Where now for MBC…..

With uncer­tainty sur­round­ing the own­er­ship of MBC and its re­la­tion­ship with the Choueiri Group, could this be the be­gin­ning of the end for the pan-arab broad­caster?

ArabAd - - CONTENTS - By Iain Ak­er­man

Of all the un­cer­tain­ties sur­round­ing the re­gion’s me­dia in­dus­try, ar­guably the big­gest and most far-reach­ing re­lates to MBC.

Last Novem­ber the pan-arab broad­caster’s chair­man, Waleed Al Ibrahim, was de­tained along with scores of other pow­er­ful busi­ness­men, princes and of­fi­cials in what the Saudi gov­ern­ment called a crack­down on sys­tem­atic cor­rup­tion.

Al­though Al Ibrahim was re­leased in Jan­uary, hav­ing made an undis­closed deal with the gov­ern­ment, the na­ture of MBC’S own­er­ship is now murky and con­fused. While me­dia re­ports have stated that Al Ibrahim re­mains a di­rec­tor of the com­pany, the Saudi gov­ern­ment’s in­vest­ment fund is be­lieved to hold a con­trol­ling stake of 60 per cent, lead­ing to ac­cu­sa­tions of the forcible trans­fer­ral of as­sets.

Ac­cord­ing to Reuters, that 60 per cent had pre­vi­ously been owned by other mem­bers of the Al Ibrahim fam­ily, as well as Saleh Kamel, a Jed­dah-based busi­ness­man who was also de­tained at the Ritz-carl­ton in Riyadh dur­ing the crack­down. Amongst the other de­tainees was Prince Al-waleed bin Ta­lal, one of the rich­est men in the world and the ma­jor­ity owner of the Rotana Group.

What all of this means for MBC and the wider me­dia in­dus­try re­mains un­clear, but uncer­tainty and in­sta­bil­ity are the last things the mar­ket­place needs. Ad­ver­tis­ing spend is dra­mat­i­cally down, while the in­dus­try as a whole is suf­fer­ing from the dual chal­lenges of eco­nomic tur­moil and dig­i­tal trans­for­ma­tion.

But the con­fu­sion sur­round­ing MBC raises a num­ber of con­cerns, not least how gov­ern­ment con­trol will im­pact staffing and pro­gram­ming, whether a purge of non-saudi em­ploy­ees is in­evitable, and if the death knell has been sounded for the re­gion’s most in­flu­en­tial pan-arab broad­caster.

Of par­tic­u­lar in­ter­est is the fate of MBC’S re­la­tion­ship with the Choueiri Group. The Le­banese me­dia sales house has han­dled the group’s ad­ver­tis­ing for years, yet spec­u­la­tion sug­gests it may lose the con­tract, with re­spon­si­bil­ity for MBC’S ad­ver­tis­ing

sales po­ten­tially shift­ing to the Saudi Re­search and Mar­ket­ing Group (SRMG). The lat­ter’s chair­man is Prince Bader bin Ab­dul­lah bin Mo­hammed bin Farhan Al Saud, a close friend of Crown Prince Mo­hammed bin Sal­man and the man named by Saudi news­pa­per Al-mad­ina in De­cem­ber last year as the new chair­man of the MBC Group. Al­though the ar­ti­cle was re­moved within hours of its pub­li­ca­tion and later de­nied, it did noth­ing to dis­pel the at­mos­phere of deep con­cern felt by em­ploy­ees of MBC.

Few me­dia com­pa­nies en­gen­der as mixed a bag of emo­tions as the Choueiri Group. It is an in­dus­try giant, a be­he­moth, an en­tity sur­rounded by anec­dotes, ru­mours and ac­cu­sa­tions of mo­nop­oly. It leaves no room for ap­a­thy from those who have deal­ings with it and re­mains the Mid­dle East’s sole me­dia sales pow­er­house. It was once es­ti­mated that An­toine Choueiri, the group’s founder and fa­ther of the cur­rent chair­man and CEO Pierre Choueiri, reigned over an em­pire that con­trolled 70 per cent of an­nual TV spend in the GCC and Le­vant. Al­though that fig­ure has di­min­ished in re­cent years, for such an en­tity to lose its key busi­ness part­ner would have huge im­pli­ca­tions not only for MBC but for the TV in­dus­try as a whole.

