhibits thereto, by electronic means and they will be
available to the public over the Internet at the Commission's web site at http://www.sec.gov.

Item 11. Quantitative and Qualitative Disclosures About Market Risk

We have not engaged in any market risk sensitive instruments for trading or non-trading purposes. We are exposed to various market risks, including
changes in foreign currency exchange rates, interest rates and inflation. Market risk is the potential loss arising from, among other things, adverse changes in foreign currency exchange rates,
interest rates and inflation.

Exchange
rate risk exists principally with respect to our indebtedness denominated in currencies other than Argentine pesos. Interest rate risk exists principally with respect to our
dollar-denominated external indebtedness that bears interest at floating rates, as well as with respect to our peso-denominated Argentine bank and financial debt. Obligations converted
into pesos according to Decree No. 214/02 are subject to varying interest rates. Communication "A" 3507, as modified by Communication "A" 3561 of the Central Bank, applied, as of
February 4, 2002, a CER to
the principal amount of dollar-denominated indebtedness converted into pesos. After adjustment in accordance with the CER an indexation rate, Communication "A" 3507 further imposed a maximum rate of
8%, as of February 3, 2002, on such dollar denominated indebtedness converted into pesos. However, we cannot assure you that this Central Bank policy limiting increases in interest rates will
remain in place, or that we will not be adversely affected by future fluctuations in the rates charged on our peso-denominated bank and financial debt denominated in dollars and later
converted into pesos. Inflation risk exists principally with respect to the adjustment in accordance with the CER of our peso-denominated bank and financial debt. In light of the recent
macro-economic situation in Argentina, this peso-denominated bank and financial debt is susceptible to inflationary pressures.

While
we realize substantially all of our earnings in Argentina through sales denominated in Argentine pesos, a substantial portion of our debt obligations, operating costs (including
programming costs) and expenses are and will continue to be denominated in dollars and will therefore be exposed to currency exchange rate risks.

We
continuously monitor our economic exposure to changes in foreign exchange rates. At December 31, 2003, our net monetary position in dollars subject to foreign currency exchange
rate fluctuations was approximately U.S.$593 million. Our foreign exchange rate-related exposure is determined based on our monetary position and that of our subsidiaries, and
primarily reflects dollar-denominated bank and financial debt and accounts payable, reduced by our cash and cash equivalents and other dollar-denominated assets (mainly receivables).

The
following table provides information on our bank and financial debt and acquisition related debt outstanding at December 31, 2003. Variable interest rates are based on
effective rates at December 31, 2003. See Note 7 to the consolidated financial statements for further information. All amounts are presented in thousands.

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Bank
and financial debt:

Currently
due

2005NotesU.S. dollars

466,815Fixed rate (average)

11.1%Series J Floating Rate Notes and bank debtU.S. dollars

177,452Pesos

72,896

240Variable rate (average)

6.7%

14%


Acquisition-related
debt:

2004U.S. dollars

2.780Fixed rate

10%


We
have not used financial instruments to hedge our exposure to fluctuations in foreign currency exchange or interest rates.

Item 12. Description of Securities Other than Equity Securities

Not applicable.

Item 13. Defaults, Dividend Arrearages and Delinquencies

As a result of Argentina's severe economic recession and the restrictions affecting our ability to refinance our debts, on February 1, 2002, we announced
that we had defaulted on payment of principal and interest on our 91/4% Notes due 2002 and interest payments on our 101/2% Notes due 2007. On February 26, 2002, we
defaulted on interest payments on our Series J Floating Rate Notes due 2003, and on April 15, 2002, we defaulted on interest payments on our Series C 101/2% Notes
due 2018 and our Series E 13.125% Notes due 2009. In consultation with our financial advisor, we have undertaken to restructure our Existing Debt (the "Restructuring") in accordance with the
Argentine Insolvency Law by means of an APE. On January 31, 2003, we announced an offer to purchase (the "Cash Tender Offer") for cash U.S.$100 million of our Existing Debt at a price of
U.S.$300 per U.S.$1,000 aggregate principal amount of Existing Debt tendered for purchase. We will not pay any accrued and unpaid interest (including default interest and additional amounts, if any)
on the Existing Debt tendered for purchase in the Cash Tender Offer. The Cash Tender Offer, as originally announced, was subject to several conditions precedent, including
(a) U.S.$100 million aggregate principal amount of Existing Debt shall have been tendered by holders of Existing Debt, (b) our controlling shareholders shall have made an
irrevocable cash contribution of U.S.$10 million to us on or after the date of the Cash Tender Offer, and (c) the execution of an APE by us and an
attorney-in-fact representing holders of at least U.S.$380 million aggregate principal amount of Existing Debt in accordance with the terms prescribed by Argentine law
to make such agreement enforceable in Argentina for purposes of Chapter VII, Title II of the Argentine Insolvency Law; provided that the participants agree in the aggregate to allocate their Existing
Debt between the two options presented to them so that the level of participation in one option does not exceed by more than 10% the level of participation in the other option (as a percentage of the
total consideration being offered in each of such options).

On
February 7, 2003 we announced that we were soliciting (the "APE Solicitation") from holders of Existing Debt powers of attorney in favor of an
attorney-in-fact to execute an APE. On July 25, 2003, we publicly announced the amendment of our Cash Tender Offer (as amended, the "Cash Option

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Solicitation")
and the APE Solicitation, as a result of the requests made by our creditors, to include an increase in the consideration offered to the holders of the Existing Debt that participate in
the APE Solicitation, a modification of the minimum participation requirements of the APE Solicitation, a modification of certain conditions precedent of the APE Solicitation and the Cash Option
Solicitation and the inclusion of the cash payment pursuant to the Cash Option Solicitation as an option in the APE Solicitation.

On
December 10, 2003, a meeting of our bondholders was held, as called for by Section 45 bis of the Argentine Insolvency Law. Holders of Existing Notes who voted for our
APE at that meeting, together with the holders of our bank debt who had agreed to assume obligations under the APE, represented approximately 67.61% of the amount of the Existing Debt as of
June 30, 2003 for purposes of determining the degree of acceptance of our APE. On December 17, 2003, the Buenos Aires Court determined that the formal requirements for confirmation of
the APE had been met and ordered us to publish the statutory notices regarding creditor objections. We published those notices beginning on December 31, 2003 and the applicable statutory period
for filing objections expired on February 13, 2004.

On
April 14, 2004 the Buenos Aires Court issued a decision rejecting each of the objections that were filed and confirming the APE. In addition, the Buenos Aires Court ordered
that persons present at the bondholders' meeting held on December 10, 2003, who voted against or abstained from voting, as well as those who were absent, be permitted to exercise the right
granted to the rest of the creditors to elect among the three options presented, under the same conditions as those who had already made such election directly with us or at the December 10,
2003 bondholders' meeting.

Three
of the claimants initially appealed the court ruling approving the APE. However, only two of the appellants submitted additional supporting documentation required under Argentine
law to permit consideration of their appeals. We cannot assure you that the ruling confirming the APE will be affirmed by the Court of Appeals.

If
the court of appeals affirms the APE confirmed by the Buenos Aires Court, subject to allocation as established in the APE, holders of our Existing Debt that elected to participate in
the Cash Option Solicitation will receive a cash payment of U.S.$300 per U.S.$1,000 of principal of Existing Debt. Holders that instead accepted the APE Solicitation will receive, subject to
allocation as established in the APE, for each U.S.$1,000 principal amount of Existing Debt tendered in connection with the APE Solicitation, either:



We
will not pay any accrued and unpaid interest (including default interest and additional amounts, if any) on the Existing Debt that is exchanged or capitalized pursuant to the APE.

We
are seeking to (i) reacquire approximately U.S.$125 million of the principal amount of the Existing Debt with an aggregate cash payment of U.S.$37.5 million,
(ii) exchange approximately U.S.$76.5 million principal amount of our Existing Debt for U.S.$80.3 million of 10-Year Notes, (iii) exchange approximately
U.S.$143.0 million principal amount of our Existing Debt for U.S.$143.0 million of our 7-Year Notes and (iv) capitalize approximately U.S.$181.9 million
principal amount of our Existing Debt.

We
remain committed to preserving the continuity of our operations. This long-term objective, however, requires that our Existing Debt be adequately restructured, whether
pursuant to an APE or, if

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the
final appeals court affirmation of our APE is not forthcoming, any other means available to us under the existing legal framework.

This
information has been previously reported by us in our Form 6-K filings. See "Item 3. Key InformationRisk FactorsRisks Relating to
MulticanalCertain holders have challenged our restructuring proposal."

Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds

Upon affirmation by the court of appeals of the confirmed APE and upon consummation of the transactions contemplated in the APE, Existing Notes will be exchanged
for either a cash payment, 10-Year Notes or the 7-Year Notes plus Class C shares, in each case under the terms and conditions of the APE. Neither the APE nor the
7-Year Notes, the 10-Year Notes or the Class C shares to be issued pursuant to the APE have been or will be registered under the United States Securities Act of 1933, as
amended (the "Securities Act") and may not be transferred or sold in the United States except pursuant to an effective registration statement or an exemption from the registration requirements of the
Securities Act. These new securities will only be delivered (i) in the United States to "qualified institutional buyers" as that term is defined in Rule 144A under the Securities Act, in
a private transaction in reliance upon an exemption from the registration requirements of the Securities Act, (ii) outside the United States in offshore transactions in reliance upon
Regulation S under the Securities Act and (iii) in reliance upon an exemption from the registration requirements of the Securities Act. See "Item 13. Defaults, Dividend Arrearages and
Delinquincies."

Item 15. Controls and Procedures

We
carried out an evaluation under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial and Administrative Officer, of
the effectiveness of the design and operation of our disclosure controls and procedures. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures,
including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable
assurance of achieving their control objectives. Based upon our evaluation, our Chief Executive Officer and Chief Financial and Administrative Officer concluded that the disclosure controls and
procedures as of December 31, 2003 were effective to provide reasonable assurance that information required to be disclosed in the reports we file and submit under the Exchange Act, as amended,
recorded, processed, summarized and reported as and when required.

There
has been no change in our internal control over financial reporting during 2003 that has materially affected, or is reasonably likely to materially affect, our internal control
over financial reporting.

Item 16A. Audit Committee Financial Expert

Our Board of Directors has determined that Alejandro Alberto Urricelqui qualifies as an "audit committee financial expert" within the meaning of this Item 16A.

Item 16B. Code of Ethics

We have adopted a code of ethics, as defined in Item 16B of Form 20-F under the Securities Exchange Act of 1934, as amended. Our code of ethics
applies to our chief executive officer, chief financial and administrative officer, and programming manager, as well as to our other employees. We recently amended our code of ethics to address
requirements associated with disclosure and public communications and to make explicit the need to comply with applicable governmental laws, rules and regulations. Our code of ethics is filed as an
exhibit to this Form 20-F.

79

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Item 16C. Principal Accountant Fees and Services

Audit and Non-Audit Fees

The following table sets forth the fees billed to us by our independent auditors, Price Waterhouse & Co., during the fiscal years ended December 31,
2002 and 2003:

|                   |  | Year ended December 31,
|------------------ |  | -----------------------
|
|Audit fees         |  | 1,308,691              
|Audit-related fees |  | 138,708                
|Tax fees           |  | 45,892                 
|                   |  |                        
|Total fees         |  | 1,493,291              

Audit Fees

Audit fees in the above table are the aggregate fees billed by Price Waterhouse & Co. and other PricewaterhouseCoopers firms in connection with the audit
of our annual financial statements and the review of our interim financial statements.

Audit-Related Fees

Audit-related fees in the above table are the aggregate fees billed by Price Waterhouse & Co. and other PricewaterhouseCoopers firms for assurance and
related services that are reasonably related to the performance of the audit or review of the consolidated financial statements and are not reported under the audit fee item above.

Tax Fees

Tax fees in the above table are fees billed by other PricewaterhouseCoopers firms for tax compliance, tax advice and tax planning professional services.

Audit Committee Pre-Approval Policies and Procedures

Our audit committee has not established pre-approval policies and procedures for the engagement of our independent auditors for services. Our audit
committee expressly approves on a case-by-case basis any engagement of our independent auditors for audit and non-audit services provided to our subsidiaries or to
us.

Item 17. Financial Statements

The Registrant has responded to Item 18 in lieu of this Item.

Item 18. Financial Statements

Reference is made to Item 19(a) for a list of all financial statements filed as part of this Form 20-F.

80

---



Item 19. Financial Statements and Exhibits



Report of Independent Registered Public Accounting Firm

F-2Consolidated balance sheets

F-4Consolidated statement of income

F-5Consolidated statement of changes in shareholders' equity

F-6Consolidated statement of cash flows

F-7Notes to the consolidated financial statements

F-8Exhibit

F-54




1.1.

Amendments to bylaws (estatutos) of Multicanal S.A., dated January 11,
2000, May 8, 2001, and February 13, 2003 (English translations)
(incorporated by reference to Exhibits 1.1, 1.2 and 1.3 to our Annual
Report on Form 20-F for the year ended December 31, 2002).2.1.

Acuerdo Preventivo Extrajudicial by and among Multicanal S.A. and Holders of its Debt, dated December 12, 2003 (English translation).2.2.

Decision of the Buenos Aires Court, dated April 14, 2004 (English translation).7.1.

Explanation of the calculation of ratios in our report (incorporated by reference to "Item 3. Key InformationSelected Financial Data").8.1.

List of subsidiaries (incorporated by reference to "Item 4. Information on the CompanyOrganizational Structure").11.1

Code of ethics (English translation).12.1.

Certification of Carlos Alberto Moltini pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.12.2.

Certification of Adrián Mészaros pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.13.1.

Certification of Carlos Alberto Moltini pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.13.2.

Certification of Adrián Mészaros pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.


81

---



MULTICANAL S.A.        Signature

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to
sign this annual report on its behalf.

| |  | MULTICANAL S.A.
| |  | ---------------
| |  | By:            

Date:
June 29, 2004.

---



INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS

MULTICANAL S.A.

CONSOLIDATED FINANCIAL STATEMENTS AT DECEMBER 31, 2003 AND 2002
AND FOR THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 2003

|                                                          |  | Page
|--------------------------------------------------------- |  | ----
|Report of Independent Registered Public Accounting Firm   |  | F-2 
|Consolidated balance sheets                               |  | F-4 
|Consolidated statement of income                          |  | F-5 
|Consolidated statement of changes in shareholders' equity |  | F-6 
|Consolidated statement of cash flows                      |  | F-7 
|Notes to the consolidated financial statements            |  | F-8 
|Exhibit                                                   |  | F-54

---





REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To
the Board of Directors and Shareholders of
Multicanal S.A.

F-2

---





|                                                                                        |  |                                                      
|--------------------------------------------------------------------------------------- |  | -----------------------------------------------------
|Buenos Aires, Argentina
March 8, 2004, except as to Note 14, which is as of May 7, 2004 |  | PRICE WATERHOUSE & CO.                               
|                                                                                        |  | by /s/ Alberto E. Fandiño (Partner)Alberto E. Fandiño

F-3

---





MULTICANAL S.A.  CONSOLIDATED BALANCE SHEETS  At December 31, 2003 and 2002  (Expressed in constant Argentine pesos through February 28, 2003  and in nominal pesos thereafterNote 2.3)

|                                                       |                                                                                                                               | December 31, 
|------------------------------------------------------ | ----------------------------------------------------------------------------------------------------------------------------- | -------------
|
|ASSETS                                                 |                                                                                                                               |              
|CURRENT ASSETS                                         |                                                                                                                               |              
|Cash and deposits in banks                             |                                                                                                                               | 187,475,744  
|Short-term investments (Note 3 (a))                    |                                                                                                                               | 450,952      
|Trade receivables (Note 3 (b))                         |                                                                                                                               | 15,527,882   
|Receivables from related parties                       |                                                                                                                               | 12,016,311   
|Other (Note 3 (c))                                     |                                                                                                                               | 46,926,992   
|                                                       |                                                                                                                               |              
|                                                       | Total current assets                                                                                                          |              
|                                                       |                                                                                                                               |              
|NON-CURRENT ASSETS                                     |                                                                                                                               |              
|Long-term investments (Note 3 (e))                     |                                                                                                                               | 11,996,007   
|Property and equipment, net (Note 4)                   |                                                                                                                               | 495,848,975  
|Intangible assets, net (Note 5)                        |                                                                                                                               | 35,083,550   
|Goodwill (Note 3 (f))                                  |                                                                                                                               | 1,172,682,439
|Other (Note 3 (d))                                     |                                                                                                                               | 379,349,295  
|                                                       |                                                                                                                               |              
|                                                       | Total non-current assets                                                                                                      |              
|                                                       |                                                                                                                               |              
|                                                       | Total assets                                                                                                                  |              
|                                                       |                                                                                                                               |              
|LIABILITIES                                            |                                                                                                                               |              
|CURRENT LIABILITIES                                    |                                                                                                                               |              
|Accounts payable and accrued liabilities               |                                                                                                                               | 96,041,540   
|Short-term bank and financial debt (Notes 3 (g) and 7) |                                                                                                                               | 1,963,820,070
|Acquisition related debt                               |                                                                                                                               | 8,158,497    
|Taxes payable                                          |                                                                                                                               | 16,878,902   
|Debt with related parties                              |                                                                                                                               | 20,458       
|Payroll and social security payable                    |                                                                                                                               | 11,643,677   
|Other (Note 3 (h))                                     |                                                                                                                               | 7,342,309    
|                                                       |                                                                                                                               |              
|                                                       | Total current liabilities                                                                                                     |              
|                                                       |                                                                                                                               |              
|NON-CURRENT LIABILITIES                                |                                                                                                                               |              
|Taxes payable                                          |                                                                                                                               | 684,715      
|Acquisition related debt                               |                                                                                                                               | 100,633      
|Long-term bank and financial debt                      |                                                                                                                               | 239,753      
|Other (Note 3 (i))                                     |                                                                                                                               | 15,133,341   
|Provision for lawsuits and contingencies (Note 6 (c))  |                                                                                                                               | 19,831,019   
|                                                       |                                                                                                                               |              
|                                                       | Total non-current liabilities                                                                                                 |              
|                                                       |                                                                                                                               |              
|                                                       | Total liabilities                                                                                                             |              
|                                                       |                                                                                                                               |              
|TEMPORARY TRANSLATION DIFFERENCES                      |                                                                                                                               | 3,330,360    
|MINORITY INTEREST IN CONSOLIDATED SUBSIDIARIES         |                                                                                                                               | 31,476,831   
|SHAREHOLDERS' EQUITY (as per related statement)        |                                                                                                                               | 182,656,042  
|                                                       |                                                                                                                               |              
|                                                       | Total liabilities, temporary translation differences, minority interest in consolidated subsidiaries and shareholders' equity |              
|                                                       |                                                                                                                               |              

The accompanying notes and exhibit are an integral part of these consolidated financial statements.

