No. 5, Fall/Winter2000

Special Issue:
The Arab World

Special section: "Actors and New Stakes in the Euro-Arab Satellite Scene":
Reports from the Institut du Monde Arabe's first Arab broadcasting seminar

Does Satellite TV Pay in the Arab World Footprint?
Exploring the Economic Feasibility
of Specialized and General Channels

A paper presented at the colloquium
by TBS Senior Editor S. Abdallah Schleifer

The problematic posed by the organizers of this colloquium pose a number of issues to consider when looking at the economic feasibility of specialized and general channels. But first let me clarify the points from which I draw my own perspectives on this issue—and it is not from comprehensive research, the data for which barely exists anyway.

Despite my title as director of a university center devoted to a branch of broadcasting, namely television journalism, broadcasting research is not my academic concern. I teach young people how to practice TV journalism, not how to research it as a quantifiable social phenomenon. Instead, my perspective is shaped by two experiences and an ongoing association: a sabbatical year spent as managing director of ART's broadcast and production center in Avezzano, outside of Rome; my role as a founding member of the board of directors of CNE (Cable Network Egypt); and my association with a number of participants in this colloquium, either in the course of placing our graduates in the industry or by virtue of being an editor of the biannual electronic journal TBS (Transnational Broadcasting Studies), which frequently provides me with opportunities to interview leaders in our field.

As the problematic implies, the pioneers of pan-Arab and transnational specialized channel pay-TV broadcasting, ART and Orbit, have been paying a heavy price in ongoing financial losses for their pioneering role. Certainly pay-TV in the Arab world faces some very severe social, cultural, and political hurdles. In the Saudi and Gulf markets as well as Egypt (and from a demographic perspective this is the heart of the Arab market), there exists a market culture (in contrast to that of America and Europe) that is rather antipathetic to pay-TV. Saudis, Kuwaitis, and Emiratis by and large do not pay for culture, education, or even medical care. At a qualitatively smaller level the same is generally true, or has been true, for Egyptians.

So why pay for something like television, particularly in its mode as entertainment, that one is already getting for free within the context of a broad welfare state culture? Even in the United States when cable, the first form of pay-TV, was introduced experimentally, the superior sound and picture quality of existing free terrestrial channels that cable provided wasn't enough. Even Americans wouldn't pay unless they got something more for their money than what they got for free. That subsequent rush to quickly come up with cheap, easily available, easily assembled programming to save the cable experiment was the defining moment in the birth of the MTV and Nickelodeon channels.

The first of the privately owned Arab satellite channels was of course MBC, a general channel launched from London within a year of the Gulf War. It was CNN's coverage of that conflict, from August 1990 when the Iraqi army rolled into Kuwait to February 1991 when Kuwait's allies rolled the Iraqis back, that unleashed satellite dish fever in the Arab world, which until then had been an arcane, almost esoteric hobby of the very wealthy, the well traveled, and—at least in Egypt, which was seizing any dishes that showed up at Cairo International Airport pending legislation—the very, very well connected.

What is now frequently overlooked is that MBC had a resounding success in terms of quickly acquiring a significant share of the market, not because it was a general channel but because it offered something different, something extra, something specialized within the overall appearance of a general channel. That something different was news coverage, field reporting, real television journalism of the sort never seen or heard before in Arabic. This initial phenomenon is all but forgotten today, particularly because MBC, in its efforts to turn around and revive its fortunes, has increasingly shifted away from its earliest self-proclaimed raison d'etre of public affairs programming for more entertainment-oriented programming. But that in itself underlines my theme: for with the appearance first and somewhat briefly of Orbit's BBC Arabic TV news channel, followed in time by Al-Jazeera and ANN—all providing news coverage, field reports and lively politically oriented talk shows non-stop—MBC's news product, limited in viewing time by its position within a general channel, was greatly eroded.

But what should not be forgotten is that MBC rapidly acquired initially impressive advertising along with its high ratings. The problem with its lack of profitability, while it still had a sharp competitive edge in Arab broadcasting, had far more to do with its expansive, one might even say royal, manner of expenditure and excessive staffing. This is a management style it has been trying to rein in over the past two years, while at the same time shifting program content from public affairs to content that is as popular, as relatively mindless, but with more sophisticated production values than its competition in the free-to-air general channel competitive field.

