No. 5, Fall/Winter2000

Special Issue:
The Arab World

continued: "Pan-Arab Satellite Television: Now the Survival Part" by Jihad Fakhreddine
page 2 of 2 / page 1

Pan-Arab satellite channels can be lauded for putting the concept of marketing into practice in the Arab television industry. Local television had for too long sat on its laurels waiting for the advertising agencies to send in their bookings. Aggressive marketing teams have totally changed the marketing culture. But this marketing culture has not yet proven to be totally to the satellite channels' benefit. The just about half-billion dollars (at rate card value) that the pan-Arab satellite channels are expected to generate in 2000 is a figure highly inflated by the industry. Industry insiders will be happy if actual figures are half that, if not much less—and of course advertising agencies' 25%-30% commission would still need to be siphoned out.

The pan-Arab satellite channel industry has thus far shown that it learned to run before learning to walk. Increased competition within the industry itself and from other media, be it new media or other mainstream media, do send a number of SOS signals. What the industry is able to generate now barely gives it enough nutrition to walk, and its era of running is quickly fading away.

The debate over the health of the pan-Arab satellite channel industry shrouds it with uncertainty. Many content providers have joined or are planning to join the fray. All newcomers have signed on to join very sophisticated tracks. But audiences have yet to buy seats on the viewing podium. Every successful satellite channel has a transponder on Arabsat 2A. Analogue transmission! yes, but every new entrant would be willing to pay whatever a less popular or poorly subsidized satellite channel would demand to have a frequency on Arabsat 2A. We are well into the digital age, but talk to consumers about its benefits and about the features of digital telecast. Neither Arabsat and Nilesat nor the satellite channels have made any concrete efforts to promote digital telecast.

Market analysts—who admittedly lack qualitative data to back it up—believe that what is driving the switch to digital telecast in the GCC markets is not what additional digital channels they can receive on Nilesat or Arabsat 3A. The driving force is the multitude of channels that can be accessed on the European satellites that orbit the region. This is certainly bad news for both Nilesat and Arabsat, despite the fact that they—and the new pan-Arab satellite channels—benefit from the switch.

At any rate, the switch to digital telecast has yet to take the GCC region by storm—unlike the boom analogue telecast caused in the region in the 1990s. Industry insiders hint at different philosophies held by Nilesat and its competitor Arabsat. It is reported that while Nilesat believes that the future trend is most likely to be pay-TV, Arabsat envisages the continuing pattern of free-to-air telecast.

Irrespective of what the future trend might be, limited financial resources hint that either way will be a bumpy ride. Proponents of pay-TV claim that good programming cannot be sustained by advertising alone. In other words, viewers must pay for premium programs. But as it stands now there is not enough evidence that either pay-TV or free-to-air channels can afford to acquire enough premium programs to distinguish their respective program mix.

The TV production industry is notoriously plagued by lack of financial resources and creative ideas that could keep the Arab television industry afloat. There are no precise figures on what the TV production industry produces annually. Unconfirmed figures tell us that Syria, for instance, has produced about forty series in 2000. Press reports claim that most of them are characteristically mass produced. Not very comforting news to potential viewers! The press also tells us that mass production is not unique to the Syrian TV production industry; its Egyptian counterpart does not fare any better. We often read how TV series stars have to rush from the filming of an episode of one series to another, before they could even remove their makeup. It is a typical situation where a TV star gets burned out from over-appearance on different series on different channels even within one evening. Blame it on repeats, yes, but what do repeats signify other than scarcity of programs. And virtually all Lebanese TV stars, although they may not appear in more than one Lebanese TV series in one night, are likely to be heard in more than one dubbed Mexican series.

The above is no more than a few qualitative observations that still need to be substantiated with figures, which the TV industry still lacks interest in compiling. For many years Arab television production saved its best for the month of Ramadan. It truly succeeded in providing entertainment that superseded what used to be shown in the remaining months of the year. But industry insiders say that, unlike previous Ramadan TV grids, in this coming Ramadan 2000 the satellite channels do not have much to entertain their audiences with. Only a few channels were able to commission a selection of premium quality series.

To boost their coffers many of the leading pan-Arab satellite channels have hiked up their rate cards 50% to 100% as of the latter months of 2000. Some industry observers consider it to be a step that should have been taken many years ago, as the rates were considerably low by international norms; international advertisers are believed to have gotten away with the lowest rates they would experience anywhere in the world. It is still somewhat early to envisage the reaction of the advertisers to the new higher rates which are likely to be implemented in 2001. The Palestinian-Israeli tension at the time of this writing has only shrouded the prospects of advertising expenditures in the fall of 2000 in added uncertainty.

Unilever, one of the biggest FMCG (fast-moving consumer goods) marketers in the Arab world, has decided to suspend its advertising until the end of 2000. This action has been taken in response to the general public outcry for boycotting American products. Procter & Gamble, another major FMCG marketer, has taken somewhat similar steps, although less drastic, in order to maintain a low-key public profile so as not to agitate the public against them. It is reported that other American-labeled brands are equally wary and are bound to reduce their advertising exposure.

Hopefully, regional tensions are not more than temporary bumps in the regional advertising track. But they do nevertheless add to the financial burdens of the Arab TV industry. The impact of prolonged regional tension on regional advertising budgets could be far-reaching, not in terms of the remaining 2000 budgets, but for 2001 in particular. Time is high to reflect on the next stage of the lifecycle of the pan-Arab satellite channels. Their chances for continuing to run full speed ahead are dim. Limited financial resources do not support it. "Crisis" might be too strong a word to use, but $250 million is hardly enough to sustain the lifeline of those satellite channels in the major league, and renders those in the minor league almost redundant.

The issue at hand is not at all whether digital telecast will take over analogue. Nor is it pay-TV versus free-to-air. Nor is it free media zones versus the current market scenario, which is free enough by the standards of the free Arab market economies. The current sour relationship between the Egyptian government (and media as well) and Al-Jazeera, after Al-Jazeera's much-trumpeted setup in Egypt's Media Free Zone, does not set a good precedent for the prospects of such zones. At risk is the survial of the pan-Arab satellite channel industry in a manner that could maintain the viability it has demonstrated thus far. TBS