F-4

---





MULTICANAL S.A.  CONSOLIDATED STATEMENT OF INCOME  For the years ended December 31, 2003, 2002 and 2001  (Expressed in constant Argentine pesos through February 28, 2003  and in nominal pesos
thereafterNote 2.3)

|                                                                                                                             |                                                           | December 31, |             
|---------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------- | ------------ | ------------
|
|Net revenues (Note 3 (j))                                                                                                    |                                                           | 507,498,473  |             
|Operating costs                                                                                                              |                                                           |              |             
|Direct operating expenses (Exhibit I)                                                                                        |                                                           | (245,004,104 | )           
|General and administrative expenses (Exhibit I)                                                                              |                                                           | (59,105,012  | )           
|Selling and marketing expenses (Exhibit I)                                                                                   |                                                           | (35,377,838  | )           
|Depreciation and amortization                                                                                                |                                                           | (150,085,893 | )           
|                                                                                                                             |                                                           |              |             
|Operating gain (loss)                                                                                                        |                                                           | 17,925,626   |             
|Non-operating expenses                                                                                                       |                                                           |              |             
|Financial results, net                                                                                                       |                                                           |              |             
|                                                                                                                             | On assets                                                 |              |             
|                                                                                                                             | Result of exposure to inflation                           |              | (8,617,916  
|                                                                                                                             | Exchange gain (loss) and results from conversion          |              | (19,607,903 
|                                                                                                                             | Bank expenses                                             |              | (916,877    
|                                                                                                                             | Holding gains/short-term investments                      |              | 348,813     
|                                                                                                                             | Interest income                                           |              | 2,200,607   
|                                                                                                                             | On liabilities                                            |              |             
|                                                                                                                             | Result of exposure to inflation                           |              | 7,241,208   
|                                                                                                                             | Interest expense                                          |              | (195,576,259
|                                                                                                                             | Loan index adjustment                                     |              | (3,371,472  
|                                                                                                                             | Result from advanced repurchase of negotiable obligations |              |            
|                                                                                                                             | Exchange gain (loss)                                      |              | 275,528,045 
|                                                                                                                             | Tax recovery                                              |              |            
|                                                                                                                             | Tax on debits and credits to bank current accounts        |              | (5,541,535  
|                                                                                                                             | Tax on interest                                           |              |            
|                                                                                                                             | Commissions                                               |              | (25,632,405 
|Other non-operating income (expenses), net (Note 3 (k))                                                                      |                                                           | 4,013,065    |             
|                                                                                                                             |                                                           |              |             
|Gain (loss) before gain on sale of investees, taxes, minority interest, and equity in gains (losses) of affiliated companies |                                                           | 47,992,997   |             
|Gain on sale of investees                                                                                                    |                                                           |             |             
|Income taxes and/or tax on minimum notional income                                                                           |                                                           | 8,069,210    |             
|                                                                                                                             |                                                           |              |             
|Gain (loss) before minority interest and equity in gains (losses) of affiliated companies                                    |                                                           | 56,062,207   |             
|Minority interest in results of consolidated subsidiaries                                                                    |                                                           | 571,482      |             
|                                                                                                                             |                                                           |              |             
|Gain (loss) before equity in gains (losses) of affiliated companies                                                          |                                                           | 56,633,689   |             
|Equity in gains (losses) of affiliated companies                                                                             |                                                           | 4,917,758    |             
|                                                                                                                             |                                                           |              |             
|Net gain (loss)                                                                                                              |                                                           | 61,551,447   |             
|                                                                                                                             |                                                           |              |             
|Weighted average number of shares                                                                                            |                                                           | 371,635,103  |             
|Net gain (loss) per share                                                                                                    |                                                           | 0.17         |             

The accompanying notes and exhibit are an integral part of these consolidated financial statements.

F-5

---





MULTICANAL S.A.  CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY  For the years ended December 31, 2003, 2002 and 2001  (Expressed in constant Argentine pesos through February 28, 2003
and in nominal pesos thereafterNote 2.3)

|                                                                                          |  |             |  | SHAREHOLDERS' CONTRIBUTIONS |  |             |  |               |  |            |  |            |  
|----------------------------------------------------------------------------------------- |  | ----------- |  | --------------------------- |  | ----------- |  | ------------- |  | ---------- |  | ---------- | -
|
|At December 31, 2000                                                                      |  | 365,953,227 |  | 365,953,227                 |  | 468,147,943 |  | 1,052,448,962 |  |           |  |           |  
|Changes to initial balance (Note 2.2)                                                     |  |            |  |                            |  |            |  |              |  |           |  |           |  
|                                                                                          |  |             |  |                             |  |             |  |               |  |            |  |            |  
|Restated initial balances                                                                 |  | 365,953,227 |  | 365,953,227                 |  | 468,147,943 |  | 1,052,448,962 |  |           |  |           |  
|Incorporation of balances following merger with Plataforma Digital S.A.                   |  | 867,810     |  | 867,810                     |  | 1,039,865   |  |              |  | 33,930,620 |  | 4,814,066  |  
|Net loss for the year                                                                     |  |            |  |                            |  |            |  |              |  |           |  |           |  
|                                                                                          |  |             |  |                             |  |             |  |               |  |            |  |            |  
|At December 31, 2001                                                                      |  | 366,821,037 |  | 366,821,037                 |  | 469,187,808 |  | 1,052,448,962 |  | 33,930,620 |  | 4,814,066  |  
|Net loss for the year                                                                     |  |            |  |                            |  |            |  |              |  |           |  |           |  
|                                                                                          |  |             |  |                             |  |             |  |               |  |            |  |            |  
|At December 31, 2002                                                                      |  | 366,821,037 |  | 366,821,037                 |  | 469,187,808 |  | 1,052,448,962 |  | 33,930,620 |  | 4,814,066  |  
|Capital increase resolved by the Extraordinary Shareholders' Meeting dated August 8, 2003 |  | 4,814,066   |  | 4,814,066                   |  |            |  |              |  |           |  | (4,814,066 | )
|Net gain for the year                                                                     |  |            |  |                            |  |            |  |              |  |           |  |           |  
|                                                                                          |  |             |  |                             |  |             |  |               |  |            |  |            |  
|At December 31, 2003                                                                      |  | 371,635,103 |  | 371,635,103                 |  | 469,187,808 |  | 1,052,448,962 |  | 33,930,620 |  |           |  
|                                                                                          |  |             |  |                             |  |             |  |               |  |            |  |            |  

The accompanying notes and exhibit are an integral part of these consolidated financial statements.

F-6

---





MULTICANAL S.A.  CONSOLIDATED STATEMENT OF CASH FLOWS  (For the years ended December 31, 2003, 2002 and 2001)  (Expressed in constant Argentine pesos through February 28, 2003  and in nominal pesos
thereafterNote 2.3)

|                                                                                             |                                                                        | December 31, |             
|-------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------- | ------------ | ------------
|
|CASH FLOWS FROM OPERATING ACTIVITIES                                                         |                                                                        |              |             
|Net gain / (loss) for the year                                                               |                                                                        | 61,551,447   |             
|Adjustments to reconcile net gain (loss) to net cash provided by operating activities:       |                                                                        |              |             
|                                                                                             | Accrued income tax and / or minimum notional income                    |              | (8,069,210  
|                                                                                             | Property and equipment depreciation                                    |              | 144,728,560 
|                                                                                             | Goodwill and intangible assets amortization                            |              | 5,357,333   
|                                                                                             | Equity in the (gains) losses of affiliated companies                   |              | (4,917,758  
|                                                                                             | Interest accrued on financial liabilities and acquisition related debt |              | 195,576,259 
|                                                                                             | Result from advanced repurchase of negotiable obligations              |              |            
|                                                                                             | Provision for recovery of investments                                  |              | (941,214    
|                                                                                             | Minority interest in results of consolidated subsidiaries              |              | (571,482    
|                                                                                             | Provision for lawsuits and contingencies                               |              | 3,824,685   
|                                                                                             | Result of sale of long-term investments                                |              |            
|                                                                                             | Financial results                                                      |              | (263,545,061
|                                                                                             | Result from conversion                                                 |              | 4,110,874   
|                                                                                             | Allowance for impairment of goodwill                                   |              |            
|                                                                                             | Result from holding of long-term investments                           |              | 2,379       
|Interest paid                                                                                |                                                                        | (3,187,865   | )           
|Income tax paid                                                                              |                                                                        | (7,964,405   | )           
|                                                                                             | Decrease (increase) in assets                                          |              |             
|                                                                                             | Trade receivables                                                      |              | 9,565,327   
|                                                                                             | Other current assets                                                   |              | (811,344    
|                                                                                             | Other non-current assets                                               |              | 2,496,443   
|                                                                                             | Receivables from related parties                                       |              | 836,588     
|                                                                                             | Increase (decrease) in liabilities                                     |              |             
|                                                                                             | Debt with related parties                                              |              | (1,007,974  
|                                                                                             | Other current and non-current liabilities                              |              | (5,858,600  
|                                                                                             | Accounts payable and accrued liabilities                               |              | (14,687,074 
|                                                                                             | Payroll and social security payable                                    |              | 1,756,893   
|                                                                                             | Current and non-current taxes payable                                  |              | (6,496,469  
|                                                                                             | Provision for lawsuits and contingencies                               |              | (2,489,367  
|                                                                                             |                                                                        |              |             
|Net cash provided by operating activities                                                    |                                                                        | 109,258,965  |             
|                                                                                             |                                                                        |              |             
|CASH FLOWS FROM INVESTMENT ACTIVITIES                                                        |                                                                        |              |             
|Purchases of property and equipment                                                          |                                                                        | (16,623,378  | )           
|Sale of investee                                                                             |                                                                        |             |             
|Acquisitions of cable systems and subscribers and increase in goodwill and intangible assets |                                                                        | (8,291,533   | )           
|                                                                                             |                                                                        |              |             
|Net cash (used in) provided by investment activities                                         |                                                                        | (24,914,911  | )           
|                                                                                             |                                                                        |              |             
|CASH FLOWS FROM FINANCING ACTIVITIES                                                         |                                                                        |              |             
|Increase in acquisition related debt                                                         |                                                                        |             |             
|Repayments of acquisition related debt                                                       |                                                                        | (2,541,810   | )           
|Borrowings of bank and financial loans                                                       |                                                                        |             |             
|Repayments of bank loans                                                                     |                                                                        |             |             
|Increase of minority interest in consolidated subsidiaries                                   |                                                                        | (899,520     | )           
|                                                                                             |                                                                        |              |             
|Net cash used in financing activities                                                        |                                                                        | (3,441,330   | )           
|                                                                                             |                                                                        |              |             
|INCREASE / (DECREASE) IN CASH AND CASH EQUIVALENTS                                           |                                                                        | 80,902,724   |             
|Increase in cash and cash equivalents provided by merger                                     |                                                                        |             |             
|Cash and cash equivalents at the beginning of year                                           |                                                                        | 107,023,972  |             
|                                                                                             |                                                                        |              |             
|CASH AND CASH EQUIVALENTS AT THE END OF YEAR                                                 |                                                                        | 187,926,696  |             
|                                                                                             |                                                                        |              |             

The accompanying notes and exhibit are an integral part of these consolidated financial statements.

F-7

---





MULTICANAL S.A.  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  For the year ended December 31, 2003, 2002 and 2001  (Expressed in constant Argentine pesos through February 28, 2003  and in
nominal pesos thereafterNote 2.3)

NOTE 1BUSINESS AND FORMATION OF THE COMPANY

(a)    Business

Multicanal S.A. (the "Company" or "Multicanal"), an Argentine corporation formed on July 26, 1991, is a multiple system cable operator with businesses in
Argentina, Uruguay and Paraguay.

Since
1994, the Company has made significant investments, initially in the acquisition of cable systems and their subsequent development and expansion. These investments have been
substantially financed by loans from financial institutions and former owners of certain acquired cable systems, as well as shareholders' contributions.

(b)    Formation of the Company

On January 1, 2001 the Company carried out a business reorganization process through which it absorbed Plataforma Digital S.A., Red Argentina S.A., Radio
Satel Sociedad Anónima, Cable Espacio del Buen Ayre S.A., Video Cable Norte S.A., Televisión por Cable S.A. and Cable Visión Corrientes
Sociedad Anónima, which were dissolved without being liquidated. In its capacity as the absorbing company, the Company continued with the operations of the absorbed companies. As a
result of the merger, the Company increased its capital stock by Ps. 867,810, i.e. from Ps. 365,953,227 to Ps. 366,821,037, through the issuance of 867,810 ordinary, nominal and
non-endorsable Class A shares of Ps. 1 par value and 5 votes each, delivered to Grupo Clarín S.A. in lieu of 16,303,000 ordinary, nominal and
non-endorsable shares held in Plataforma Digital S.A.

As
the Company is a publicly held corporation, on April 11, 2001 an application was filed with the Comisión Nacional de Valores (National Securities Commission or
the "CNV") for administrative approval of such business reorganization process, as required by applicable regulations. After obtaining evidence of registration of the reorganization procedures, the
CNV will submit the file to the Superintendency of Corporations for registration.

NOTE 2BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

2.1.Principles of consolidation

The
consolidated financial statements include the accounts of Multicanal and its majority owned subsidiaries. All material intercompany balances, transactions and profits have been
eliminated on consolidation.

F-8

---



The
consolidated financial statements include accounts of Multicanal and the following subsidiaries:

|                                       |  | % of capital and votes held by Multicanal
|-------------------------------------- |  | -----------------------------------------
|
|
|AVC Continente Audiovisual S.A.        |  | 90.00                                    
|CV Berazategui S.A.                    |  | 70.00                                    
|Delta Cable S.A.                       |  | 84.00                                    
|San Lorenzo TV Cable S.A.              |  | 100.00                                   
|TV Cable San Francisco S.A.            |  | 100.00                                   
|Telesur Teledifusora Río Cuarto S.A.   |  | 100.00                                   
|Televisora Privada del Oeste S.A.      |  | 51.00                                    
|Pem S.A.                               |  | 100.00                                   
|Bridge Management Holdings Corp. (1)   |  |                                         
|La Capital Cable S.A.                  |  | 50.00                                    
|Chaco Cable Color S.R.L. (2)           |  | 100.00                                   
|Teledifusora San Miguel Arcángel S.A.  |  | 50.10                                    
|Tevemundo S.A.                         |  | 100.00                                   
|Cable Imagen S.R.L. (2)                |  | 100.00                                   
|Televisión Dirigida S.A.E.C.A.         |  | 89.39                                    
|Orange Televisión Productions S.A. (3) |  |                                         
|Cablepar S.A. (3)                      |  |                                         
|Cablevisión Comunicaciones S.A.E.C.A.  |  | 89.81                                    
|Tres Arroyos Televisora Color S.A.     |  | 71.06                                    
|Wolves Televisión Sociedad Anónima     |  | 100.00                                   
|Adesol S.A.                            |  | 100.00                                   
|Cable Video Sociedad Anónima           |  | 100.00                                   
|Dorrego Televisión S.A.                |  | 100.00                                   
|Cable Video Sur S.R.L.                 |  | 100.00                                   

---

2.2.Impact of recently issued accounting standards

The
Professional Council in Economic Sciences of the Autonomous City of Buenos Aires ("CPCECABA") approved Technical Pronouncements No. 16: "Framework for the preparation and
presentation of financial statements"; No. 17: "Overall considerations for the presentation of financial statements", No. 18: "Specific considerations for the preparation of financial
statements", No. 19: "Amendments to Technical Resolutions Nos. 4, 5, 6, 8, 9, 11 and 14", and No. 20 "Accounting for derivatives instruments and hedging operations" through Resolutions
CD 238/01, CD 243/01, CD 261/01, CD 262/01 and CD 187/02, respectively. The mentioned technical pronouncements and amendments are applicable to years commenced on July 1, 2002, except for
Technical Pronouncement No. 20, which is applicable to years commenced as from January 1, 2003.

Furthermore,
the CNV has endorsed these Technical Pronouncements, incorporating certain amendments and establishing that they are applicable to fiscal years commencing on or after
January 1, 2003.

F-9

---



The
main amendments to Argentine GAAP resulting from the adoption of the new technical pronouncements, are as follows:



Restatement of previously issued financial statements

As required by Argentine GAAP, the Company has restated its prior year financial statements to give retroactive effect to the recently adopted accounting
standards.

Presented
below is a summary of the impact of the restatement on previously reported amounts of accumulated deficit as of December 31, 2002, 2001 and 2000 and net loss and for the
years ended December 31, 2002 and 2001:

|                                                                 |  | 2002           |   | 2001         |   | 2001           |  
|---------------------------------------------------------------- |  | -------------- | - | ------------ | - | -------------- | -
|
|Amounts as previously reported                                   |  | (2,213,566,047 | ) | (945,412,403 | ) | (1,268,153,644 | )
|Application of the deferred tax method                           |  | 339,767,382    |   | 255,394,790  |   | 84,372,592     |  
|Changes to the valuation of liabilities generated by labor costs |  | (3,175,099     | ) | 89,474       |   | (3,264,573     | )
|                                                                 |  |                |   |              |   |                |  
|Amounts as restated                                              |  | (1,876,973,764 | ) | (689,928,139 | ) | (1,187,045,625 | )
|                                                                 |  |                |   |              |   |                |  

Pursuant to the new technical pronouncements, there are certain transitional rules that enable, and in certain cases require, prospective
application of valuation and disclosure criteria contained in those rules. The transition rules applied by the Company, which affect the comparability of the financial statements, are as follows:



2.3.Presentation of financial statements in constant Argentine pesos

On
August 22, 1995, the Argentine government issued Decree No. 316/95 discontinuing the requirement that financial information be restated for inflation for any date or
period after August 31, 1995. Effective September 1, 1995 in accordance with CNV resolutions and Argentine GAAP, the Company began accounting for its financial transactions on a
historical cost basis, without considering

F-10

---



the
effects of inflation. Prior to September 1, 1995, the financial statements were prepared on the basis of general price level accounting, which reflected changes in purchasing power of the
Argentine Peso in the historical financial statements. The financial statement information of periods prior to August 31, 1995 was restated to pesos of general purchasing power as of
August 31, 1995. The August 31, 1995 balances, adjusted to the general purchasing power of the Peso at that date, became the historical cost basis for subsequent accounting and
reporting.