In contrast ART, launched in 1993, had stabilized by 1995 as a satellite network of specialized channels that was initially free-to-air in the truest sense of the word, just like MBC (in contrast to the Nilesat free-to-air channels, which can only be seen by purchasing a Nilesat decoder). Anyone who had a dish could watch ART without spending an additional dinar or dollar. And by 1993, and even more so by 1995, satellite dish fever was already transforming the skyline of Arabia and the Emirates, and to a lesser per capita but still significant demographic point of view Egypt, which has half the population of the Arab world. ART could provide its rapidly acquired large audience with such specialized channels as movies, variety (drama and talk shows), music, sports and children's shows. Advertising revenue, if not sufficient to cover costs, was nevertheless significant and rising.

It was not so much that ART's programming was that much superior in production value to the national channels, but that there was so much of it, and in such variety, hour after hour, for the same price—in other words, at no additional cost. In the case of the Saudi and Gulf audiences, it was also programming with far more verve and sexual excitement than could ever be hoped for or found on the national channels. Suddenly there were Arab women to look at, lots of them, either singing and bouncing up and down or just simply being seductive in that broad "baladi" style that typifies ART's female presenters. ART's President Sheikh Saleh Kamel had occasional second thoughts about this (on several occasions I was involved with him in drafting dress codes that sought the best of both worlds, what might be called a seductiveness of relative modesty) and compared to ART's free-to-air Lebanese competition like LBC and Future, one must consider ART as a conservative force in the emerging world of Arab satellite broadcasting. But with its backlog of Egyptian movies that had previously been cut to ribbons by Arabian censors if shown at all, and with its pouting, prancing, visibly well-endowed presenters, ART was, for its original, basic Saudi and Gulf market in the mid-nineties, hot stuff indeed.

When ART went over to pay-TV and to digital, both representing confusion and significant costs for the consumer, and did so in that rather arbitrary manner that has until the past spring's management reorganization almost always characterized ART's marketing, distribution, and scheduling efforts, it failed to carry much of its free-to-air audience with it.

In the case of Egypt one could argue that this was because the difference in program quality between ART and the Egyptian national channels was not that great. Indeed in its formative years ART programs were often curiously inspired by Egypt TV's 1970s Arab perspective on broadcast production. But in Saudi Arabia and the Gulf there was another factor at play which increasingly haunts pay-TV specialized channels like ART, and to a lesser degree Orbit: the emergence of privately owned competitive general or specialized free-to-air satellite channels like LBC, Future and Al-Jazeera (which is private in management style and strategic intention if not in actual ownership). Future and LBC delivered entertainment with production values and sexual verve as great or greater than ART, and Al-Jazeera delivered Arabic language news coverage not available on ART or Orbit, and talk shows in greater quantity than Orbit and far more directly political than ART.

Ironically, ART went into pay-TV convinced that advertising revenues would never be sufficient to cover its extensive costs. But instead of cutting its unproductive costs it expanded them with highly staffed marketing and distribution operations that rarely seemed to get off the ground—or when they did, thanks to unique properties like special sports events or dramatic subscription price cutting, failed to sustain initial public interest. In those first years as a digital pay-TV operation, the costs of marketing soared without any significant corresponding rise in subscription income, and advertising revenue disappeared, except for the occasional in-the-clear successes like the 1998 World Cup. The irony in this situation is that satellite advertising revenue, which was analyzed as insufficient, was not in the mid-nineties a static statistic. It has continued to nearly double in dollars-spent nearly every year for the past five years, but little of that revenue went to ART after it opted for pay-TV. continued

Next page: Some light at the end of the tunnel

Also in our three-part coverage of the colloquium "Actors and New Stakes in the Euro-Arab Satellite Scene":

TBS Paris Correspondent Magdi Ghoneim of TV5 France, who served as seminar organizer, reports on the event

"The Current Situation of Satellite Broadcasting in the Middle East"
An extract from a speech presented by TBS Senior Editor Hussein Y. Amin at the colloquium