Openly dis­cussing such a po­lit­i­cally sen­si­tive topic, how­ever, is prob­lem­atic, es­pe­cially given the un­cer­tain na­ture of the in­for­ma­tion in­volved. Other fac­tors are also at play: the po­lit­i­cal ten­sions be­tween Saudi Ara­bia and Le­banon; the king­dom’s push to­wards Saud­i­s­a­tion; and the coun­try’s de­ter­mi­na­tion to con­trol all as­pects of the me­dia.

“What we’re see­ing is the align­ment of me­dia own­er­ship be­tween Rotana, SRMG and now MBC Group,” said one me­dia agency ex­ec­u­tive who re­quested anonymity. “We cer­tainly ex­pect fur­ther changes, like the pro­gram­ming for MBC Group. There is a risk that rat­ings will be af­fected neg­a­tively and any drop in view­er­ship will lead to a re­duc­tion in ad­ver­tis­ing in­vest­ments. A few TV chan­nels may ben­e­fit from this but we an­tic­i­pate dig­i­tal plat­forms will be the prime ben­e­fi­cia­ries.

“The com­mer­cial ar­range­ments for the me­dia rep­re­sen­ta­tion of MBC Group are also up for re­view and the con­tract will ei­ther stay with the Choueiri Group or move to another or­gan­i­sa­tion. In th­ese un­cer­tain times, keep­ing the Choueiri Group’s steady hand to­tally makes sense but busi­ness sense doesn’t al­ways pre­vail. Should a new com­pany end up with the con­tract, it will need to have or rapidly gain a solid grasp of the TV mar­ket to counter the neg­a­tive im­pact of a pos­si­ble drop in rat­ings. It will also have to with­stand the loss of ad­ver­tis­ers while it de­vel­ops the same level of trust ad­ver­tis­ers and agen­cies have in the Choueiri Group. If it ends up los­ing this con­tract, the Choueiri Group’s wings will cer­tainly be clipped but it has plenty of other as­sets to fo­cus on, in­clud­ing DMS. Ei­ther way, the TV mar­ket is in for a bumpy 2018.”

The big­gest loser, how­ever, could be tele­vi­sion it­self. State con­trol is anath­ema to in­no­va­tion and trust and will in all like­li­hood hand ad­van­tage to dig­i­tal me­dia com­pa­nies, with over-thetop (OTT) dis­tri­bu­tion chan­nels likely to ben­e­fit the most.

And al­though TV has largely avoided the cat­a­strophic ad rev­enue losses of other me­dia, with dig­i­tal growth pre­dom­i­nantly eat­ing into the ad­ver­tis­ing share of print, ra­dio and cin­ema, the gov­ern­ment takeover of the re­gion’s most im­por­tant broad­caster could well change that.

“Google and Face­book, fol­lowed by other dig­i­tal ad rev­enue plat­forms such as Snapchat and Twit­ter, have snapped up some of the best dig­i­tal tal­ent in the re­gion and are a se­ri­ous threat to TV sales teams,” says a me­dia owner who re­quested anonymity. “With­out the strong rep­re­sen­ta­tion that the Choueiri Group of­fers MBC, TV in gen­eral won’t be as well rep­re­sented, al­low­ing Face­book and Google to dom­i­nate fur­ther.

“The TV in­dus­try is shift­ing to dig­i­tal fast. If TV sales on OTT ser­vices are to be a match for Face­book and Google, then the in­cum­bents – MBC be­ing the largest – will need to in­no­vate and have strong rep­re­sen­ta­tion on all sides of the busi­ness. Not only are the likes of MBC and Rotana un­der threat from Face­book, but the new OTT play­ers in the mar­ket – Net­flix, Starz Play, and Icflix in ad­di­tion to OSN of­fer­ing Wavo – mean that MBC’S new prop­er­ties face many shift­ing in­dus­try chal­lenges.”

Should a new com­pany end up with the MBC con­tract, it will need to have or rapidly gain a solid grasp of the TV mar­ket to counter the neg­a­tive im­pact of a pos­si­ble drop in rat­ings. It will also have to with­stand the loss of ad­ver­tis­ers while it de­vel­ops the same level of trust ad­ver­tis­ers and agen­cies have in the Choueiri Group.

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