However,
as a result of the inflationary environment in Argentina in 2002, the CPCECABA, approved on March 6, 2002, a resolution reinstating the application of inflation
accounting in financial statements as from January 1, 2002. This resolution provided that all recorded amounts restated for inflation through August 31, 1995, as well as those arising
between that date and December 31, 2001 are to be considered stated in currency as of December 31, 2001.

However,
after considering inflation levels for the second half of 2002 and the first months of 2003, on March 25, 2003, the Argentine government repealed the provisions of the
previous decree related to the inflation adjustment and instructed the CNV to issue the necessary regulations to preclude companies under its supervision from presenting price-level restated financial
statements. Therefore, on April 8, 2003, the CNV issued a resolution providing for the discontinuance of inflation accounting as of March 1, 2003. The Company complied with the CNV
resolution and accordingly recorded the effects of inflation until February 28, 2003. Comparative figures were also restated until that date, using a conversion factor of 1.007.

Since
Argentine GAAP required companies to prepare price-level restated financial statements until September 30, 2003, the application of the CNV resolution represents a departure
from generally accepted accounting principles. Had the provisions of Argentine GAAP been applied, the Company's shareholder's equity and the results for the year would have decreased by Ps.
35 million and Ps. 32 million, respectively.

2.4.Basis of presentation

The
consolidated financial statements are presented in Argentine pesos ("Ps.") and have been prepared in accordance with Argentine GAAP and the requirements of the CNV, which differ in
certain respects from generally accepted accounting principles in the United States of America ("US GAAP"). Such differences involve methods of measuring the amounts shown in the financial statements
as well as additional disclosures required by US GAAP and Regulation S-X of the Securities and Exchange Commission ("SEC"). A description of the significant differences between
Argentine GAAP and US GAAP as they relate to the Company are set forth in Note 15 to these consolidated financial statements.

Accounting
principles generally accepted in Argentina require companies with a controlling financial interest in other companies to present both parent company, where investments in
subsidiaries are accounted for by the equity method, and consolidated financial statements as primary and supplementary information, respectively. Because of the special purpose of these consolidated
financial statements, parent company financial statements are not included. This procedure has been adopted for the convenience of the reader of the financial statements.

2.5.Comparative financial statements

Balances
at December 31, 2002 and for the year then ended, which are shown in these consolidated financial statements for comparative purposes, result from restating the amounts
in the financial statements at those dates following the guidelines indicated in Note 2.3.

F-11

---



2.6.Significant accounting policies

The
following is a summary of the significant accounting policies used in the preparation of these consolidated financial statements:

(a)    Cash and Banks

Cash on hand was recorded at face value.

(b)    Foreign currency

Assets and liabilities denominated in foreign currency are presented at the nominal value of the foreign currency translated to Argentine pesos at
year-end exchange rates.

(c)    Short-term investments

Time deposits were valued at cost plus accrued interest. Mutual investment funds were valued at their quotation value at each year-end.

(d)    Trade receivables and accounts payable

Trade receivables and accounts payable were valued at the estimated cash value at the time of the transaction plus interest and implicit financial components
accrued based on the internal rate of return determined at such time.

Trade
receivables include an allowance for doubtful accounts, which is considered to be sufficient to absorb future losses due to uncollectible loans.

(e)    Financial receivables and payables

Financial receivables and payables were valued based on the sums of money disbursed and collected, respectively, plus financial results accrued based on the rate
estimated at that time.

(f)    Other receivables and payables

Sundry receivables and payables were valued based on the best estimates of the amounts receivable and payable, respectively.

(g)    Long-term investments

Generally, investments in unconsolidated affiliated companies in which the Company has ownership interests between 20% and 50% are accounted for under the equity
method.

The
Company's foreign subsidiaries (Cable Visión Comunicaciones S.A.E.C.A., Televisión Dirigida S.A.E.C.A., Orange Televisión Productions
S.A., Cablepar S.A. and Adesol S.A.) have been considered foreign entities for purposes of its categorization under Technical Pronouncement No. 18 as they are financially, economically and
organizationally autonomous. Accordingly, financial statements of the Company's foreign subsidiaries were translated to Argentine pesos using the year-end exchange rates for assets,
liabilities and results of operations. Adjustments resulting from these translations are accumulated and reported as a separate line item between the liability and equity section of the balance sheet.

On
October 1, 2003 Orange Televisión Productions S.A. and Cablepar S.A. merged into Cable Visión Comunicaciones S.A.E.C.A.

On
August 25, 2003, Company's foreign subsidiary Bridge Management Holdings Corp. was dissolved and, therefore, its assets and liabilities were assigned to Multicanal, as its sole
shareholder.

F-12

---



Until
December 31, 2002, financial statements of foreign subsidiaries had been translated into Argentine pesos following the guidance of Technical Pronouncement No. 13 of
the Argentine Federation of Professional Councils in Economic Sciences ("FACPCE") (restate-convert-disclose method).

Long-term
investments in companies in which no significant influence is exercised were valued at cost, adjusted for inflation following the guidelines mentioned in
Note 2.3.

(h)    Property and equipment

Property and equipment were valued at restated acquisition cost following the guidelines indicated in Note 2.3., net of accumulated depreciation.

Depreciation
was calculated by the straight-line method based on the estimated useful lives of the assets, using annual rates sufficient to extinguish asset values by the end
of their useful lives.

Improvements
that extend asset lives are capitalized; other repairs and maintenance charges are expensed as incurred. The cost and related accumulated depreciation applicable to assets
sold or retired are removed from the accounts and are recognized as a component of depreciation expense.

Aggregate
assets value does not exceed their economic value to the business at the end of the year.

(i)    Intangible assets

Intangible assets are basically represented by exploitation rights, concessions, purchase value of the subscriber portfolio, etc. and were valued at restated cost
following the guidelines indicated in Note 2.3., net of accumulated amortization.

Amortization
was computed by the straight-line method, based on an estimated useful life of between 5 and 20 years.

Aggregate
value of intangible assets does not exceed their estimated recoverable value at the end of the year.

(j)    Goodwill

Goodwill represents the excess of cost over the fair value of net identifiable assets acquired. Goodwill was restated following the guidelines indicated in
Note 2.3.

Until
December 31, 2002, amortization was computed over twenty years as from the month of origin. Upon the adoption of Technical Pronouncement No. 17, amortization of
goodwill ceased. Periodic impairment testing is now required.

As
of December 31, 2002 and 2001 as a result of the continued deterioration of the Argentine economy, the Company evaluated for impairment its goodwill and other intangible assets
in accordance with the standard's guidance and recorded a loss of Ps. 315,044,680 and Ps. 328,492,945, respectively (Note 3 (k)).

(k)    Income Tax

The Company records income taxes in accordance with the liability method of accounting. Deferred tax assets and liabilities are recognized for the estimated
future tax effects of temporary differences between the tax basis of an asset or liability and its reported amount in the financial statements. The measurement of deferred tax assets and liabilities
is based on enacted tax laws and rates currently in effect in each of the countries in which the Company has operations.

F-13

---



Deferred
tax assets are reduced, if necessary, by a valuation allowance. The Company has recorded a valuation allowance to reflect the estimated amount of deferred tax assets that may
not be realized.

The
Company has treated the differences between the price-level restated amounts of assets and liabilities and their historical basis as permanent differences for deferred income tax
calculation purposes in accordance with Resolution MD No.11/2003 issued by the CPCECABA.

In
accordance with CNV regulations, deferred tax assets and liabilities have not been discounted. Since Argentine GAAP requires the accounting for deferred tax assets and liabilities on
a discounted basis, the application of the CNV resolution represents a departure from generally accepted accounting
principles. However, such a departure has not had a material effect on the accompanying consolidated financial statements.

(l)    Minimum notional income tax

The Company calculates minimum notional income tax by applying the current rate (1%) on computable assets at the end of the year. This tax complements income tax.
The tax obligation of the Company during each year will be determined by the higher of the two taxes. However, if in a given year minimum notional income tax exceeds income tax, that amount in excess
can be computed as payment on account of income tax determined in the following ten years.

In
May 2001 the Company was included in the register of beneficiaries of the agreements to improve competitiveness and employment (Decree No. 730/01). For this reason, the
Company was exempt from this tax until December 31, 2002.

(m)    Provision for lawsuits and contingencies

A provision has been set up to cover potential labor, commercial, tax and other types of contingencies that could generate liabilities for the Company. The
opinion of the Company's legal counsel has been taken into account for purposes of calculation of the amount and likelihood of occurrence.

(n)    Shareholders' equity

These accounts have been restated on a constant Argentine pesos basis (included in Adjustments to capital account) (Note 2.3.). Adjustments to capital and
additional paid-in capital may be used to absorb accumulated deficits or to increase capital at the discretion of the shareholders. These amounts cannot be distributed in the form of cash
dividends.

The
"share capital" account has been stated at its historical nominal value. The difference between the capital stock stated in constant currency and the capital stock stated in
historical nominal value has been disclosed under the "adjustments to capital" account, in the shareholders' equity.

(o)    Revenues Recognition

Revenues are recognized on an accrual basis, including revenues from subscriptions, which are recorded in the month the service is rendered. The Company's
revenues are presented net of the allowance for doubtful accounts.

(p)    Selling and marketing expenses

Selling and marketing expenses are expensed as incurred.

F-14

---



(q)    Programming rights

Programming rights pending invoicing at the year-end are estimated on the basis of existing agreements and other judgment criteria at that date.

(r)    Employee severance indemnities

Severance indemnities are expensed when paid or when they represent a certain and quantified risk.

(s)    Accounting estimates

The preparation of the financial statements requires management to make estimates and assumptions which affect the reported amounts of assets and liabilities and
the disclosure of contingent assets and liabilities at the balance sheet dates, and the reported amounts of revenues and expenses during the reporting years. Actual results may differ from these
estimates.

(t)    Earnings per share

For purposes of calculating earnings per share, historical weighted average share and per share amounts have been calculated based on the assumption that the
4,814,066 shares issued for the capitalization of the irrevocable contribution were issued and outstanding at the date of the merger with Plataforma Digital S.A.

(u)    Cash and cash equivalents

The Company considers all highly liquid investments with original maturities of three months or less, consisting primarily of mutual funds, to be cash
equivalents.

F-15

---



NOTE 3DETAILS OF CONSOLIDATED BALANCE SHEETS AND STATEMENT OF INCOME ACCOUNTS

|                                           |  |                                              |  |             |   | December 31, |  
|------------------------------------------ |  | -------------------------------------------- |  | ----------- | - | ------------ | -
|
|CONSOLIDATED BALANCE SHEETS
CURRENT ASSETS |  |                                              |  |             |   |              |  
|(a)                                        |  | Short-term investments                       |  |             |   |              |  
|                                           |  | Money market instruments                     |  | 36,385      |   | 57,020       |  
|                                           |  | Time deposits                                |  | 173,845     |   | 1,378,244    |  
|                                           |  | Other                                        |  | 240,722     |   | 20,338       |  
|                                           |  |                                              |  |             |   |              |  
|                                           |  |                                              |  |             |   | 450,952      |  
|                                           |  |                                              |  |             |   |              |  
|(b)                                        |  | Trade receivables                            |  |             |   |              |  
|                                           |  | From subscriptions                           |  | 28,168,333  |   | 40,230,001   |  
|                                           |  | From advertising                             |  | 9,212,702   |   | 9,406,832    |  
|                                           |  | Notes receivable                             |  | 15,628      |   | 252,035      |  
|                                           |  | Credit cards                                 |  | 3,354,466   |   | 2,069,571    |  
|                                           |  | Other                                        |  | 1,173,092   |   | 2,226,504    |  
|                                           |  | Allowance for doubtful accounts (Note 6 (a)) |  |             |   |              |  
|                                           |  | From subscriptions                           |  | (20,285,188 | ) | (22,251,308  | )
|                                           |  | From advertising                             |  | (5,710,992  | ) | (6,437,303   | )
|                                           |  | From other                                   |  | (400,159    | ) | (403,123     | )
|                                           |  |                                              |  |             |   |              |  
|                                           |  |                                              |  |             |   | 15,527,882   |  
|                                           |  |                                              |  |             |   |              |  
|(c)                                        |  | Other                                        |  |             |   |              |  
|                                           |  | Advances to suppliers                        |  | 791,057     |   | 1,115,208    |  
|                                           |  | Receivables from minority shareholders       |  | 520,326     |   | 2,779,965    |  
|                                           |  | Tax advances                                 |  | 3,406,427   |   | 7,324,228    |  
|                                           |  | Guarantee Deposits                           |  | 555,334     |   | 559,157      |  
|                                           |  | Other receivables                            |  | 9,004,290   |   | 9,442,924    |  
|                                           |  | Debtors in litigation                        |  | 327         |   | 11,435       |  
|                                           |  | Prepaid expenses                             |  | 5,446,394   |   | 10,007,711   |  
|                                           |  | Advances to employees                        |  | 309,154     |   | 532,765      |  
|                                           |  | Judicial deposits                            |  | 14,361,063  |   | 3,006,888    |  
|                                           |  | Other                                        |  | 12,532,620  |   | 3,546,654    |  
|                                           |  |                                              |  |             |   |              |  
|                                           |  |                                              |  |             |   | 46,926,992   |  
|                                           |  |                                              |  |             |   |              |  
|NON-CURRENT ASSETS                         |  |                                              |  |             |  
|(d)                                        |  | Other                                        |  |             |   |              |  
|                                           |  | Prepaid expenses                             |  | 22,561,980  |   | 26,316,971   |  
|                                           |  | Net deferred tax assets                      |  | 352,245,799 |   | 337,819,328  |  
|                                           |  | Tax advances                                 |  | 4,396,391   |   | 225,219      |  
|                                           |  | Guarantee Deposits                           |  | 145,125     |   | 353          |  
|                                           |  | Other                                        |  |            |   | 3,212,636    |  
|                                           |  |                                              |  |             |   |              |  
|                                           |  |                                              |  |             |   | 379,349,295  |  
|                                           |  |                                              |  |             |   |              |  
|                                           |  |                                              |  |             |   |              |  

F-16

---



|(e)                                                                                                                                                                                                                |  | Long-term investments                                              |  |               |   |               |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ------------------------------------------------------------------ |  | ------------- | - | ------------- | -
|                                                                                                                                                                                                                   |  | Investments in companies carried under the equity method (Note 10) |  | 7,286,400     |   | 6,951,016     |  
|                                                                                                                                                                                                                   |  | Advances for the purchase of companies                             |  | 6,785,500     |   | 7,727,833     |  
|                                                                                                                                                                                                                   |  | Allowance for impairment of long-term investments (Note 6 (d))     |  | (6,635,500    | ) | (7,576,714    | )
|                                                                                                                                                                                                                   |  | Investments in companies carried at cost                           |  | 4,559,607     |   | 204,587       |  
|                                                                                                                                                                                                                   |  |                                                                    |  |               |   |               |  
|                                                                                                                                                                                                                   |  |                                                                    |  |               |   | 11,996,007    |  
|                                                                                                                                                                                                                   |  |                                                                    |  |               |   |               |  
|(f)                                                                                                                                                                                                                |  | Goodwill                                                           |  |               |   |               |  
|                                                                                                                                                                                                                   |  | Original Value                                                     |  | 2,644,024,212 |   | 2,646,206,514 |  
|                                                                                                                                                                                                                   |  | Accumulated amortization (1)                                       |  | (847,019,237  | ) | (847,639,129  | )
|                                                                                                                                                                                                                   |  |                                                                    |  |               |   |               |  
|                                                                                                                                                                                                                   |  |                                                                    |  |               |   | 1,797,004,975 |  
|                                                                                                                                                                                                                   |  | Allowance for impairment of goodwill                               |  | (624,322,536  | ) | (625,198,981  | )
|                                                                                                                                                                                                                   |  |                                                                    |  |               |   |               |  
|                                                                                                                                                                                                                   |  |                                                                    |  |               |   | 1,172,682,439 |  
|                                                                                                                                                                                                                   |  |                                                                    |  |               |   |               |  
|(1) Goodwill amortization for the years ended December 31, 2002 and 2001 amounted to Ps. 110,859,406 and Ps. 131,508,066 respectively No amortization has been recognized during the year ended December 31,
2003. | 
|CURRENT LIABILITIES                                                                                                                                                                                                |  |                                                                    |  |               |   |               |  
|(g)                                                                                                                                                                                                                |  | Short-term bank and financial debt                                 |  |               |   |               |  
|                                                                                                                                                                                                                   |  | Overdraft facilities                                               |  | 57,144        |   | 57,144        |  
|                                                                                                                                                                                                                   |  | Corporate Bonds                                                    |  |               |   |               |  
|                                                                                                                                                                                                                   |  | Capital                                                            |  | 1,490,545,620 |   | 1,724,139,310 |  
|                                                                                                                                                                                                                   |  | Interests payable                                                  |  | 400,378,043   |   | 245,467,378   |  
|                                                                                                                                                                                                                   |  | Loans                                                              |  |               |   |               |  
|                                                                                                                                                                                                                   |  | Capital                                                            |  | 44,601,647    |   | 44,930,773    |  
|                                                                                                                                                                                                                   |  | Interests payable and index-adjustments                            |  | 28,237,616    |   | 21,320,282    |  
|                                                                                                                                                                                                                   |  |                                                                    |  |               |   |               |  
|                                                                                                                                                                                                                   |  |                                                                    |  |               |   | 1,963,820,070 |  
|                                                                                                                                                                                                                   |  |                                                                    |  |               |   |               |  
|(h)                                                                                                                                                                                                                |  | Other                                                              |  |               |   |               |  
|                                                                                                                                                                                                                   |  | Other provisions                                                   |  | 736,009       |   | 7,841,415     |  
|                                                                                                                                                                                                                   |  | Debt with minority shareholders                                    |  | 244,646       |   | 472,393       |  
|                                                                                                                                                                                                                   |  | Dividends payable                                                  |  | 2,347,300     |   | 2,285,825     |  
|                                                                                                                                                                                                                   |  | Other                                                              |  | 4,014,354     |   | 2,591,592     |  
|                                                                                                                                                                                                                   |  |                                                                    |  |               |   |               |  
|                                                                                                                                                                                                                   |  |                                                                    |  |               |   | 7,342,309     |  
|                                                                                                                                                                                                                   |  |                                                                    |  |               |   |               |  
|                                                                                                                                                                                                                   |  |                                                                    |  |               |   |               |  

