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By
Jihad Fakhreddine
 Inexpensive
analogue satellite TV gear introduced to the Arab world during
the 1990s, and the even cheaper digital TV satellite technologies
that have followed since the beginning of this decade, have
been instrumental in short-circuiting a number of stages in
the evolution of the TV distribution landscape in the Arab world.
Access to such telecast technologies allowed the Arab world
to make a swift leap from single into multi-TV channel environment
without having to resort to cable distribution - as has been
the case in much of Europe and the United States since the 1960s.
Cable TV distribution
technologies have undergone slow but progressive developments
since the 1960s, with digital terrestrial TV making inroads
into many markets world wide, thus enabling the TV industry
in Western Europe and the US to develop at a comparable pace.
But in the case of the Arab world, just as the rapid proliferation
of satellite TV has created many opportunities, so too it has
imposed tremendous challenges, if not frustrations, which Arab
broadcasters seem to have been unable to cope with.
Local cable distribution
(affiliations) in markets like the US allowed national TV networks
to harness both local and national advertising budgets. In contrast,
the concept of TV networks with local distribution has yet to
be put on the drawing board in the Arab World. The market's
ecstasy at having access to pan-Arab satellite TV, as opposed
a local (national) TV channels, seems to be have taken the Arab
World by storm without any regard to the implications for the
servicing of specific regions or local communities.
Arab satellite homes
from the Atlantic all the way along North Africa and to the
Arabian Gulf are catered to by an ever-increasing number of
satellite TV channels that take little note of local or regional
variations in TV viewing needs. The most overriding concern
of pan-Arab satellite TV channels (PASTV) is to be on as many
satellites as possible; many over-stretch their coverage to
the North Americas and Australia even before being able to establish
a viewing foothold in the market they broadcast from.
Most, if not all,
PASTV are on multitudes of satellites -- Arabsat, Nilesat, Hotbird,
Astra, and others -- without any knowledge of the level of penetration
of any these satellites. Thanks to comparatively low digital
transponder rents, being on multiple satellites constitutes
an insignificant portion of overall operations costs. Industry
insiders report that certain satellite providers are giving
free rents. Many of the brochures of new PASTV entrants list
the satellites they ride on with no information about viewership
in any of the Arab markets.
Such a pan-Arab TV
landscape poses a number of questions that still require serious
thinking from broadcasters. How will the PASTV channels survive
financially while spreading themselves so thin, given that most
advertising budgets are still local, with the Saudi market still
synonymous with the pan-Arab market? An equally serious question
is the fate of what is considered to be state-owned national
(local) TV channels -- given that most viewers are migrating
to the PASTV channels -- both financially and in terms of audience
bases? What would be the potential prospects of privately owned
TV channels that might seek more local (regional) audiences,
especially from a financial point of view, given that local
advertising budgets across the Arab world are being squeezed
out?
From the general
public perspective, the rarely addressed issues are the following:
are the 300 million Arabs spread across 22 states and living
in dozens of cities and in hundreds of communities served best
by dozens of PASTV channels that increasingly look very much
alike? And what will become of television as a medium that has
often been hailed as instrumental in the socio-cultural and
economic process of underdeveloped countries?
Common history and
cultural, religious, and political ideals aside, the Arab world
is not one society; it is as fragmented as it can get. True,
the pan-Arab media, especially the PASTV channels, have been
instrumental in enhancing trans-Arab communication and interaction,
but local and regional variations require that local and regional
audio-visual media need to be given a boost for two main purposes.
These are variations in local and regional communities' TV viewing
needs, and giving better chances for local advertising budgets
to grow and be channeled into television.
The current life-cycle
path of the Arab TV landscape shows that it in no way addresses
these issues. It is headed for both financial losses on the
one hand and, on the other, depriving local Arab communities
of local audio-visual media that mirror their concerns, expectations,
and frustrations. The PASTV channels are increasingly becoming
media that mirror pan-Arab issues and entertainment and a window
to the world, but are shutting viewers off their own immediate
socio-cultural and economic environments. Thanks to stale, state-owned,
single TV channels, local TV has been associated with all the
negative perceptions brought about by the Arab state-owned media.
For the more successful
PASTV channel, any attempts at local adaptation are frustrated
by the lack of local TV distribution mechanics in the Arab markets
of the sort that exist in the US and Europe. In effect, this
lack is likely to make the idea of regional TV networks with
local TV affiliations a far-fetched concept. The ramifications
of the persistence of such TV scenarios ought to be of major
concern to broadcasters, especially in terms of the financial
well-being of the TV channels, both local and pan-Arab.
Current advertising
revenues generated by the TV sector in the different Arab markets
illustrate the dominant presence of the PASTV sector compared
to the local TV channels. In 2004, for instance, total advertising
revenues of the TV sector (local and pan-Arab markets combined)
amounted to $2.17 billion, which constituted a hefty 47 percent
share of the total value of the advertising market in the Arab
World ($4.6 billion at claimed rate card values). (See Figure
1)
The forceful presence
of the pan-Arab satellite TV in 2004 totaled $1.6 billion and
hence has dwarfed the national TV sector across all markets
with a share of 74 percent, after which a mere 26 percent goes
to the local TV channels of the ten Arab markets covered by
PARC's advertising monitoring service. Local television stations
in markets like Kuwait, Qatar, Jordan, Oman, and even Saudi
Arabia and UAE are left nibbling on advertising crumbs. Indeed
thanks to unlocked government coffers, local television channels
have yet to be weaned off the mother-government and become more
dependent on the private sector for financial survival. Nor
are signs of such a weaning in sight.
