Dreams need planning to come true


When the first privately owned Arab satellite television, ART, experienced serious financial problems and had to sack dozens of its Italy-based staff few years ago, some media analysts expected that Arab businessmen would be reluctant to venture into similar visual media projects.

Yet, a couple of Saudi business tycoons who are connected to the Saudi royal family risked their money in another two television networks, the Orbit and the MBC. Though well funded by the Saudi petro-dollars, the three stations have been striving to survive since they were established in the early 1990s.

For Egyptian businessmen, the experience of investing in private channels is not entirely different. Until recently, the Egyptian government was reluctant to license for privately owned television channels leaving the Arab air dominated by the Saudi businessmen and the state-run television channels.

But with a sudden change in the government's attitude after the launch of the Nilesat 102 and the expansion of the Media Production City at the October 6 City, a good number of Egyptian businessmen and politicians competed to win licenses for television channels.

Taken by their enthusiasm for a business that has been shuttered for the private sector for decades, early signs of their financial situations indicate that the owners of the new channels rushed and risked their money without carefully studying the media market and their future opportunities of survival.

Three new private satellite channels, Dream TV 1 and 2 and Al Mehwar, were granted licenses in 2001 and started transmission via the Nilesat 102, marking a new era of Egypt's television industry.

The Dream TV 1 and 2 are owned by Ahmed Bahgat, an Egyptian businessman whose activities include electronics manufacturing, real estate and eventually TV business. Al Mehwar is a joint stock company owned by a number of Egyptian businessmen headed by Hassan Rateb, an investor in tourism projects in Sinai.

Marking the inauguration of Al Mehwar, the Minster of Information, Safwat A1 Sherif said, “We shall support the private sector in its first experiment, at their own request. We shall support the experiment with all our abilities particularly as the private sector realizes the difficulty of this experiment. The media industry is difficult and costly and needs the experience of long years.”

The Egyptian Radio and Television Union, ERTU, owns around 15 % of both channels. The ERTU’s contribution comes in forms of media materials and free use of the Media Production City’s studios.

Such a limited government support seems not helping much the infant channels since media analysts have noticed early signs of financial mal-performance and expressed doubts about their ability to be profitable.

A freelance television producer, who wished to remain anonymous, said just a year after it was launched, the Dream TV has already been experiencing financial problems and started cutting down some jobs.

“The story of other Arab private televisions seems to repeat itself. Rumors are widespread in the media community that the Saudi business giant, Al Waleed bin Talal, might venture in the Dream TV to provide financial backing, but nothing is confirmed,” she said.

Though admitting that it is not making profit at the moment, Dream TV general manager, Osama El Shiekh, said the channels are not experiencing financial problems and Ahmed Bahgat is still the sole owner of Dream TV.

“The television business is a long term investment. We have a plan to start making profit in three years time. The one-year old channels have succeeded to gain a good segment of the Arab audience by its mixture of entertainment on Dream 1 and serious programs on Dream 2,” Al Sheikh said.

Denying reports that Dream TV is depending only on the owner’s advertisements, Al Sheikh said the channels attract other advertisers and by next month they will be having more advertisements. An international company has just signed an agreement with Dream TV to run the advertising business for the channels, he added.

Passant Hassan, an announcer at Al Mehwar Television, however, said both channels experience financial problems. “Some staff are not paid their salaries and others get them very late,” she said. Changes in the channels’ management staff might be the reason for not being paid on time. Some of Dream’s staff already left the channel to join Al Mehwar.

Not getting enough advertisements might be another reason.

“At the moment, both Ahmed Bahgat and Hassan Rateb are using their channels primarily to advertise for their projects. They have had enough of advertisements on the local televisions’ screens and now they want to reach the foreign markets through their satellite channels, she said. “ It is their right to take up most of the channels’ time to serve their cause. Advertisements about their projects are given prime times and more frequency than those of external advertisers. This is quite discouraging for other advertisers.”