F-17

---



|NON-CURRENT LIABILITIES |  |                                                                                  |  |            |  |            | 
|----------------------- |  | -------------------------------------------------------------------------------- |  | ---------- |  | ---------- | 
|(i)                     |  | Other                                                                            |  |            |  |            | 
|                        |  | Investments in companies carried under the equity methodFintelco S.A. (Note 10) |  | 14,875,850 |  | 19,465,318 | 
|                        |  | Other                                                                            |  | 257,491    |  | 257,117    | 
|                        |  |                                                                                  |  |            |  |            | 
|                        |  |                                                                                  |  |            |  | 15,133,341 | 
|                        |  |                                                                                  |  |            |  |            | 

|                                 |  |                                          |  | December 31, |  
|-------------------------------- |  | ---------------------------------------- |  | ------------ | -
|
|CONSOLIDATED STATEMENT OF INCOME |  |                                          |  |              |  
|(j)                              |  | Net revenues                             |  |              |  
|                                 |  | Gross sales                              |  |              |  
|                                 |  | From subscriptions                       |  | 491,640,338  |  
|                                 |  | From advertising                         |  | 9,311,394    |  
|                                 |  | Other                                    |  | 9,028,020    |  
|                                 |  | Allowance for doubtful accounts          |  |              |  
|                                 |  | From subscriptions                       |  | (2,499,494   | )
|                                 |  | From advertising                         |  | 18,215       |  
|                                 |  | From other                               |  |             |  
|                                 |  |                                          |  |              |  
|                                 |  |                                          |  | 507,498,473  |  
|                                 |  |                                          |  |              |  
|(k)                              |  | Other non-operating expenses, net        |  |              |  
|                                 |  | Employee's dismissals                    |  | 1,571,916    |  
|                                 |  | Provision for lawsuits and contingencies |  | (3,824,685   | )
|                                 |  | Uncollectibility of other receivables    |  | (567,641     | )
|                                 |  | Impairment of goodwill                   |  |             |  
|                                 |  | Impairment of long-term investments      |  | 941,214      |  
|                                 |  | Other                                    |  | 5,892,261    |  
|                                 |  |                                          |  |              |  
|                                 |  |                                          |  | 4,013,065    |  
|                                 |  |                                          |  |              |  

F-18

---



NOTE 4PROPERTY AND EQUIPMENT, NET

|                                                          |       | December 31, 2003
|--------------------------------------------------------- | ----- | -----------------
|
|Installations, external wiring and transmission equipment |       | 1,414,541,121    
|Properties                                                |       | 119,919,321      
|Computer equipment                                        |       | 63,889,233       
|Furniture, fixtures and tools                             |       | 53,295,943       
|Vehicles                                                  |       | 29,896,109       
|Materials, net of provision for obsolescence of materials |       | 57,212,629       
|Work in progress                                          |       | 9,088,949        
|Advances to suppliers                                     |       | 1,848,205        
|                                                          |       |                  
|                                                          | Total |                  
|                                                          |       |                  

|                                                          |       | December 31, 2002
|--------------------------------------------------------- | ----- | -----------------
|
|Installations, external wiring and transmission equipment |       | 1,413,781,113    
|Properties                                                |       | 120,442,846      
|Computer equipment                                        |       | 64,132,624       
|Furniture, fixtures and tools                             |       | 53,349,165       
|Vehicles                                                  |       | 30,293,201       
|Materials, net of provision for obsolescence of materials |       | 61,875,704       
|Work in progress                                          |       | 6,644,528        
|Advances to suppliers                                     |       | 2,803,861        
|                                                          |       |                  
|                                                          | Total |                  
|                                                          |       |                  

Net
additions of property and equipment for the years ended December 31, 2003, 2002 and 2001 amounted to Ps. 16,623,378, Ps. 11,331,612 and Ps. 46,562,387, respectively.

Depreciation
of property and equipment for the years ended December 31, 2003, 2002 and 2001amounted to Ps. 144,728,560, Ps 193,288,814 and Ps. 199,781,408, respectively.

F-19

---



NOTE 5INTANGIBLE ASSETS, NET

|                      |  | December 31, 2003
|--------------------- |  | -----------------
|
|Purchased subscribers |  | 27,678,117       
|Others                |  | 48,986,577       
|                      |  |                  
|Total                 |  | 76,664,694       
|                      |  |                  

|                      |  | December 31, 2002
|--------------------- |  | -----------------
|
|Purchased subscribers |  | 27,678,117       
|Others                |  | 45,893,771       
|                      |  |                  
|Total                 |  | 73,571,888       
|                      |  |                  

Amortization
of intangible assets for the years ended December 31, 2003, 2002 and 2001 amounted to Ps 5,357,333, Ps 4,980,090 and Ps. 3,358,939, respectively.

NOTE 6ALLOWANCES AND CERTAIN PROVISIONS

(a)    Allowance for doubtful accounts

|                                                    |  | December 31,
|--------------------------------------------------- |  | ------------
|
|
|Balance at the beginning of the year                |  | 22,251,308  
|Increase / (Decrease) (recorded as loss / (income)) |  | 2,499,494   
|(Write-off) (*)                                     |  | (4,465,614  
|                                                    |  |             
|Balance at the end of the year                      |  | 20,285,188  
|                                                    |  |             

---

(b)    Allowance for obsolescence of materials

|                                     |  | December 31, | 
|------------------------------------ |  | ------------ | 
|
|Balance at the beginning of the year |  | 11,084,790   | 
|Decrease                             |  | 61,568       | 
|                                     |  |              | 
|Balance at the end of the year       |  | 11,146,358   | 
|                                     |  |              | 

F-20

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(c)    Provision for lawsuits and contingencies

|                                     |  | December 31, |  
|------------------------------------ |  | ------------ | -
|
|Balance at the beginning of the year |  | 18,495,701   |  
|Increase (recorded as loss)          |  | 3,824,685    |  
|(Decrease) increase of provision (*) |  | (2,489,367   | )
|                                     |  |              |  
|Balance at the end of the year       |  | 19,831,019   |  
|                                     |  |              |  

---

(d)    Allowance for impairment of long-term investments

|                                     |  | December 31,
|------------------------------------ |  | ------------
|
|Balance at the beginning of the year |  | 7,576,714   
|Increase (recorded as loss)          |  | (941,214    
|                                     |  |             
|Balance at the end of the year       |  | 6,635,500   
|                                     |  |             

NOTE 7BANK AND FINANCIAL DEBT

In addition to the financial loans with local financial entities, which have been converted into pesos and adjusted through application of the Reference
Stabilization Coefficient ("CER"), the Company's financial debt is as follows:

(a)    US$ 125 million 91/4% Notes due 2002 and US$ 125 million 101/2% Notes due 2007

On January 28, 1997, the Board of Directors of Multicanal approved the issuance of two series of securities, the US$ 125 million
91/4% Notes due 2002 and the US$ 125 million 101/2% Notes due 2007 (collectively, the "Notes"), in each case interest to be paid semi-annually. The
aggregate net proceeds of the issue of the Notes due 2002 and the Notes due 2007 of US$ 244,882,500, together with US$ 5,117,500 corresponding to cash generated by the operations, were used to repay a
US$ 200 million loan facility arranged by The Boston Investment Group S.A., Banco Río de la Plata S.A. and Galicia Capital Markets S.A. in 1995 (the "1995 Loan Facility") and to
refinance short-term bank debt and other indebtedness. Appropriation to payment was effected on February 3, 1997.

The
Notes due 2002 and the Notes due 2007 contained customary affirmative and negative covenants, including, but not limited to, restrictions on the incurrence of additional debt,
creation of liens on assets, disposal of assets, mergers and payments of dividends.

On
July 2, 1997, the Notes due 2002 and the Notes due 2007 were registered with the SEC, and the Company concluded exchange offers involving those obligations on August 3, 1997
and September 4, 1998.

(b)    Establishment of a Medium-Term Note Program of up to US$ 350,000,000

During the Ordinary Shareholders' Meeting held on April 4, 1997, the Shareholders approved the establishment of a Medium-Term Note Program (the
"Program") for the issue of unsecured corporate debt, in different currencies, provided that the maximum outstanding amount, after adding all series and classes of notes issued under the Program, does
not exceed US$ 350,000,000, or an equivalent amount if any such issue is in another currency, at any time. On May 8, 1997, the CNV approved the

F-21

---



public
offer of Corporate Bonds under the abovementioned Program. On July 24, 1997, the abovementioned Program was approved by the Buenos Aires Stock Exchange ("BCBA").



(c)    Increase in the maximum amount of notes outstanding under the Medium-Term Note Program

The Company's shareholders approved, at a Unanimous Ordinary Meeting held on November 24, 1997, an increase in the maximum aggregate amount of notes
outstanding under the Medium-Term Note Program by US$ 200,000,000 to US$ 550,000,000. On December 2 and 22, 1998 and February 16, 1999, the CNV, the BCBA and the
over-the-counter market ("MAE"), respectively, approved the abovementioned increase.

Subsequently,
on January 19, 1999, the Company's shareholders approved an additional increase in the maximum aggregate amount of notes outstanding under the
Medium-Term Note Program by US$ 550,000,000 to US$ 1,050,000,000. On March 31, April 5 and 13, 1999, the CNV, the BCBA and the MAE, respectively, approved the abovementioned
increase.



F-22

---





Repurchases

During the last quarter of 2001 and in January 2002, the Company repurchased notes issued by it for US$ 211,148,000, obtaining a discount with respect to
the face value of the Company's debt amounting to US$ 130,995,548. The result of that purchase corresponding to the previous year amounted to Ps. 420,871,431, which is recorded under Financial
results, net in the consolidated statement of income.

Deferred Payments

On February 1, 2002, the Company deferred the payment of principal and interest on its 91/4% Notes due 2002 and interest on its
101/2% Notes due 2007 due to the situation of the Argentine economy and the political and social crisis that resulted from the economic, exchange and regulatory measures described in
Note 12. Subsequently on February 26, 2002, the Company deferred the payment of interest on its Series J Floating Rate Notes due 2003.

On
April 15, 2002, the Company deferred payments of interest on its Series C 101/2% Notes due in 2018, and its Series E 13.125% Notes due in 2009 due
to the worsening of the Argentine economic crisis.

On
June 4, 2002, the Company announced the designation of JP Morgan Securities Inc. as financial advisor, to assist it in designing alternative means of discharging the
deferred payments. As agreed, the fees and total costs in relation to the restructuring process will depend on the result finally achieved.

F-23

---



Proposal for the restructuring of the financial debt

On January 31, 2003 the Company launched an offer to purchase (the "Cash Tender Offer") its 91/4% Notes due 2002, 101/2%
Notes due 2007, 13.125% Series E Notes due 2009, Series C 101/2% Notes due 2018 and Series J Floating Rate Notes due 2003 (together, the "Existing Notes"), and
other financial indebtedness (the "Bank Debt" and together with the Existing Notes, the "Existing Debt").

On
February 7, 2003, as a second stage of the restructuring process Multicanal announced that it was soliciting (the "APE Solicitation") from holders of Existing Debt powers of
attorney in favor of an attorney-in-fact, to execute an APE which was successively extended until December 12, 2003. At that date the offer was closed, Multicanal having
accepted it.

On
July 25, 2003 the Company publicly announced the modification of its Cash Tender Offer (the "Cash Tender Offer", as amended, the "Cash Option Solicitation") and the APE
Solicitation as a result of the requests made by its creditors, including an increase in the consideration offered to the holders of the Existing Debt that participate in the APE Solicitation,
modification of the minimum participation requirements of the APE Solicitation, modification of certain conditions precedent of the APE Solicitation and the Cash Option Solicitation and inclusion of
the cash payment pursuant to the Cash Option Solicitation as an option in the APE Solicitation.

On
December 10, 2003 a meeting of holders of all series of Existing Negotiable Obligations was held, the call of which was resolved by the Federal Court of Original Jurisdiction
dealing with Commercial Matters No. 4, Clerk's Office 8, of the City of Buenos Aires, Argentina (the "Argentine Court"), as called for by Section 45 bis of Law 24522 (LCQ). Holders of
Existing Negotiable Obligations who voted for the Company's APE at that meeting, together with the holders of Bank Debt who had agreed to assume obligations under the APE, represented approximately
67.61% of the amount of the Existing Debt at June 30, 2003, for purposes of determining the degree of acceptance of the Company's APE. On December 17, 2003, after the filing made by the
Company, the Argentine Court considered the requirements for the order for relief of APE to have been met and ordered the publication of the notices prescribed by Section 74 of the LCQ for
filing opposition. The Company published those notices on December 31, 2003 and the time frame given to creditors for filing opposition to the APE expired on February 13, 2004.

Upon
approval by an Argentine commercial court of the APE, each of the holders that participates in the Cash Option Solicitation will receive a cash payment of US$ 300 for each US$ 1,000
of principal of Existing Debt tendered. Furthermore, each holder that accepts the APE Solicitation will receive, for each U.S.$1,000 principal amount of Existing Debt tendered in connection with the
APE Solicitation, at its option, either:



The
Company will not pay any accrued and unpaid interest (including default interest and additional amounts, if any) on the Existing Debt that is exchanged or capitalized pursuant to the
APE.

The
Company is seeking to (i) exchange approximately U.S.$76.5 million principal amount of its Existing Debt for U.S.$80.3 million of 10-Year Notes,
(ii) exchange approximately U.S.$143.0 million principal amount of its Existing Debt for U.S.$143.0 million of its 7-Year Notes and (iii) capitalize
approximately U.S.$181.9 million principal amount of its Existing Debt. The rest of the conditions of the restructuring were included on the APE Solicitation.

F-24

---



NOTE 8SHAREHOLDERS' CAPITAL

As a result of the incorporation of the equity of Plataforma Digital S.A., effective from January 1, 2001 (Note 1 (b)), the capital stock of
Multicanal, as the absorbing company, was increased by Ps. 867,810, from Ps. 365,953,227 to Ps. 366,821,037, by the issue of 867,810 non-endorsable, registered, ordinary Class A
shares of Ps. 1 par value with five votes per share, which were delivered to Grupo Clarín S.A. in exchange for the shares held by it in Plataforma Digital S.A. This capital increase is
pending registration.

The
dissolution of Multicanal Holding LLC was registered with the Secretary of State of the State of Delaware on June 2, 2003 in line with the Operating Agreement signed at the
time of the Company's creation, and its shareholders contributed to Grupo Clarín S.A. the shares Multicanal Holding LLC held in the Company.

Furthermore,
on August 8, 2003, the Shareholders' Meeting of the Company resolved to increase the corporate capital by Ps. 4,814,066, through the capitalization of all irrevocable
contributions recognized. Thus, the capital was increased to Ps. 371,635,103 through the issuance of 2,629,140 ordinary registered non-endorsable Class A shares with a par value of
Ps.1 each and entitled to five votes per share, delivered to Grupo Clarín S.A., and 2,184,926 ordinary registered non-endorsable Class B shares with a par value of
Ps.1 each and entitled to one vote per share, of which 654,438 correspond to Grupo Clarín S.A. and 1,530,488, to Arte Gráfico Editorial Argentino S.A. This capital
increase is pending registration.

As
a result, the shares of the Company are currently held as follows:

|                                      |  | Number of shares |  |            
|------------------------------------- |  | ---------------- |  | -----------
|
|
|Grupo Clarín S.A.                     |  | 202,963,617      |  | 50,521,104 
|Arte Gráfico Editorial Argentino S.A. |  |                 |  | 118,150,382
|                                      |  |                  |  |            
|Total                                 |  | 202,963,617      |  | 168,671,486
|                                      |  |                  |  |            

---



F-25

---



NOTE 9COMMITMENTS AND CONTINGENCIES

(a)    Acquisition and sale of cable systems

(i)    Acquisition
of cable systems in Paraguay

On
December 12, 1997, the Company entered into two agreements for the acquisition of 14 cable systems (13 in Paraguay and 1 in Clorinda, Argentina). The closing of the transaction
was scheduled for November 15, 1997, which was subject to the seller's compliance with certain conditions, including obtaining various regulatory approvals from the government of Paraguay,
which were ultimately not obtained. The Company renegotiated the purchase of the subscribers, and the assets and liabilities of the Paraguayan companies. So far, US$ 2,300,000 corresponding to the
payment on account of the total price has been paid.

The
final agreement was not signed due to the seller's failure to comply with its obligations. The seller signed a promissory note amounting to US$ 2,300,000 and pledged the shares
corresponding to certain TV systems in favor of the Company to guarantee compliance with the conditions for the closing of the transaction. As a result of the seller's non-compliance, the
Company demanded payment of the promissory note, but the seller brought a claim demanding compliance with the agreement signed on December 12, 1997, reserving the right to determine the amount
of damages, and an injunction which was resolved by the Paraguayan court in favor of the plaintiff. This measure prevents collection by the Company of the promissory note amounting to US$ 2,300,000.

On
November 30, 2003, the Civil and Commercial Court of Appeals, Panel 4, ordered that the injunction be discharged. This decision was final and binding, but the records of the
case remained at the Panel for purposes of the assessment of attorneys' fees.

