Middle East broadcaster ART may abandon the pay-TV business…

Middle East platform Arab Radio & Television (ART) has confirmed to Interspace that it may quit pay-TV. While no decision has yet been made on whether it will offer its five channel premium bouquet on a free-to-air basis, one channel (ART Music) is now available to anyone viewing Arabsat or Nilesat through a digital set-top box, the intention being to attract pan-regional advertising to the channel. ART is owned by Sheikh Saleh Kamel, with a minority holding (30 per cent) controlled by Newcorp/Mediaset investor Prince Al Waleed.

One unconfirmed report suggests Al Waleed has decided against further investments in ART, although Sheikh Saleh seems able to continue funding the operation. What is beyond doubt is that ART is by any measure well beyond its own five-year plan to break even, and profits seem as elusive as ever. ART celebrates its sixth anniversary at the end of November.

ART’s troubles confirm that making money from subscription TV in the Middle East still seems to be a nightmare. Rival Orbit is also finding it every bit as tough to make ends meet and is likely to switch operations from Rome to Bahrain where the government is keen to attract broadcasters. However, ART is enjoying some success outside the region. Its North American operation is extraordinarily successful, with more than 60,000 Arab bouquet subscribers now claimed for the Echostar-backed DISH network. ART subscriber numbers in Latin America, Europe and the Far East/Australia are also buoyant, with some 25,000 claimed in Europe (to the Arabesque bouquet, some 12,500 on France’s TPS system).

ART is enjoying some subscription success in Egypt (as is Showtime) with much talk of Egypt suffering box shortages thanks to aggressive on-screen promotion by Nilesat tenant the state-backed Egyptian Radio & Television Union (ERTU). However, it is unlikely that total Middle East subscribers stand at much more than 100,000. One local commentator suggested that without Saudi Arabia and Egypt’s subscribers, ART may as well pack up.

Showtime, however, seems to be more hopeful, with talk of 200,000 subscribers and the promise of profits soon. The platform’s new promotional activity focuses on that most Egyptian of movie-star icons, Omar Sharif, familiar to western viewers as well as locals. Showtime has just won carriage of CNN, plus Cartoon Network and TCM, each considered a valuable asset. Showtime largely exists on acquired western programming, which it subtitles into Arabic, and promotes in the Arabic language.

However, whatever progress is made in the subscription arena, ART’s income is nowhere near matching expenditure. A senior ART official put programming expenditure at $500,000 per day earlier this year, topping $180 million per annum at one stage. Those losses and investments have now been curtailed, with significant changes to ART’s senior management team, the dropping of loss-making education channels and a much greater attention to the bottom line – perhaps a new experience for some of ART’s senior managers.

Nevertheless, the expenditure continues. A new and spectacular production centre is close to being completed in Giza, near the Pyramids, comprising two huge 500 square metre studios and a pair of 150 square metre sound stages, plus impressive editing and post-production facilities. The final bill, when the adjacent admin block is finished, is expected to be close to $50 million, and the site is designed to allow production to shift from ART’s Avezzano facility, near Rome "back to where our audience is based," according to an insider.

Closing, or reducing, its dependence on Avezzano is likely to cost ART a small fortune. Italy has famously tough labour laws, and ART is currently facing some 78 lawsuits by disgruntled employees. More likely is that Avezzano will be retained, at least as a transmission and Mux centre. But ART production chiefs recognise that ART’s points of difference with its free-to-air competitors (currently more than 60 channels) must be highlighted. Conse-quently, the coming months will see more resources invested in exclusive sports, especially soccer, a huge driver in the region. Second thrust will be in new movie production, with around 15 projects now at various stages. ART considers this to be the minimum slate for 2000.

The Giza complex allows ART to invest in more drama shows and long-form series, highly valued by Middle East audiences. Another benefit, according to Usama Al Sheikh, general manager at ART, will be other production demands from independent producers in the region.

Those independents are already supplying content to ART’s rivals. Another recent TV start-up is already being talked about. NBN is an all-news channel and will shortly sign with Nilesat, and intends adding Promo Sat, a channel that is part entertainment and part a barker channel with on-screen listings data. NBN and Promo Sat hope to be on air by January.

New channels are also coming from the Qatar-based Al Jazeera news organisation. It is preparing two new channels, covering business news and documentary programming. In the lower Gulf, Dubai is also floating new channels. "By CabSat 2000 [March 1 2000] we want to be transmitting about 18 hours a day on the sport and business channels, moving to 24 hours around mid-year. Our expectation is for both channels to supply English-language services on a more or less 50/50 basis, but the ultimate objective is to have separate channels in English and Arabic," says Riyad al Shuabi, who advises the Dubai government on broadcasting matters. "With this trend for more thematic channels we are planning a dedicated drama channel. This means we will have drama, sports and business as well as our Channel 33, which is our existing English-language general channel, which we are also proposing to put on satellite."

Al Shuabi says that the Drama Channel will launch on December 2, and will be on Nilesat, Arabsat and Eutelsat and on Telstar 5 and Intelsat K. "We want global coverage for our four main channels, that is EDTV, Drama, Sport and Business, all in digital," he says. "There will also be two private channels on satellite. They will be completely different to anything already transmitted by Dubai TV." Al Shuabi declines to elaborate on content or start-dates for these channels, except to hint, with a smile, that they may be called "Shuabi 1 and Shuabi 2". In the Middle East, it seems, anything is possible.