In effect, it is
not only the local government-owned TV channels that are financially
vulnerable; the pan-Arab satellite TV sector as whole is also
vulnerable. Irrespective of whether the TV channels are government
or private owned, they find themselves in an increasingly crowded
market with the prospects of real increase in advertising revenues
slim at best. The pan-Arab satellite market remains trigger-happy
nevertheless. Thanks to the rampant proliferation of digital
satellite TV broadcasting and the low cost of being on satellite,
the increase in the number of TV channels seems set to exceed
the average annual growth of advertising revenues.
With advertisers
wary about the size of audiences television can deliver for
them, many of the TV channels are counting on revenues from
SMSs and phone calls for subsistence. Revenues from interactive
TV remain outside the scope of advertising monitoring. Unconfirmed
reports indicate that Arab audiences are displaying positive
disposition to SMS messaging. Some TV channels are already running
as many as three scrolls on one screen. In such a crowded screen
environment, there will probably be little room for advertising,
if marketing efforts in this direction are taking place at all.
Pan-Arab satellite
TV remains the most intriguing Arab medium in terms of the ability
to shift the flab from lean adverting muscles. At face value
it gained a 46 percent increase in advertising revenues in 2004
over 2003. But we are not in a position to estimate the real
size of the increase, let alone estimate the actual size as
these figures are calculated at rate card values, which some
industry insiders ridicule as being inflated by well over two-thirds
the actual revenues.
What is evident however
is that taking the pan-Arab satellite sector as a whole, the
46 percent increase in revenues was accompanied by a greater
increase in the number of advertising slots (60 percent). The
increase in advertising space, where one advertising space is
equal to one thirty-second advertising spot, grew at an even
higher rate (66 percent).
The unequal growth
rates of these three interrelated advertising measures indicate
that overall average rate card value per spot in effect declined
by 10 percent from $1879 in 2003 to $1690 in 2004. The 60 percent
increase in the demand for TV advertising spots, countered by
a 10 percent decline in cost per advertising spot, produces
a media economics scenario that defies basic economic concepts
of supply and demand.
The market forces
that are bringing the rate cards down are many, not to mention
the mushrooming in the number of TV channels that are willing
to take a relaxed attitude. We need to bear in mind that this
relaxed approach is very much perpetuated by the big market
players as well.
The pan-Arab satellite
TV sector is at cross-roads. While a few major players still
expect double digit ratings for TV programs, as was the case
in the limited TV channel environment of four or five years
ago, they are perpetuating audience fragmentation through their
fertile generation of thematic channels.
By virtue of their
own nature, thematic channels are targeted media. It is not
clear yet whether the advertisers are considering them as such,
let alone whether these thematic TV channels have the mindset
to market themselves as such. It may still take some time for
the pan-Arab TV sector to break loose from the gridlock of mass
audiences. Double digit TV program ratings were possible in
the single TV channel environment. They were sustained to a
large extent in a limited TV channel environment. But the multi-digital-TV
broadcast environment has its own market rules.
Indeed, should the
main PASTV channels count their audiences across the different
Arab markets, those audiences would be significant, but such
trans-market audiences will not impress advertisers, not even
international brands, especially since most of the advertising
budgets are still local. This in effect is the major week point
in the PASTV channels as advertising media, especially when
the advertising budgets are Saudi-based.
We currently are
witnessing the continued rise of the PASTV channels, where in
fact it is difficult to keep track of their numbers unless one
keeps a close eye on the growing list of TV channels on both
Arabsat and Nilesat. But in the thick of this hype, the PASTV
sector may need more than wealthy businessmen or governments
to keep their life support system on. If this is the case with
the main PASTV channels, local TV channels are even more vulnerable,
with the possible exception of the Lebanese and the Egyptian
markets, where the advertising revenues channeled into local
television remain comparatively large (See Figure
2).
The notion "Be
pan-Arab or perish" will hold in the short run, but the
market has become crowded indeed, while the advertising pie
is not growing sufficiently in real terms. There is a limit
to how much the Saudi advertising market -- the Mecca of all
pan-Arab satellite TV channels -- can grow. In the short run
the local TV channels are bound to continue losing ground, as
are the prospects of growing the advertising budgets that would
have naturally gone into TV had the local TV been able to deliver
the desired sizes of consumers. This is happening at a time
where the pan-Arab channels are not able to recover the lost
ground.
Pan-Arab satellite
TV channels will be able to recover such ground only if local
TV distribution can be put in place. SamaCom, part of Dubai
Holdings, has just launched its digital terrestrial TV telecast
service in the UAE, which seems to have the potential of local
adaptation of regional TV formats and contents. This is believed
to be one viable solution in the absence of other forms of cable
distribution such as exist in the US or Europe. Arab broadcasters
need to search for solutions where they can strike a balance
between local, regional, and international TV contents.
It is not by the
contents of pan-Arab TV -- increasingly dominated by the US
-- alone that local TV viewing needs will be met or the much
needed local advertising budgets grown.
Figure
1
Figure
2
Jihad N. Fakhreddine
is the research manager for media and public opinion polls
at Pan Arab Research Center (PARC). He is based in the UAE and
writes on Arab media and US public diplomacy.
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