Therefore,
the case will be remanded to the trial court, where it will be prosecuted according to its status. The Company is unable to assure that it will collect the amount due once the
injunction has been lifted.

(ii)    Sale
of assets and rights in DirecTV Latin America, LLC.

On
August 24, 2001, the Company transferred all of its interests in DirecTV Latin America, LLC and certain contractual rights related thereto to Raven Media Investments, LLC, a
company organized under the laws of the state of Delaware and wholly-owned by Grupo Clarín S.A., for US$ 150,000,000.

The
Company received the full purchase price upon the execution of the transfer agreement.

Multicanal
reserved the right, subject to certain conditions, to indirectly repurchase the assets sold. This option expired on November 10, 2003 and Multicanal did not exercise
it.

(iii)    Tres
Arroyos Televisora Color S.A. trusts

On
September 7, 2001, a Trust Agreement was signed under which the minority shareholders transferred all of their equity interests in Tres Arroyos Televisora Color S.A.,
representing 38.58% of the stock capital, in favor of the trustee, Mr. José María Sáenz Valiente (h). Multicanal was appointed the trust beneficiary
so that the stock in trust is gradually transferred to it provided it pays Ps. 42,876 per month to the trustee over a 10-year period. The trust will be revoked if Multicanal were to fail
to pay the consecutive monthly installments.

Additionally,
on the same date, a beneficial interest on the mentioned shares was set up in favor of Multicanal, for the earlier of 10 years or the trust life.

F-26

---



As
of December 2003, the trustee transferred 2,315 shares to Multicanal under the Trust Agreement. The participations after the transfer are as follows: Multicanal owns 17,055
shares representing 71.06% of the capital stock and Fideicomiso Tres Arroyos Televisora Color S.A. owns 6,945 shares representing 28.94% of the capital stock.

(iv)    Acquisition
of Telemás S.A. Renegotiation of payment of the price balance

On
May 2, 1997, through its wholly-owned subsidiary Adesol S.A., the Company acquired 75% of Telemás S.A., a company that provides programming and management
services to UHF systems and another seven cable operators in Uruguay. On July 15, 1999 the Company established that Adesol S.A. would acquire the remaining 25% of Telemás S.A.
and agreed to pay US$ 12.4 million in six half-yearly installments, the first four of which were paid on December 15, 1999, June 15 and December 15, 2000 and
June 15, 2001 (payment corresponding to December 31, 2001 had been made in advance). The amount of the final installment due on June 15, 2002 was renegotiated, being payable in 24
installments from July 2002. In accordance with an addendum dated November 2002, the Company and Adesol S.A. partially renegotiated their financing obligations with maturities from
October 2002 through March 2003, reducing the amount of the installments and adding a final installment corresponding to the difference. The restriction on the sale of Adesol S.A. and
Telemás S.A. will continue to be in effect until those installments have been settled. On June 23, 2003 the Company and Adesol renegotiated the financial obligations falling due
in April 2003 to instead fall due in December 2003, decreased the amount of the installments and added a final installment for the difference which will fall due in August 2004.

(v)    Acquisition
of Dorrego Televisión S.A.

Through
the agreement entered into on October 15, 2002 in relation to the purchase of the capital stock of Dorrego Televisión S.A. and Cable Video Sur S.R.L., the
Company assumed the outstanding obligations of the purchaseramounting to Ps. 250,000with the previous shareholders of Dorrego Televisión S.A. and agreed to
settle that debt in 30 monthly installments using a formula based on a basic subscription fee charged in Coronel Dorrego. On December 15, 2002 the Company entered into an agreement
whereby it assumed the obligations of the seller with the previous owners of Cable Video Sur S.R.L. The obligations of the seller were secured with a pledge on 99% of the quotas of Cable Video Sur
S.R.L. The Company agreed to pledge the shares of Dorrego Televisión S.A. in exchange for the release of the pledge on the installments of Cable Video Sur S.R.L. It was also agreed that
the total payment of Ps. 829,641 would be made in 39 monthly installments and six semi-annual installments.

(b)    Litigation

The Company is involved in litigation from time to time in the ordinary course of business. In Management's opinion, the lawsuits in which the Company is
currently involved, individually and in the aggregate, are not expected to be resolved for amounts that would be material to the Company's financial condition or results of operations.

(c)    Operating licenses

The Company's operating licenses, obtained from the Comité Federal de Radiodifusión (Federal Broadcasting Committee or "COMFER"),
have been generally granted for a period of 15 years, with the option to extend the licenses for an additional ten-year period, counted as from the expiration of the original term.
The Company has requested the extension of the term for several licenses. The extension of the licenses is subject to approval by the COMFER. Although management considers that the risk that the
Company will be unable to renew its licenses in the future remote, it cannot provide assurance that the Company will obtain any such extensions.

F-27

---



(d)    Pending approvals

The Company has applied for COMFER approval of several transactions, including the various corporate reorganizations in which several operating subsidiaries were
merged into the Company, certain transfers and other acquisitions of cable television companies. In addition, the Company has requested the COMFER to approve the elimination of certain headends.
Although most of these approval petitions are pending, the Company expects to receive all such approvals in due course. Notwithstanding the foregoing, the Company can give no assurance that such
approvals will be granted by the COMFER or any successor agency.

The
merger-spin-off of Fintelco S.A., Video Cable Comunicación S.A. ("VCC") and CV Inversiones S.A., are pending approval by the IGJ.

The
capital increases derived from the merger with effects as from January 1, 2001 and as a result of the capitalization of irrevocable contributions are still pending
registration with the IGJ. Furthermore, the reorganization processes carried out by the Company before the merger are also pending registration.

(e)    Claims by COMFER

(i)    Administrative
proceedings

The
Company has taken part in a payment facilities regime established by Government Decree 1201/98, as amended by Decrees 644/99 and 937/99, in order to pay the penalties for violations
of the broadcasting law that allegedly occurred prior to December 9, 1999. This mechanism provides for: (i) an 85% reduction in any fines in connection with these proceedings, and
(ii) cash payments of the amount to be determined, or crediting of the amount to TELAM S.A. for use in public service campaigns run by the Federal Government. The COMFER notified the Company,
by means of Note 2872/02, that the "Amount payable" amounts to Ps. 5,295,359. The Company intends to pay this amount by providing advertising. However, because the "amount to be settled" that
the Company was notified it must pay was calculated by applying the previous regime on calculating penalties approved by Resolutions Nos. 626/COMFER/98, 772/COMFER/98 and 609/COMFER/99, the Company
filed a request with the relevant authorities requesting recalculation of the "amount to be settled" by applying the new regime approved by Resolution No. 830/COMFER/2002 in effect since
November 21, 2002, if it is more favorable to the Company. This decision was based on the general legal principle which establishes that the most favorable regulation is to be applied at the
time of setting a penalty. Through Resolution No. 0582/CFR/03 dated May 16, 2003, the COMFER admitted the Company's objections and proceeded to recalculate the amount payable at Ps.
57,439.50, to be settled in its entirety through the granting of advertising in favor of TELAM, currently Sistema Nacional de Medios Públicos Sociedad del Estado.

On
December 13, 2002 the Company took part in a new payment facilities regime established by Decree 2362/02 of the National Government for the payment of fines imposed on the
Company or derived from non-compliance with broadcasting regulations between January 1, 2001 and October 31, 2002, inclusive. Under this regime, the following alternatives
are available: (i) to make payment in cash, or (ii) to apply the resulting amounts in favor of the National Secretariat of Communication Media and the COMFER for campaigns for the public
interest organized by the National Government. It is the Company's intention to pay the fines by providing advertising time in future broadcasts. Through Resolution No. 0584/CFR/03 dated
May 16, 2003, the COMFER resolved to approve adherence to the Installment Payment Plan requested by the Company, determining the amount payable at Ps. 422,390, to be settled in its entirety
through the granting of advertising seconds in favor of the Communications Media Secretariat of the Presidency of the Nation and the Federal Broadcasting Committee, which will be applied to the
promotion of general interest campaigns conducted by the National State.

F-28

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(ii)    Demand
for payment from Vidycom S.A.

The
COMFER filed a claim whereby it demanded payment from Vidycom S.A. ("Vidycom"), a company absorbed by Multicanal in 1995, of all the differences in its favor as a result of its
participation in the tax exemption established by Resolution No. 393/93.

The
tax authorities based their rejection of the mentioned tax exemption on the following grounds: (a) Vidycom was asked to make payment on several occasions, but did not comply
with COMFER's requirements, (b) no documentation supporting the investments committed by the company was provided and (c) no evidence was provided of the weather phenomenon as a result
of which the previous shareholders had requested the tax exemption.

The
amount of the claim, which would be equivalent to 30% of the rate paid in 1994, 20% of the rate paid in 1995 and 10% of the rate paid in 1996, plus the corresponding interest, has
not yet been determined.

According
to Multicanal, there are questions of fact and of law in its favor which would lead COMFER to reassess its position. Consequently, no amount has been recorded in these
consolidated combined financial statements at December 31, 2003.

(iii)    Demand
for payment due to rejection of requests for exemption

The
COMFER issued various resolutions announcing the rejection of the request for exemptions filed under the terms of Resolution No. 393/93 to the holders of broadcasting licenses
absorbed by Multicanal and to demand payment of sums due plus interest.

The
Company considers that there are allegations of fact and questions of law in its favor that would require COMFER to review its position, but the Company cannot provide any assurance
that the authorities will rule in favor of the Company.

(f)    Other regulatory aspects

In February 1995, the City of Buenos Aires issued a municipal ordinance regulating the authorization for the installation of TV cable networks. Such
ordinance establishes several alternatives for cable installation on the street, namely: by underground laying, center of city block or posting. The ordinance established a maximum term of
7 years for cable operators to adapt their wiring networks according to the requirements of the ordinance. The municipality of the City of Mar del Plata issued an ordinance to regulate the
installation of cable TV networks.

Although
the Company has been adapting its network, it has had difficulties making its network fully compliant as a result of the economic crisis in Argentina, the current lack of
financial stability and the successive tax charges, which have forced the Company to apply its resources and income to ensuring
the continuity of its business and greatly reduce its capital expenditures. On September 30, 2002 the Company requested suspension of the terms established by ordinance 48,899. The municipality
of the City of Mar del Plata is also analyzing the granting of an extension for the license holders to adapt their networks.

According
to applicable regulations, 5% of the year's profit must be applied to the legal reserves until it equals 20% of Company capital stock.

(g)    Commitments to make contributions to Fintelco S.A.

Fintelco S.A. had a negative shareholders' equity as of November 30, 2003. Under the Argentine Commercial Companies Law, this could bring its dissolution,
unless its capital is restored. National Executive Branch Decree No. 1269/02, as amended by Decree No. 1293/03, suspended the application of the abovementioned regulation until
December 10, 2004. The Company and Cablevisión S.A. each

F-29

---



hold
50% of the equity of Fintelco S.A. and, in that proportion, the Company has undertaken to make the contributions required to pay the liabilities of Fintelco S.A. and of its subsidiaries when due.

(h)    Complaints against the Supercanal Group

The Company brought various claims against Supercanal Holding S.A. and its subsidiaries (the "Supercanal Group"), including an action to declare resolutions
adopted during the Extraordinary Shareholders' Meeting of Supercanal Holding S.A. on January 25, 2000 to reduce capital stock of Supercanal Holding S.A. to Ps. 12,000 and subsequently increase
capital to Ps. 83,012,000 null and void. The Court issued an injunction requested by the Company but required that the Company post bond for Ps. 22,000,000 for potential damages that could be assessed
against the defendant, should the complaint be dismissed. The remedy was granted against the issue of a surety bond. The Court of Appeals revoked the injunction. The Company has filed an extraordinary
appeal against that resolution, claiming it is both "arbitrary" and "damaging to the institution". The appeal is in the process of being heard, and a ruling thereon is pending.

Other
legal actions were initiated, claiming the suspension of: i) the last three Ordinary Shareholders' Meetings of Supercanal Holding S.A. and ii) the guarantees granted
by Supercanal S.A. on bank loans exclusively in favor of the group controlling Supercanal Holding S.A. (Grupo Uno S.A. and affiliated companies). In addition, a claim for dissolution and liquidation
of Supercanal Holding S.A. was brought
jointly with the action for removal of all the members of the Board of Directors and the Surveillance Committee, and the dissolution of Supercanal Capital N.V.

Supercanal
Holding S.A. and other companies of the Supercanal Group filed for bankruptcy proceedings with the National Court of First Instance on Commercial Matters No. 20,
Secretariat No. 40. and the procedures began on April 19, 2000.

As
a result of the revocation of the preliminary injunction mentioned above, on December 12, 2001 the Company was notified of the filing of a claim by Supercanal Holding S.A. for
damages caused by the granting of the preliminary injunction that was subsequently revoked. It has been claimed that the suspension of the effects of the meeting held on January 25, 2000
resulted in the cessation of payments to Supercanal Holding S.A.

The
Company answered the complaint and rejected the liability attributed to it based on the fact that the cessation of payment had taken place before the date of the meeting that was
suspended by the preliminary injunction, according to documentation provided by the plaintiff itself. Furthermore, the suspension of the meeting did not prevent capitalization of the Company through
other means. Based on the record of the case, the Company considers that the claim filed should be rejected in its entirety, and the legal costs should be borne by the plaintiff.

No
assurance can be provided that the Company will obtain an economic or financial gain as a result of these actions. Presently, as a result of the ancillary jurisdiction of the
bankruptcy proceedings of Supercanal Holding S.A., all the claims are brought in the abovementioned Court.

F-30

---



NOTE 10LONG-TERM INVESTMENTS

Investments carried under the equity method are as follows:

Direct percentage
participation in
voting stock

December 31,Company

%

2003

2002VER T.V. S.A. (1)

49.00

7,286,400

6,951,016Fintelco S.A.

50.00

(14,875,850
)
(19,465,318
)(7,589,450
)
(12,514,302
)


---

F-31

---



NOTE 11ANTITRUST CONSIDERATIONS

In September 1998, the Santa Fe branch of Asociación del Consumidor ("Consumer Association") filed with the Comisión Nacional
de Defensa de la Competencia (the "National Commission for the Defense of Competition" or "CNDC") a complaint against Multicanal and Cablevisión S.A. alleging the existence of
anticompetitive practices in the city of Santa Fe. The Company filed an answer to the complaint in which it requests the CNDC to dismiss the complaint on the grounds of lack of a factual basis and for
failure to state a cause of action under the relevant provisions of the Antitrust Law. The Company cannot assure that the final decision shall be favorable to Multicanal, or that no further actions
shall be brought against the Company and/or Cablevisión S.A.

On
January 13, 1999, the CNDC notified the Company that a complaint had been filed by the Santa Fe commerce department alleging the existence of anticompetitive practices by VCC
in the city of Rosario, Province of Santa Fe, prior to Multicanal's acquisition of this company. Although the Company has filed an answer to the complaint with the CNDC, the Company cannot give any
assurance that its arguments will prevail and the final decision will be favorable to it or that it will not be fined.

On
February 18, 1999, the CNDC issued a resolution initiating an investigative proceeding into an alleged agreement between the TV cable operating companies VCC, Multicanal and
Cablevisión S.A. and those providing Televisión Satelital Codificada S.A. and Tele Red Imagen S.A. channels consisting of fixing of minimum prices for the trading of
channels owning rights to the broadcasting of football tournaments organized by the "Asociación de Fútbol Argentino" in Federal Capital and Greater Buenos Aires. The
investigation spans from the year 1995 through the date of the resolution. The Commission penalized the companies with a fine, which in the case of Multicanal amounts to Ps. 352,859. The resolution
under which the fine was applied has been appealed by the Company on October 8, 2002. The Company can give no assurance that the final outcome will be favorable to it.

On
March 12, 1999, the owner of a cable television operating company in the city of Roldán, Province of Santa Fe, filed a complaint against Multicanal for alleged
anticompetitive practices in such city. Although the Company has filed an answer to the complaint with the CNDC, the Company cannot give any assurance that its arguments will prevail and the final
decision will be favorable to it or that it will not be fined.

In
December 2001, and November 2003, Gigacable SA., a cable TV operator operating in certain areas of the Provinces of Santa Fe and Corrientes, filed two complaints before
the CNDC accusing
Multicanal of (i) having divided areas in which the companies provide services with Cablevisión S.A., (ii) uncompetitive practices, and (iii) selling the
subscription for a price below Multicanal S.A.'s usual price. On December 6, 2001 and on November 26, 2003, respectively, the Company provided explanations in this regard and the CNDC
has not issued any decision so far. The Company cannot provide assurance that the dispute will be settled or whether it will be fined if no agreement is reached.

On
September 17, 2003 the Company was notified of a claim made by Gigacable S.A. alleging that Multicanal S.A. and Cablevisión S.A. (i) have made
presentations before various bodies (COMFER and the Municipality of Rosario), which hindered Gigacable S.A. from obtaining the administrative permits to operate in Rosario; (ii) engaged in
monopolistic conduct. Multicanal answered that claim on October 6, 2003.

The
Interior Trade and Consumer Defense Bureau of the Province of Entre Ríos filed a complaint against the CNDC for the presumed division of areas between Multicanal and
its competitors. On May 4, 1999, the Company filed a document providing explanations and requesting that the claim be rejected. No assurance can be provided that the final ruling will be in the
Company's favor.

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NOTE 12ARGENTINE ECONOMIC SITUATION AND ITS IMPACT ON THE COMPANY'S ECONOMIC AND FINANCIAL POSITION

At the end of 2001, the Argentine authorities implemented various monetary and exchange control measures which mainly included restrictions on the free
availability of bank deposits and on transfers of funds abroad, except for foreign trade and other authorized transactions which in some cases require the prior approval of the Argentine Central Bank
("BCRA").

Subsequently,
the Argentine Government declared default on its external debt and on January 6, 2002 the Government enacted Law 25,561 on public emergency and exchange system
reform that involved profound changes to the then prevailing economic model and amended the Convertibility Law that had been in force since March 1991. Under this Law 25,561, the Executive
Branch is empowered to enact other monetary, financial and exchange regulations which are conducive to overcoming the current economic crisis in the medium term.