Early indications of financial problems facing the new private channels, in some media analysts’ points of views, reflect a chronic problem facing the private television industry in the Arab world.

“Sources of revenues for the private televisions, which are advertising and or paid subscriptions, do not cover the cost of their production. For free to air channels, the situation is more difficult since they depend mainly on advertising,” Professor Hamdy Hassan, Dean of the Faculty of Mass Communication at the Misr International University said.

Taking into account that both Dream and Al Mehwar are not pay- televisions, Hassan said they depend on advertisements and the call-in competitions. For those two sources of revenues to work, the channels have been trying to build up viewership. With its light entertainment programs, Dream has succeeded to attract more audience and advertisers than Al Mehwar, he added.

Apparently, these two sources do not cover the production cost of the channels’ programs though most of them are of the low-budget talk shows that fill in hours of transmission. Their failure to attract advertisers can be traced back to reasons related to the channel itself and others related to the market.

“Being a satellite channel does not encourage both the local advertisers and the international ones who are targeting Egyptian consumers. Advertisers do not want to place their advertisements on satellite channels favoring Egyptian local channels that reach millions of Egyptians,” a senior advertising executive at Tarek Nour Communications said.

There is a demand from some clients to have their products advertised on Dream TV since it has considerable number of viewers, but still it is a limited demand comparing to the Egyptian local channels though the channel is offering reduced rates for commercials.

Inaccurate rating of Egyptian and Arab televisions is another problem that leaves advertisers unsure how best to target viewers, he said

Adding to this, Hassan said, without having an identity or a “character” that attracts viewers and advertisers, the channels would not survive. “While Dream TV has managed to create an identity for itself focusing on the entertainment business in the first place, Al Mehwar, though seems more serious, is still looking for one, a thing that is quite discouraging for both viewers and advertisers.”

Not having an identity or a character reveals that neither feasibility studies nor planning policies had been adopted before they were launched.

“Who is their targeted audience, what is the expected cost and what are the sources of funding? All those questions should have been answered before the new private channels started transmission,” Jihan Rachty, former Dean of Cairo University’s Faculty of Mass Communication said.

Part of the problem of planning is determining the targeted viewers. Owners of the new satellite channels should realize that only 12% of the Egyptian people have satellite dishes. “Unfortunately, some businessmen venturing in media projects are looking for prestige and control. They are not interested in the business itself. That is why they do not have serious plans for such projects,” Rachty said.

The channels’ early problems could be part of an economic slump the Arab economies and the media market experience. Arab advertisers’ spending is declining too as a result of the current economic slump.

A report released by the Washington Institute for Near East Policy revealed that financing is a primary challenge facing the satellite television industry in the Arab world.

“ With annual costs in the tens of millions of dollars, few if any satellite television stations in the Arab world are turning a profit. Some have business plans, which rely on advertising revenue alone (so-called "free to air" channels), while others encode their transmissions and require a proprietary decoder and the payment of a monthly fee. Such fees, which run in the range of $10-$30/month and up, put satellite television beyond the reach of many in the region,” Jon B. Alterman said in the report.

At the present time, Alterman added, “the Arab advertising market appears too weak to allow a broad variety of free-to-air systems to prosper. The market is growing, however, and television spending is growing faster than the overall market.”

Commenting on the Egyptian experience, Jihad Fakhr El Din, head of the Dubai based Arab Media Research Center said, “TV privatization in Egypt comes at a time when the pan Arab market is extremely crowded. Even the major players in this market are suffering, both financial and audience losses.”

However, Fakhr El Din said there are many positive indications that the privately owned Egyptian TV channels are able to establish a foothold in the market.

“Well-thought out product concepts are required in order to capitalize on this initial success. One major limitation needs to be surmounted. Will they want to position themselves as Egyptian channels targeting the Egyptian market, or reaching out with a wider net, and that is the pan Arab market?”

Yomna Kamel