Abstract: A video signal processing system employs an amplitude compander for reducing the effects of transmission noise. The compander includes a transmitter nonlinear amplitude compressor for amplifying small signals and compressing large signals. A receiver includes an amplitude expander with an inverse transfer function. The nonlinear compressor generates out-of-band frequencies which are removed by a transmitter output filter, producing signal distortion. To compensate for such distortion, the transmitter duplicates certain receiver processing circuits, including the receiver amplitude expander and a filter for generating a prediction signal. The prediction signal is subtracted from the transmitter input video signal before the video signal is amplitude compressed at the transmitter, producing an error signal which is transmitted. The error signal is small if the prediction is good, whereby noise reduction results from compressor gain at the transmitter.