Executive
Branch Decree No. 71/2002 and BCRA Communication "A" 3425 and its amendments established an official exchange market for exports, certain imports and financial
obligations, and a free exchange market on which the remaining transactions were to be carried out.

Subsequently,
various regulations were issued which introduced additional changes to the new norms. These included the unification of the exchange market into a single, free market, the
conversion to pesos of US dollar deposits with Argentine financial institutions at an exchange rate of Ps. 1.40 per US dollar as well as of obligations in Argentina denominated in US dollars or any
other foreign currency existing as of January 6, 2002, at the Ps. 1 = US$1 exchange rate and subsequent index-adjustment by applying the CER, based on the Retail Price Index (except for
certain operations), the conversion to pesos of public utility rates previously determined in US dollars and their case-by-case renegotiation, the requirement for prior
authorization of the BCRA to make certain transfers abroad for the servicing and principal and interest, the suspension of employee termination without a legal justification until March 31,
2004 and the suspension until December 10, 2004 of company dissolution due to reduction in capital stock and mandatory reduction of capital established by the Corporations Law.

The
impact generated by all these measures adopted to date by the Government on the financial situation of the Company at December 31, 2003 was calculated according to the
evaluations and estimates made by Management at the date of preparing these consolidated financial statements. Actual results could differ from the evaluations and estimates made at the date of
preparing these consolidated financial statements and these differences could be significant. Therefore, the Company's financial statements may not report all the adjustments that could result from
these adverse conditions. Furthermore, at this time it is not possible to foresee the future development of the country's economy or its consequences on the economic and financial situation of the
Company. Thus, any decision that must be made on the basis of these consolidated financial statements must take into account the effects of these measures and their future development and the
Company's financial statements must be considered in the light of these uncertain circumstances.

In
the year ended December 31, 2003, the Company recognized a shortfall in consolidated working capital amounting to Ps. 1,841,507,572. Continuing adverse market conditions and
their negative effect on the Company's cash flows, coupled with limited liquidity, are likely to limit the Company's ability to meet its obligations.

In
addition, the losses recorded by the Company exceed 50% of its capital and 100% of its reserves as of December 31, 2003. Although section 206 of the Commercial Companies
Law establishes a mandatory capital reduction in such situations, by means of Decree 1293/03, the National Executive suspended enforcement of this regulation until December 10, 2004.

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These
consolidated financial statements have been prepared assuming that the Company will continue as a going concern. Therefore, these financial statements do not include any
adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to
continue as a going concern. The Company's continuation as a going concern is dependent upon its ability to generate sufficient cash
flows to meet its obligations on a timely basis, to obtain additional financing as may be required, and ultimately to attain profitable operations and positive cash flows.

NOTE 13NOTIFICATION OF PETITIONS FOR BANKRUPTCY FILED AGAINST THE COMPANY

The Company has been served with process on 34 petitions for bankruptcy against it as a result of the Company's deferral of payments of principal and interest on
its negotiable obligations. The Company filed its response in all cases, and deposited in escrow, the amount claimed in pesos at the rate of exchange of US$ 1 = Ps. 1 plus CER plus 8% per annum
for interest and 5% to cover possible expenses relating to lawsuits. The judge considered it sufficient at this time in order to disregard the credit invoked as "revealing factor" of suspension of
payment of debts, the deposit made by the Company, dismissing 33 petitions for declaration of bankruptcy, the Court of Appeals having ratified the lower court decisions in those cases where plaintiffs
have appealed such decisions.

The
latest petition for bankruptcy filed in the Republic of Argentina after the meeting of holders of negotiable obligations held on December 10, 2003 has been suspended under a
resolution issued by the Argentine Court on February 4, 2004.

The
Company argued in its response to the bankruptcy petitions that its foreign currency obligations had been converted to pesos as established by Section 1 of Decree
No. 214/02, because the provisions of Section 1, subsection e) of Decree No. 410/02 (establishing that "the obligations of the public and private sectors denominated in
foreign currency, compliance with which is subject to foreign laws, are not subject to the conversion to pesos") do not apply in this case.

In
the offer to restructure its financial debt (see Note 7) the Company calculated Existing Debt to be restructured in US dollars, to reflect more clearly the reduction of the
debt and the exchange ratio for the new securities that would be issued if its restructuring transactions are consummated. The fact that the Company has denominated its debt in US dollars does not
mean that the Company has waived its right to assert that those obligations should be considered to have been converted to pesos. The Company's reason for denominating such debt in U.S. dollars is
only to conclude the negotiation stage of the reorganization plan in a quick and effective manner in order to obtain creditors' acceptance of the proposal without having to waive any valid rights.
This approach, which does not address the definition of the scope of the Decree on Conversion to Pesos referred to above, has been the most appropriate one to overcome financial difficulties for the
benefit of the Company, its creditors and the public in general, but should not be construed as a waiver by the Company of its right to sustain that its debt is subject to pesification norms.

In
view of this, in the submission filed to request approval of the reorganization plan from the court, the Company reserved its right to file a motion for the pesification of all
financial debts incurred in the
issuance of outstanding negotiable obligations if the out-of-court reorganization plan were not to be approved and insolvency proceedings were to be filed against it.

On
January 28, 2004, affiliates of the U.S.-based investment group known as W.R. Huff and a certain Willard Alexander (together, the "Involuntary Petitioners"), claiming to be
holders of debt securities issued by Multicanal sought to initiate a proceeding under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Southern District of
New York (the "U.S. Bankruptcy Court").

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On
January 30, 2004, at the request of the Board of Directors of Multicanal under a proceeding brought on January 16, 2004 pursuant to article 304 of the U.S.
Bankruptcy Code, in order to counteract legal actions initiated by Huff before the courts of the State of New York in December 2003, the U.S. Bankruptcy Court entered an order allowing
(a) Multicanal to take all actions to participate in, conduct, or take any action in furtherance of, Multicanal's APE under the jurisdiction of the National Court of First Instance in
Commercial Matters No 4, Clerk's Office No 8 (the "APE Proceedings") to the fullest extent permitted under Argentine law, (b) any creditor, equity holder, party in
interest or any other person, entity, court or governmental unit (including, without limitation, the Involuntary Petitioners) to take all actions to participate in, conduct, or take any action in
furtherance of, Multicanal's APE and its APE Proceedings to the fullest extent permitted under Argentine law, and (c) any creditor, equity holder, party in interest or any other person, entity,
court or governmental unit (including, without limitation, the Involuntary Petitioners) to take all actions in the Argentine court presiding over the APE Proceedings (and any right to appeal any
decision of such Argentine court) to oppose Multicanal's APE or its APE Proceedings to the fullest extent permitted under Argentine law.

The
order of the U.S. Bankruptcy Court ensures that the filing by the Involuntary Petitioners does not interfere with participation by creditors of Multicanal or any other person in the
APE Proceedings. This order makes clear that any person's or party's participation in the APE or the APE Proceedings in Argentina is not prohibited or limited by application of automatic stay
provisions of the United States Bankruptcy Code.

On
December 30, 2003, the Company proceeded to publish the notices laid down by Section 74 of the Law on Insolvency and Bankruptcy Proceedings, the time limit for creditors to
file opposition having therefore expired on February 13, 2004. At the date of these financial statements, the Company has answered the opposition filed by creditors and the records of the case
have been submitted to the consideration of the court.

If
the restructuring process undertaken by the Company is unsuccessful it will likely have to file voluntary insolvency proceedings.

NOTE 14SUBSEQUENT EVENTS

a)Restructuring process

On
April 14, 2004 the Company was notified of the contents of the court ruling issued in the case captioned "Multicanal S.A. s/Acuerdo Preventivo Extrajudicial" under the
jurisdiction of the National Court of First Instance on Commercial Matters No. 4, Clerk's Office No. 8, rejecting the claims filed and confirming the APE filed by the Company.

Furthermore,
persons present at the meeting held on December 10, 2003 under the provisions of Section 45 bis of the Argentine Insolvency Law, who voted against or abstained
from voting, as well as those who were absent, within 30 days from the last publication of legal notices (to be carried out for the term and in the locations noted for publication of the notice
convening the meeting held under Section 45 bis of the Argentine Insolvency Law) were given the right to exercise the right granted to the rest of the creditors to elect among the three options
presented, under the same conditions as those who had already made such election directly with the debtor; provided that in the case of silence such creditor's holdings shall be allocated to the
Available Options (as such term is defined in the APE).

Three
of the claimants initially appealed the court ruling approving the APE. However, only two of the appellants submitted additional supporting documentation required under Argentine
law to permit consideration of their appeals. The Company cannot ensure that the ruling approving the APE will be confirmed by the Court of Appeals.

F-35

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b)Shareholders' Extraordinary Meeting

On
May 7, 2004 a Shareholders' Extraordinary Meeting was held to adopt certain decisions contemplated in and required by the terms of the APE approved on April 14, 2004 by
the Commercial Court No. 4, Clerk's Office No. 8 of the Federal Capital. Subject to the court confirmation of the Company's APE becoming final, the Shareholders' Extraordinary Meeting
approved the increase in capital stock to reflect the contribution of US$ 15,000,000 to be made by the controlling shareholder Grupo Clarín S.A., under the terms of the trust agreement
entered into with JPMorgan Chase Bank and the capitalization of the financial debt resulting from the APE, as well as the overall amendment of the by-laws and admission of the Company to
the public offering and share quotation
regime. All these decisions were unanimously approved, conditioned on the obtaining of confirmation of judgment approving the APE by the Commercial Court. The Shareholders' Extraordinary Meeting
delegated to the Board of Directors the determination of the date for filing the application for admission to the public offering and share quotation regime.

NOTE 15SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN ACCOUNTING PRINCIPLES ADOPTED BY THE COMPANY AND ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN THEUNITED STATES OF
AMERICA

The consolidated financial statements have been prepared in accordance with Argentine GAAP, which differ in certain significant respects from US GAAP. The
significant differences at December 31, 2003 and 2002 and for the three years in the period ended December 31, 2003 are reflected in the reconciliations provided in Note 16 and
principally relate to the items discussed in the following paragraphs:

(a)    Restatement of Argentine GAAP figures and its effects on the US GAAP reconciliation

As more fully described in Note 2.2, effective January 1, 2003 the Company adopted new accounting standards related to valuation and disclosure
criteria. As required by Argentine GAAP, the Company has restated its prior year financial statements to give retroactive effect to the recently adopted accounting standards, except for certain
valuation and disclosure criteria that in accordance with the transition provisions have been applied for prospectively.

As
a result, the US GAAP reconciliation footnote has also been restated to reflect the above-mentioned changes in accounting standards. However, this restatement did not affect the
originally reported US GAAP amounts of consolidated net loss for the years ended December 31, 2002 and 2001 and of consolidated shareholders' deficit as of December 31, 2002.

(b)    Restatement of financial statements for general price-level changes

As indicated in Note 2.3., on March 25, 2003, the National Executive Branch issued a decree establishing that the financial statements for periods
ending as from that date should be stated in nominal currency. In April 2003, the CNV issued a resolution discontinuing inflation accounting as of March 1, 2003. As a result, the
Company's consolidated financial statements include the effects of inflation until February 28, 2003. Comparative figures were also restated until that date. Since Argentine GAAP required
companies to prepare price-level restated financial statements through September 30, 2003, the application of the CNV resolution represents a departure from Argentine GAAP.

The
US GAAP reconciliation does not reverse the effects of the general price-level restatement included in the Argentine GAAP financial statements because the application of that
Resolution represents a comprehensive measure of the effects of price level changes in the Argentine economy.

F-36

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(c)    Foreign currency translation adjustment

Under Argentine GAAP, as from January 1, 2003, the financial statements of the foreign subsidiaries that are considered foreign entities, were translated
into pesos at the rates of exchange prevailing at the end of the year. The exchange differences generated by that translation were charged to "Temporary translation differences" between liabilities
and shareholders' equity. Until December 31, 2002, financial statements, which were prepared in currencies other than the Argentine peso, had been translated into that currency in accordance
with Technical Pronouncement No. 13 of the FACPCE, translation differences were reported in the Company's result of operations.

Under
US GAAP, financial statements of foreign subsidiaries have been translated into Argentine pesos following the guidelines established in SFAS 52 "Foreign Currency Translation".
Assets and liabilities of these foreign subsidiaries are translated at the exchange rates in effect at period-end, and the statement of income is translated at the average exchange rates
during the period. Exchange rate fluctuations on translating foreign currency financial statements into pesos that result in unrealized gains or losses are referred to as foreign currency translation
adjustments. Under US GAAP, cumulative translation adjustments are recorded as a separate component of shareholders' equity. Accordingly, the reconciling difference for this item is presented in the
quantitative reconciliation in Note 16.

(d)    Goodwill

Under Argentine GAAP and US GAAP the Company applied the purchase method of accounting to the Company's acquisition transactions. Accordingly, the fair market
value of the assets and liabilities of the acquired companies were estimated and the excess of the purchase price over the fair value of the assets acquired and liabilities assumed is considered
goodwill. The US GAAP adjustment reflects the application of certain US GAAP adjustments when estimating the fair value of such assets and liabilities.

The
Company adopted SFAS No. 142 "Goodwill and Other Intangible Assets" in the year ended December 31, 2002. SFAS No. 142 states that goodwill is not amortized but
rather is tested at least annually for possible impairment. Under Argentine GAAP, until December 31, 2002, amortization was computed over twenty years as from the month of origin. As from
January 1, 2003, the Company adopted the criterion of discontinuing amortization.

(e)    Impairment of long-lived assets

Management reviews long-lived assets, primarily property and equipment to be held and used in the business, long-term investments and
goodwill for the purposes of determining and measuring impairment. The Company recognized during the year ended December 31, 2002 and 2001 an impairment of Ps. 315,044,680 and Ps 328,492,945,
respectively. Under US GAAP, SFAS No. 121 "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of" required a company to review
assets for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Assets were grouped and evaluated for possible impairment at the
level of cable television systems by region. As a result of a different basis of goodwill determined on acquisition; as described in Note 15 (d), the impairment recognized under Argentine GAAP
for the year ended December 31, 2001 differed from the one recognized under US GAAP. Accordingly, the reconciling difference for this item is presented in the quantitative reconciliation in
Note 16.

As
a result of the adoption of SFAS No. 142, the Company tested goodwill for impairment. The steps taken are fully explained in Note 17 (i) and the reconciling
difference for this item is presented in the quantitative reconciliation in Note 16. The impairment losses at the beginning of the year ended

F-37

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December 31,
2002 are presented as a cumulative effect of a change in an accounting principle in the quantitative reconciliation in Note 16.

(f)    Organizational and preoperating costs

Under Argentine GAAP, organizational and preoperating costs may be deferred and amortized over the estimated period of benefit. Under US GAAP, such costs are
generally charged to operations. Accordingly, the reconciling difference for this item is presented in the quantitative reconciliation in Note 16.

(g)    Non-interest bearing debt instruments

Under Argentine GAAP non-interest bearing debt instruments were not generally presented with an imputed rate of interest in order to recognize the
economic substance of the underlying transaction. Under US GAAP, APB No. 21 "Interest on Receivables and Payables", such adjustment would be required.

APB
No. 21 requires the imputation of a reasonable, market-based rate of interest for non-interest bearing debt instruments over the maturity period of the note.
Additionally, the carrying value of the debt instrument is reported net of any resulting discount or premium. As reflected in the US GAAP reconciliation, certain non-interest bearing debt
instruments for acquisition debt were discounted at 10%, which approximated the Company's weighted average annual interest rate. Accordingly, the reconciling difference for this item is presented in
the quantitative reconciliation in Note 16 under the item Discounting of non-interest bearing acquisition related debt.

(h)    Income taxes

As discussed in Note 2.2, the Company adopted new accounting standards effective January 1, 2003. Pursuant to this adoption, deferred tax assets and
liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets are also recognized for tax loss carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recorded or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes
the enactment date.

Under
Argentine GAAP, the Company has treated the differences between the price-level restated amounts of assets and liabilities and their historical basis as permanent differences for
deferred income tax calculation purposes in accordance with Resolution MD No.11/2003 issued by the CPCECABA. Under US GAAP, the Company applies EITF 93-9, "Application of FASB Statement
No.109 in Foreign Financial Statements Restated for General Price-Level Changes", which requires such differences to be treated as temporary differences in calculating deferred income taxes. In
addition, the adjustment includes the effect on deferred income taxes of the foregoing reconciling items, as appropriate.

Under
Argentine GAAP, the realization of deferred income tax assets depends on the generation of future taxable income when temporary differences would be deductible. Accordingly, the
Company has considered the reversal of the deferred income tax liabilities, tax planning and taxable income projections based on its best estimates. Based on these projections, Multicanal has recorded
as of December 31, 2003 a valuation allowance against the deferred taxes assets considered non recoverable. Also, as indicated in Note 2.6.(l)., the Company is subject to minimum
notional income tax. Under Argentine GAAP, the Company considered the ultimate realization of the credit relating to the minimum notional income tax to be more likely than not based on current
projections and its legal expiration period of 10 years. As such, the Company deferred this amount as other non-current receivables in the balance sheet.

F-38

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Under
US GAAP, Statement of Financial Accounting Standards No. 109 ("SFAS 109"), "Accounting for Income Taxes" states more specific and strict rules to determine a
valuation allowance for tax credits. Under this pronouncement, an enterprise must use judgment in considering the relative impact of negative and positive evidence to determine if a valuation
allowance is needed or not. For example, negative evidence includes: a) losses expected in early future years by a presently profitable entity; b) unsettled circumstances that, if
unfavorably resolved, would adversely affect future operations and profit levels on a continuing basis in future years; and c) a carryforward that is so brief that it would limit realization of
tax benefits if significant deductible temporary difference is expected to reverse in a single year.

Considering
the magnitude of the negative effect of the devaluation of the Argentine peso on the Company's financial position and results of operations, as well as the uncertainty
generated by the local economic situation regarding the realization of the deferred tax credits in a brief period, under US GAAP the Company decided to set up a valuation allowance against 100% of
Multicanal's tax loss carryforwards and tax credits related to minimum notional income tax and of certain of its other deferred tax assets.

(i)    Severance indemnities

As described in Note 2.6. (r), the Company expenses severance indemnities when paid or when they should have an impact on the results for the year because
they represent a certain and quantified risk. Under Argentine law, the Company is required to pay a minimum severance indemnity based on years of service and age when an employee is dismissed without
adequate justification. Under US GAAP, before the issuance of SFAS 146 "Accounting for Costs Associated with Exist or Disposal Activities", the Company applied the guidance of Emerging Issues
Task Force Issue No. 94-3, "Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit and Activity" ("EITF 94-3"). As such, during fiscal
year 2001 the Company reversed the severance provision recognized under Argentine GAAP as certain criteria specified by EITF 94-3 were not met.

(j)    Equity in earnings (losses) of affiliated companies and investments in companies carried under equity method

For purposes of this reconciliation, the Company has assessed the impact of US GAAP adjustments on the Argentine GAAP financial statements of its equity
investees. The significant differences that give rise to US GAAP adjustments on equity investees are as follows: (i) the application of SFAS No 109 "Deferred Income Taxes", (ii) the
effects on depreciation of different bases for determination of the underlying net asset acquired, and (iii) foreign exchange differences (see Note 15 (l)).

(k)    Interest capitalization

Before the adoption of the new technical pronouncements (Note 2.2), Argentine GAAP allowed, but did not require, companies to capitalize interest on
self-constructed assets. The Company did not capitalize interest on projects under construction of a short-term nature. Under US GAAP, the Company would be required to
capitalize interest on the qualifying self-constructed assets. Accordingly, the reconciling difference for this item is presented in the quantitative reconciliation in Note 16.

(l)    Foreign exchange differences

The Argentine Government declared exchange holidays all working days between December 21, 2001 and December 31, 2001. On January 11, 2002,
when the exchange market first opened, the exchange rate was Ps. 1 to US$ 1.4 (buying rate) and Ps. 1 to US$ 1.6 (selling rate). Under Argentine GAAP, the Company accounted for its foreign currency
assets and liabilities at an exchange rate of Ps.

F-39

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1
to US$ 1. Under US GAAP, the Company applied the guidance set forth in the EITF D-12 "Foreign Currency TranslationSelection of the Exchange Rate When Trading is Temporarily
Suspended", that states that when exchangeability between two currencies is temporarily lacking at the balance sheet date, the first subsequent rate at which exchange could be made shall be used.
Accordingly, the reconciling difference for this item is presented in the quantitative reconciliation in Note 16.

(m)    Transfer of financial assets

As explained in Note 9 (a) (ii) the Company transferred all of its interests in DirecTV Latin America, LLC and certain contractual rights related
thereto to Raven Media Investments, LLC. Under Argentine GAAP a transfer of financial assets is recognized as a sale to the extent that contractual terms result in the passage of title.

Under
US GAAP, the existence of an agreement that constrains the transferee right to exchange the transferred asset or gives the transferor the ability to unilaterally cause the holder
to return specific assets, preclude a transfer subject to such a condition from being accounted for as a sale. This agreement expired on November 10, 2003. Accordingly, the reconciling
difference for this item is presented in the quantitative reconciliation in Note 16.

(n)    Specific pronouncement for cable television companies

Under Argentine GAAP, there are no specific pronouncements related to cable television companies. Hookup revenues are recognized at the time of connection.

Under
US GAAP, SFAS No. 51 "Financial Reporting by Cable Television Companies" establishes that:



(o)    Allowance for doubtful accounts

Under Argentine GAAP, the allowance is charged against revenues whereas under US GAAP the charge would be presented as an operating cost. As this difference has
no effect on net income/(loss) or on shareholders' deficit, no reconciling adjustment is presented in the US GAAP reconciliation.

F-40

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(p)    Advances to suppliers

Under Argentine GAAP, funds advanced to suppliers are capitalized and included under Property and equipment prior to purchase and specifically identified as
property or equipment items. Under US GAAP, these funds are accounted for as a deposit until the actual property or equipment procured by such funds has been purchased. Accordingly, such funds are
generally classified as "Other assets."

However,
due to the nature of such funds and their relative immateriality to the consolidated financial statements taken as a whole (Note 4), the quantitative difference between
Argentine and US GAAP would be a reclassification from property and equipment to other assets and, accordingly, it does not affect the reconciliation of net loss and shareholders' equity in
Note 16.

(q)    Other income and expenses

Under Argentine GAAP certain expenses are included in Other non-operating income (expenses), net (see Note 3 (k)). Under US GAAP, these items
are classified as operating expenses.

However,
the quantitative difference between Argentine and US GAAP would be a reclassification from "Other non-operating income (expenses), net" to "Direct operating
expenses", "General and administrative expenses", "Selling and marketing expenses" or "Other operating expenses", as appropriate, and, accordingly, it does not affect the reconciliation of net loss
and shareholders' deficit summarized in Note 16.

F-41

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NOTE 16RECONCILIATION OF NET GAIN (LOSS) AND SHAREHOLDERS' (DEFICIT) EQUITY TO US GAAP

The following is a summary of the significant adjustments to net gain (loss) for the three years in the period ended December 31, 2003 and shareholders'
(deficit) equity for the years ended December 31, 2003 and 2002, which would be required if the financial statements had been prepared in accordance with US GAAP instead of Argentine GAAP.

|                                                                    |                                                                            | Years ended December 31, |            
|------------------------------------------------------------------- | -------------------------------------------------------------------------- | ------------------------ | -----------
|
|Net gain (loss) in accordance with Argentine GAAP                   |                                                                            | 61,551,447               |            
|US GAAP adjustmentsincome (expense)                                |                                                                            |                          |            
|                                                                    | Amortization of organizational and preoperating costs (Note 15 (f))        |                          | 1,883,284  
|                                                                    | Deferred income taxes, net of allowance (Note 15 (h))                      |                          | 10,456,130 
|                                                                    | Amortization of goodwill (Note 15 (d))                                     |                          |           
|                                                                    | Depreciation of property and equipment (Note 15 (d))                       |                          | (8,122,418 
|                                                                    | Discounting of non-interest bearing acquisition related debt (Note 15 (g)) |                          |           
|                                                                    | Equity in the earnings (losses) of affiliated companies (Note 15 (j))      |                          | 2,963,749  
|                                                                    | Interest capitalization (Note 15 (k))                                      |                          | (597,491   
|                                                                    | Severance indemnities (Note 15 (i))                                        |                          |           
|                                                                    | Foreign currency translation adjustment (Note 15 (c))                      |                          | 455,703    
|                                                                    | Foreign exchange differences (Note 15 (l))                                 |                          |           
|                                                                    | Transfer of financial assets (Note 15 (m))                                 |                          | 324,778,329
|                                                                    | Impairment adjustment (Note 15 (e))                                        |                          |           
|                                                                    | Hook up revenues (Note 15 (n))                                             |                          | (1,661,342 
|                                                                    | Minority interest in above reconciling items                               |                          | (5,564,088 
|                                                                    |                                                                            |                          |            
|Gain / (loss) before cumulative effect of accounting change         |                                                                            | 386,143,303              |            
|Cumulative effect of accounting change                              |                                                                            |                         |            
|                                                                    |                                                                            |                          |            
|Net gain (loss) in accordance with US GAAP                          |                                                                            | 386,143,303              |            
|                                                                    |                                                                            |                          |            
|Gain (loss) per share before cumulative effect of accounting change |                                                                            | 1.04                     |            
|Loss per share on cumulative effect of accounting change            |                                                                            |                         |            
|Net gain (loss) per share in accordance with US GAAP                |                                                                            | 1.04                     |            
|Weighted average number of shares                                   |                                                                            | 371,635,103              |            

F-42

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|                                                       |                                                                              | At December 31, |             
|------------------------------------------------------ | ---------------------------------------------------------------------------- | --------------- | ------------
|
|Shareholders' equity in accordance with Argentine GAAP |                                                                              | 182,656,042     |             
|US GAAP adjustmentsincrease (decrease)                |                                                                              |                 |             
|                                                       | Organizational and preoperating costsOriginal value (Note 15 (f))           |                 | (9,259,476  
|                                                       | Organizational and preoperating costsAccumulated amortization (Note 15 (f)) |                 | 3,766,568   
|                                                       | Goodwill, net (Note 15 (d))                                                  |                 | 101,180,181 
|                                                       | Hook up revenues (Note 15 (n))                                               |                 | (1,661,342  
|                                                       | Depreciation of property and equipment (Note 15(d))                          |                 | (74,990,811 
|                                                       | Deferred income taxes (Note 15 (h))                                          |                 | (366,571,906
|                                                       | Foreign currency translation adjustment (Note 15 (c))                        |                 | 3,330,360   
|                                                       | Investments in companies carried under equity method (Note 15 (j))           |                 | (1,422,868  
|                                                       | Interest capitalizationOriginal value (Note 15 (k))                         |                 | 5,974,908   
|                                                       | Interest capitalizationAccumulated depreciation (Note 15 (k))               |                 | (1,261,953  
|                                                       | Transfer of financial assets (Note 15 (m))                                   |                 |            
|                                                       | Impairment adjustment (Note 15 (e))                                          |                 | (99,196,589 
|                                                       | Minority interest in above reconciling items                                 |                 | 5,589,024   
|                                                       |                                                                              |                 |             
|Shareholders' deficit in accordance with US GAAP       |                                                                              | (251,867,862    | )           
|                                                       |                                                                              |                 |             

Changes
in Shareholders' deficit under US GAAP are as follows:

|                                                                              |  | Years ended December 31, |  
|----------------------------------------------------------------------------- |  | ------------------------ | -
|
|Shareholders' deficit at the beginning of the year in accordance with US GAAP |  | (640,885,821             | )
|Foreign currency translation adjustment (Note 17 (g))                         |  | 2,874,656                |  
|Net gain (loss) for the year in accordance with US GAAP                       |  | 386,143,303              |  
|                                                                              |  |                          |  
|Shareholders' deficit at the end of the year in accordance with US GAAP       |  | (251,867,862             | )
|                                                                              |  |                          |  

F-43

---



NOTE 17OTHER SIGNIFICANT US GAAP DISCLOSURE REQUIREMENTS

(a)    Income taxes

The Company's deferred income taxes under US GAAP are comprised as follows:

|                                      |                                                                       | Years ended December 31, |             
|------------------------------------- | --------------------------------------------------------------------- | ------------------------ | ------------
|
|Deferred tax assets                   |                                                                       |                          |             
|                                      | Tax loss carryforwards                                                |                          | 390,978,026 
|                                      | Allowance for doubtful accounts and others                            |                          | 7,403,788   
|                                      | Provision for lawsuits and others                                     |                          | 6,598,894   
|                                      | Provision for obsolescence of materials                               |                          | 3,862,204   
|                                      | Deferred tax loss                                                     |                          | 54,358,801  
|                                      | Transfer of financial assets                                          |                          |            
|                                      | Other temporary differences                                           |                          | 1,705,496   
|                                      | Less: Valuation allowance                                             |                          | (392,704,753
|                                      |                                                                       |                          |             
|                                      |                                                                       | 72,202,456               |             
|                                      |                                                                       |                          |             
|Deferred tax liabilities              |                                                                       |                          |             
|                                      | Difference between tax and accounting basis of property and equipment |                          | (77,845,018 
|                                      | Prepaid expenses                                                      |                          | (9,087,146  
|                                      |                                                                       |                          |             
|                                      |                                                                       | (86,932,164              | )           
|                                      |                                                                       |                          |             
|Net deferred tax assets (liabilities) |                                                                       | (14,729,708              | )           
|                                      |                                                                       |                          |             

Of
the outstanding balance at December 31, 2003 and 2002, Ps. 7,403,788 and Ps. 11,990,400, respectively are current.

The
tax loss carryforwards at December 31, 2003 expire as follows:

Expiry date

Ps.2004

261,0942005

62,401,2982006

1,093,4662007

1,052,877,1702008

447,046Total

1,117,080,074


Valuation
allowances are provided against future deferred tax benefits to the extent their realization is unlikely.

The
changes in the carrying amount of the valuation allowance for the year ended December 31, 2003, are as follows:

Ps.Balance as of January 1, 2003

(596,463,831
)Decrease

203,759,078Balance as of December 31, 2003

(392,704,753
)


F-44

---



The
provision for income taxes computed in accordance with US GAAP differs from that computed at the statutory tax rate, as follows:

| |                                                                                      | Years ended December 31, |             
| | ------------------------------------------------------------------------------------ | ------------------------ | ------------
|
| | Income tax benefit at statutory tax rate on pretax income in accordance with US GAAP |                          | 128,666,287 
| | Permanent differences                                                                |                          |             
| | (Decrease) / increase in valuation allowance                                         |                          | (203,759,078
| | Result on disolution/sale of investees                                               |                          | 54,592,655  
| | Amortization of goodwill and intangible assets                                       |                          |            
| | Impairment adjustment                                                                |                          |            
| | Effect of inflation adjustment                                                       |                          | (1,841,678  
| | Other                                                                                |                          | 3,816,474   
| |                                                                                      |                          |             
| | Income tax (benefit) expense in accordance with US GAAP                              |                          | (18,525,340 
| | Tax on minimum notional income                                                       |                          |            
| |                                                                                      |                          |             
| | Income taxes and/or tax on minimum notional income in accordance with US GAAP        |                          | (18,525,340 
| |                                                                                      |                          |             

The
company income tax charges are comprised as follows:

| | Current tax  |  | 6,112,900   |   | 4,968,474  |  | 11,411,992 |  
| | ------------ |  | ----------- | - | ---------- |  | ---------- | -
| | Deferred tax |  | (24,638,240 | ) | 46,899,892 |  | (358,717   | )
| |              |  |             |   |            |  |           
| | Total        |  | (18,525,340 | ) | 51,868,366 |  | 11,053,275 |  
| |              |  |             |   |            |  |           

(b)    Fair value of financial instruments

The estimated fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties,
other than in a forced or liquidation sale. The following methods and assumptions were used to estimate the fair value of each class of financial instrument for which it is practicable to estimate
that value:



F-45

---





The
estimated fair values of financial instruments are as follows:

|                      |                                          | Years ended December 31,
|--------------------- | ---------------------------------------- | ------------------------
|
|
|Financial assets      |                                          |                         
|                      | Cash and banks                           |                         
|                      | Short-term investments                   |                         
|                      | Trade receivables                        |                         
|                      | Receivables from related parties         |                         
|                      | Other                                    |                         
|Financial liabilities |                                          |                         
|                      | Accounts payable and accrued liabilities |                         
|                      | Bank and financial debt                  |                         
|                      | Acquisition related debt                 |                         
|                      | Taxes payable                            |                         
|                      | Debt with related parties                |                         
|                      | Payroll and social security              |                         
|                      | Other                                    |                         

(c)    Financial instruments with off-balance sheet risk and concentrations of credit risk

The Company has not used financial instruments to hedge its exposure to fluctuations in foreign currency exchange or interest rates and, accordingly, has not
entered into transactions that create off-balance sheet risks associated with such financial instruments.

Accounts
receivable substantially comprise balances with a large number of subscribers. Management does not believe significant concentrations of credit risk exist.

(d)    Supplementary information on the statement of cash flows

|                                                                           |                                                      | Years ended December 31,
|-------------------------------------------------------------------------- | ---------------------------------------------------- | ------------------------
|
|Cash and cash equivalents include:                                         |                                                      |                         
|                                                                           | Cash                                                 |                         
|                                                                           | Short-term investments (original maturity < 90 days) |                         
|                                                                           |                                                      |                         
|                                                                           |                                                      | 187,926,696             
|                                                                           |                                                      |                         
|Non-cash investing and financing activities                                |                                                      |                         
|Common stock issued as a result of the merger with Plataforma Digital S.A. |                                                      |                        
|                                                                           |                                                      |                         

Under
Argentine GAAP the effect of inflation and of exchange rate changes on cash and cash equivalents was not disclosed by presenting additional cash flow statement categories as
required by US GAAP. The following table presents the cash flows from operating, investing and financing activities and the effects of inflation accounting and of exchange rate changes on cash and
cash equivalents that

F-46

---



would
be reported in the statement of cashflows, which contemplate classification differences under US GAAP.

|                                                     |  | Years ended December 31, |  
|---------------------------------------------------- |  | ------------------------ | -
|
|Net cash provided by operating activities            |  | 117,300,554              |  
|Net cash (used in) by investment activities          |  | (24,914,911              | )
|Net cash used in financing activities                |  | (3,441,330               | )
|Effect of inflation accounting                       |  | (792,806                 | )
|Effect of exchange rate changes                      |  | (7,248,783               | )
|                                                     |  |                          |  
|Net increase (decrease) in cash and cash equivalents |  | 80,902,724               |  
|                                                     |  |                          |  

(e)    Aging of long-term bank and financial debt and non-current acquisition related debt under US GAAP

|                                     |  | Maturity in the
year 2005 |  | Total  
|------------------------------------ |  | ------------------------- |  | -------
|Long-term bank and financial debt    |  | 239,753                   |  | 239,753
|Non-current acquisition related debt |  | 100,633                   |  | 100,633
|                                     |  |                           |  |        
|                                     |  | 340,386                   |  | 340,386
|                                     |  |                           |  |        

(f)    Interest expense

|                                                             |  | Years ended December 31, | 
|------------------------------------------------------------ |  | ------------------------ | 
|
|Total interest expense under Argentine GAAP                  |  | 195,576,259              | 
|Interest capitalization                                      |  |                         | 
|Discounting of non-interest bearing Acquisition related debt |  |                         | 
|                                                             |  |                          | 
|Total interest expense under US GAAP                         |  | 195,576,259              | 
|                                                             |  |                          | 

(g)    Statement of consolidated comprehensive loss

The Company has adopted SFAS No. 130, "Reporting Comprehensive Income", which requires that an enterprise (i) classify items of other comprehensive
income (loss) by their nature in a financial statement and (ii) display the accumulated balance of other comprehensive income (loss) separately from retained earnings and additional
paid-in capital in the equity section of a statement of financial position.

|                                           |                                          | Years ended December 31, |          
|------------------------------------------ | ---------------------------------------- | ------------------------ | ---------
|
|Net gain (loss) in accordance with US GAAP |                                          | 386,143,303              |          
|                                           |                                          |                          |          
|Other comprehensive income (loss):         |                                          |                          |          
|                                           | Foreign currency translation adjustments |                          | 2,874,656
|                                           |                                          |                          |          
|Total other comprehensive income (loss)    |                                          | 2,874,656                |          
|                                           |                                          |                          |          
|Comprehensive income (loss)                |                                          | 389,017,959              |          
|                                           |                                          |                          |          

F-47

---



The
accumulated balances related to each component of other comprehensive income were as follows:

|                                     |                                          | December 31, |          
|------------------------------------ | ---------------------------------------- | ------------ | ---------
|
|Balance at the beginning of the year |                                          | 7,404,988    |          
|                                     |                                          |              |          
|Other comprehensive income:          |                                          |              |          
|                                     | Foreign currency translation adjustments |              | 2,874,657
|                                     |                                          |              |          
|Total other comprehensive income     |                                          | 2,874,657    |          
|                                     |                                          |              |          
|Balance at the end of the year       |                                          | 10,279,645   |          
|                                     |                                          |              |          

F-48

---



(h)    Transactions with related parties

In the ordinary course of business, the Company purchases programming from related parties, the amounts invoiced by such related parties to the Company for
programming were approximately Ps.70.2 million, Ps.70.4 million and Ps.111.2 million for the years ended December 31, 2003, 2002 and 2001, respectively. In addition, also
in the ordinary course of business, the Company places advertising in media owned by related parties, including newspapers and radio stations. Related parties also purchase advertising time from the
Company, and the parties occasionally exchange advertising space and air time. In the years ended December 31, 2003, 2002 and 2001, the aggregate amounts invoiced by Multicanal to related
parties for advertising were approximately Ps. 1.6 million, Ps. 2.2 million and Ps. 5.5 million, respectively, and the aggregate amounts invoiced by related parties to the Company
for advertising were approximately Ps. 5.2 million, Ps. 3.3 million and Ps. 1.3 million for the years ended December 31, 2003, 2002 and 2001, respectively. Multicanal's monthly
subscriber magazine is also published by a related party. Amounts invoiced to the Company by such related party were approximately Ps. 5.2 million, Ps. 12.4 million and Ps. 15.8 million
for the years ended December 31, 2003, 2002 and 2001, respectively. In the years ended December 31, 2003 and 2002, the aggregate amounts invoiced by Multicanal to such related parties
for new business were approximately Ps. 0.9 million and Ps. 0.8. In the years ended December 31, 2003 and 2002, a related party invoiced Multicanal a total amount of Ps.
3.6 million and Ps. 5.4 millon, respectively for treasury, accounting and logistic services. Related parties balances at December 31, 2003 and 2002 were as follows: accounts receivable
of Ps. 3.7 million and Ps. 4.8 million at December 31, 2003 and 2002, respectively, and accounts payable of Ps. 28 million and Ps. 18.8 million at
December 31, 2003 and 2002, respectively. In addition, in 2001, Multicanal bought property owned by its shareholder for a total of Ps. 1.1 million.

Additionally,
in the year ended December 31, 2001, the Company transferred all of its interests in DirecTV Latin America, LLC and certain contractual rights related thereto to
Raven Media Investments, LLC, a company organized under the laws of the state of Delaware and wholly-owned by Grupo Clarín S.A., for US$ 150,000,000, recording a gain of Ps.
324,763,538.

At
December 31, 2001, the Company has a balance of Ps. 3.4 million payable on a loan from Grupo Clarín S.A., which has generated an interest charge of Ps.
0.2 million.

(i)    Adoption of SFAS 142

In June 2001, the FASB issued Statement of Financial Accounting Standards No. 142. This statement changes the accounting for goodwill and intangible
assets.

Under
SFAS 142, goodwill and indefinite-lived intangible assets are no longer amortized but are reviewed annually, or more frequently if indicators for impairment arise. Separable
intangible assets that have finite lives will continue to be amortized over their useful lives, with no maximum life. In addition, SFAS 142 changes the test for goodwill impairment.

The
new impairment test for goodwill is a two step process. The first step is a comparison of the fair value of the reporting unit with its carrying amount, including goodwill. If this
step reflects impairment, then the loss would be measured as the excess of recorded goodwill over its implied fair value. Implied fair value is the excess of the fair value of the reporting unit over
the fair value of all recognized and unrecognized assets and liabilities. The amortization provisions of SFAS 142 apply to goodwill and intangible assets acquired after June 30, 2001.
With respect to goodwill and intangible assets acquired prior to July 1, 2001, companies were required to adopt SFAS 142 in their fiscal year beginning after December 15, 2001.

The
Company has evaluated whether goodwill was impaired at January 1, 2002. As a consequence of that assessment, a non-cash after-tax charge amounting to
Ps. 184,835,961 has been recorded for the impairment. This initial impairment charge is shown in the quantitative reconciliation to US GAAP

F-49

---



recorded
as a cumulative effect of a change in accounting principle in the Company's results for the year ended December 31, 2002. Effective January 1, 2002, in accordance with this
pronouncement, the Company ceased the amortization of goodwill under US GAAP.

As
required by SFAS No. 142 the results for the prior years have not been restated. A reconciliation of net income as if SFAS No. 142 had been adopted for the year ended
December 31, 2001 is presented below without considering the effects of the impairment charge:

Year ended
December 31,2001(unaudited)Net loss

(1,556,344,916
)Add back: Goodwill amortization

130,966,880Adjusted net loss

(1,425,378,036
)Net loss per share

(3.84
)


(i)    Goodwill

The changes in the carrying amount of goodwill for the years ended December 31, 2003 and 2002, are as follows:

|                                       |  | Argentina     |   | Foreign countries |   | Totals        |  
|-------------------------------------- |  | ------------- | - | ----------------- | - | ------------- | -
|
|Balance as of January 1, 2002          |  | 1,481,056,965 |   | 94,207,725        |   | 1,575,264,690 |  
|Effect of the adoption of SFAS No. 142 |  | (153,827,375  | ) | (31,008,587       | ) | (184,835,962  | )
|Translation adjustment                 |  |              |   | 1,887,162         |   | 1,887,162     |  
|Impairment losses                      |  | (302,010,137  | ) |                  |   | (302,010,137  | )
|                                       |  |               |   |                   |   |               |  
|Balance as of December 31, 2002        |  | 1,025,219,453 |   | 65,086,300        |   | 1,090,305,753 |  
|Translation adjustment                 |  |              |   | (685,965          | ) | (685,965      | )
|                                       |  |               |   |                   |   |               |  
|Balance as of December 31, 2003        |  | 1,025,219,453 |   | 64,400,335        |   | 1,089,619,788 |  
|                                       |  |               |   |                   |   |               |  

As
a result of the Argentine economic crisis, operating profits and cash flows were lower than expected. In the year ended December 31, 2002 a goodwill impairment loss of Ps.
302,010,137 was recognized in the Argentine reporting unit. The fair value of that reporting unit was estimated using the expected present value of future cash flows.

(k)    Amortization of intangible assets

|Estimated amortization expense   |  | Ps.      
|-------------------------------- |  | ---------
|For year ended December 31, 2004 |  | 4,756,308
|For year ended December 31, 2005 |  | 4,752,438
|For year ended December 31, 2006 |  | 4,752,438
|For year ended December 31, 2007 |  | 4,752,438
|For year ended December 31, 2008 |  | 4,105,495

F-50

---



(l)    Interest rate on short-term borrowings

|                               |  | December 31, |  
|------------------------------ |  | ------------ | -
|
|Weighted average interest rate |  | 9.8          | %
|                               |  |              |  

(m)    Corporate bonds

The
amounts issued and outstanding of Corporate bonds as of December 31, 2003 are as follows:

|                                                      |  | December 31, 2003
|----------------------------------------------------- |  | -----------------
|
|US$ 125 million 9.25% Notes due 2002                  |  | 366,875,000      
|US$ 125 million 10.50% Notes due 2007                 |  | 366,875,000      
|US$ 150 million Series C 10.50% Notes due 2018        |  | 440,250,000      
|US$ 175 million Series E Notes due 2009               |  | 513,625,000      
|US$ 144 million Series J Floating Rate Notes due 2003 |  | 422,640,000      
|                                                      |  |                  
|                                                      |  | 2,110,265,000    
|                                                      |  |                  

(n)    Adoption of SFAS 145

On May 1, 2002, the FASB issued SFAS No. 145 "Rescission of SFAS Nos. 4, 44 and 64, Amendment of SFAS No. 13, and Technical Corrections as of
April 2002" (SFAS No. 145), which, among other things, eliminates the exception of applying APB Opinion No. 30 (APB 30) to all gains and losses related to extinguishments
of debt (other than extinguishments of debt to satisfy sinking-fund requirements). As a result, gains and losses from extinguishment of debt should be classified as extraordinary items
only if they meet the criteria set forth in APB 30. These provisions are effective for fiscal years beginning after May 15, 2002, with early application encouraged. Any gain or loss on
extinguishment of debt that was classified as an extraordinary item in prior periods that does not meet the criteria in APB 30 for classification as an extraordinary item should be reclassified. The
Company adopted this standard on January 1, 2003. As such, gains and losses on extinguishment of debt are no longer reported as extraordinary items.

F-51

---



(o)    Information about segments and foreign operations under Argentine GAAP

Multicanal is in only one segment, cable television. The Company generates revenue from Argentina and from foreign countries (Paraguay and Uruguay). Accounting
policies of the segments are the same as those described in the summary of significant accounting policies:

|                                                    |  | Argentina     |   | Foreign
countries |   | Totals        |  
|--------------------------------------------------- |  | ------------- | - | ----------------- | - | ------------- | -
|Year ended December 31, 2003                        |  |               |   |                   |   |               |  
|Revenues from external customers                    |  | 443,186,258   |   | 64,312,215        |   | 507,498,473   |  
|Interest income                                     |  | 1,270,068     |   | 930,539           |   | 2,200,607     |  
|Interest expense                                    |  | (194,106,984  | ) | (1,469,275        | ) | (195,576,259  | )
|Depreciation and amortization                       |  | (145,129,695  | ) | (4,956,198        | ) | (150,085,893  | )
|Equity in earnings of affiliated companies          |  | 4,917,758     |   |                  |   | 4,917,758     |  
|Income tax benefit (expenses)                       |  | 8,967,592     |   | (898,382          | ) | 8,069,210     |  
|Segment profit                                      |  | 52,684,652    |   | 8,866,795         |   | 61,551,447    |  
|Segment assets                                      |  | 2,217,939,461 |   | 139,418,686       |   | 2,357,358,147 |  
|Expenditures for segment assets                     |  | (19,688,159   | ) | (5,226,752        | ) | (24,914,911   | )
|Year ended December 31, 2002                        |  |               |   |                   |   |               |  
|Revenues from external customers                    |  | 501,237,871   |   | 80,882,993        |   | 582,120,864   |  
|Interest income                                     |  | 237,712       |   | 336,827           |   | 574,539       |  
|Interest expense                                    |  | (246,161,826  | ) | (1,077,553        | ) | (247,239,379  | )
|Depreciation and amortization                       |  | (297,165,484  | ) | (11,962,826       | ) | (309,128,310  | )
|Equity in earnings of affiliated companies          |  | 23,180,671    |   | 7,239             |   | 23,187,910    |  
|Income tax benefit (expenses)                       |  | 248,085,596   |   | (1,230,930        | ) | 246,854,666   |  
|Segment profit                                      |  | (621,488,211  | ) | (68,439,928       | ) | (689,928,139  | )
|Segment assets                                      |  | 2,224,672,207 |   | 168,634,993       |   | 2,393,307,200 |  
|Expenditures for segment assets                     |  | (8,940,483    | ) | (3,429,693        | ) | (12,370,176   | )
|Year ended December 31, 2001                        |  |               |   |                   |   |               |  
|Revenues from external customers                    |  | 919,293,569   |   | 80,425,792        |   | 999,719,361   |  
|Interest income                                     |  | 2,226,603     |   | 226,762           |   | 2,453,365     |  
|Interest expense                                    |  | (197,205,232  | ) | (617,092          | ) | (197,822,324  | )
|Depreciation and amortization                       |  | (320,197,250  | ) | (14,451,163       | ) | (334,648,413  | )
|Equity in (losses) earnings of affiliated companies |  | (5,010,495    | ) | 1,468             |   | (5,009,027    | )
|Income tax benefit (expenses)                       |  | 66,424,254    |   | (1,663,105        | ) | 64,761,149    |  
|Segment profit                                      |  | (206,415,081  | ) | (710,525          | ) | (207,125,606  | )
|Segment assets                                      |  | 2,799,184,860 |   | 148,997,660       |   | 2,948,182,520 |  
|Expenditures for segment assets                     |  | (55,841,702   | ) | (4,926,514        | ) | (60,768,216   | )

NOTE 18IMPACT OF NEW ACCOUNTING STANDARDS NOT YET ADOPTED

In January 2003, the FASB released FASB Interpretation No. 46 ("FIN 46"), "Consolidation of Variable Interest Entities, an Interpretation of ARB
51". FIN 46 requires certain variable interest entities to be consolidated by the primary beneficiary of the entity if the equity investors in the entity do not have the characteristics of a
controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. FIN 46 is
effective immediately for variable interest entities created after January 31, 2003 and to variable interest entities in which an enterprise obtains an interest after that date. It applies in
the first fiscal year or interim period beginning after June 15, 2003 to variable interest entities in which an enterprise holds a variable interest it acquired before February 1, 2003.
In December 2003, the FASB published a revision to FIN 46 ("FIN 46 R") to clarify some of the provisions of the interpretation and to defer the effective date of implementation for certain
entities. Under the guidance of FIN 46 R,

F-52

---



entities
that do not have interests in structures that are commonly referred to as special purpose entities are required to apply the provisions of the interpretation in financial statements for
periods ending after December 31, 2004. The Company did not create a variable interest entity after January 31, 2003 and does not have a variable interest entity as of
December 31, 2003. The Company expects that the full adoption of FIN 46 R in 2004 will not have a material impact on its financial position or results of operations.

In
May 2003, the FASB issued SFAS No. 150 ("SFAS 150"), "Accounting For Certain Financial Instruments with Characteristics of Both Liabilities and Equity", which
establishes standards for how an issuer of financial instruments classifies and measures certain financial instruments with characteristics of both liabilities and equity. SFAS 150 requires
that an issuer classify a financial instrument that is within its scope as a liability (or an asset in some circumstances) if, at inception, the monetary value of the obligation is based solely or
predominantly on a fixed monetary amount known at inception, variations in something other than the fair value of the issuer's equity shares or variations inversely related to changes in the fair
value of the issuer's equity shares. This Statement is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first
interim period beginning after June 15, 2003. The Company has adopted the provisions of SFAS 150, which did not have an impact on the Company's financial position or results of
operations. The classification and measurement provisions in paragraphs 9, 10 and 22 of SFAS 150 are deferred for an indefinite period for certain mandatorily redeemable
non-controlling interests with finite lived subsidiaries. The Company expects that the full adoption of SFAS 150 will not have a material impact on its financial position or results
of operations.

F-53

---





MULTICANAL S.A.

Exhibit I

INFORMATION REQUIRED BY SECTION 64, SUB-SECTION b) OF LAW No. 19550  for the years ended December 31, 2003, 2002 and 2001  (Expressed in constant Argentine pesos through February 28, 2003
and in nominal pesos thereafterNote 2.3)

|                                       |  |             |  |             |  |            |  | Total at December 31,
|-------------------------------------- |  | ----------- |  | ----------- |  | ---------- |  | ---------------------
|
|
|Payroll and social security            |  | 36,126,874  |  | 10,097,053  |  | 14,116,201 |  | 60,340,128           
|Employees' dismissals                  |  | 1,183,580   |  | 197,211     |  | 1,459,556  |  | 2,840,347            
|Taxes rates and contributions          |  | 8,225,922   |  | 3,978,820   |  | 9,120,056  |  | 21,324,798           
|Insurance                              |  | 63,807      |  | 120,960     |  |           |  | 184,767              
|Programming rights                     |  | 160,473,148 |  |            |  |           |  | 160,473,148          
|Printing and distribution of magazines |  | 6,623,336   |  |            |  |           |  | 6,623,336            
|Fees and compensation for services     |  | 649,583     |  | 10,328,741  |  | 102,631    |  | 11,080,955           
|Commissions                            |  | 2,990,074   |  | 15,068,781  |  | 9,914      |  | 18,068,769           
|Overhead                               |  | 2,828,074   |  | 894,231     |  | 30,896     |  | 3,753,201            
|Personnel expenses                     |  | 3,102,212   |  | 1,684,950   |  | 1,650,052  |  | 6,437,214            
|Building expenses                      |  | 834,305     |  | 4,796,753   |  |           |  | 5,631,058            
|Vehicles expenses                      |  | 79,360      |  | 2,910,061   |  |           |  | 2,989,421            
|Rentals                                |  | 14,164,122  |  | 2,005,121   |  |           |  | 16,169,243           
|Security and surveillance              |  | 11,019      |  | 1,657,362   |  |           |  | 1,668,381            
|Representation and travel expenses     |  | 2,942       |  | 1,211,629   |  |           |  | 1,214,571            
|Office expenses                        |  | 147,501     |  | 1,878,102   |  | 20,709     |  | 2,046,312            
|Publicity and advertising              |  |            |  |            |  | 8,867,823  |  | 8,867,823            
|Sundry                                 |  | 7,498,245   |  | 2,275,237   |  |           |  | 9,773,482            
|                                       |  |             |  |             |  |            |  |                      
|Total at December 31, 2003             |  | 245,004,104 |  | 59,105,012  |  | 35,377,838 |  | 339,486,954          
|                                       |  |             |  |             |  |            |  |                      
|Total at December 31, 2002             |  | 312,181,488 |  | 84,664,191  |  | 41,813,366 |  |                      
|                                       |  |             |  |             |  |            |  |                      
|Total at December 31, 2001             |  | 500,032,283 |  | 135,554,406 |  | 35,364,081 |  |                      
|                                       |  |             |  |             |  |            |  |                      

F-54

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