Middle East broadcaster ART is set to benefit from the cancellation of the Sara Vision MMDS project in Saudi Arabia and the relaxation of the dish ban in that country. ART president Sheikh Saleh Kamel spoke to Interspace at MIPtv…

Just a week before MIPtv in Cannes, Saudi Arabia’s notorious dish ban was formally lifted by the authorities following the closure earlier this year of the troubled Sara Vision MMDS project. Sheikh Saleh Kamel, president of Arab Radio & Television (ART), in an exclusive interview with Interspace, admitted that ART, in its seventh year of operation, was still losing money.

“The key about this business is once you break even then the extra growth represents pure profit, the fixed costs remain much the same,” says Saleh. “We are on track to achieve break-even before the end of next year. It has been slower than we originally expected, and we have made certain changes to bring us back on track. We have reorganised as we learn, gathering experience as we go and we now know how to save money from here and there. These changes all help bring us closer to our goal.”

Saleh insists progress is being made, especially in North America where ART says it now has 80,000 subscribers (via the Kelly/Echostar systems). As to the rest of the world, Sheikh Saleh says: “We met our goals for 1999,and we ended the year with a global subscriber base of some 300,000. Each month we do a little more, and we find that word of mouth is our best promotion. I have to say as far as markets like North America are concerned we now see 100,000 as achievable, and that 100,000 could grow to 200,000 and more. The revenue stream from North America means that we are now profitable in the region, and this year we expect even greater results.”

However, not all the MIPtv participants agreed with the global figure. One industry insider expressed great surprise when asked to confirm these numbers, indicating that as far as his company was concerned the Mid-East numbers were nearer 9,000-10,000 DTH subscribers, which if true, represents a considerable discrepancy.

Nevertheless, ART claims it is making dramatic changes to the way it operates. It has just hired John Tydemann, for example, a well-known figure in pay-TV in the region (Tydemann was earlier involved in the Gulf DTH/Showtime joint-venture between Kipco and Viacom). ART has also cut back its dependence on its Avezanno, Rome studio complex, switching much of the production back to the region and in particular Cairo and Beirut, just two of the ten production centres under the ART umbrella.

“We now have more capacity, and are strong enough to see some of the surplus used by others,” says Sheikh Saleh. “The new facilities have also allowed us to move some production back from Avezzano (near Rome, Italy) to the Middle East. We found it not only expensive, but we were not getting the scope of quality talent that we wanted. There is something special about Cairo and Beirut: the talent is there, the excitement is there. We found it difficult replicating this in Italy. The exact same variety programme, the same guests, the same audience, would all be better done from Cairo or Beirut. But we will not close Avezzano, except we now use it at a sensible level, and of course the switching and muxing is all done from there.”

New studios – and ART is building another pair in Jeddah, Saudi Arabia – mean surplus capacity. “We have changed our policy,” says Saleh. “Besides producing for ART [the studios] are now making shows for non-ART channels, like MBC. In Cairo we produce shows for MBC. This is a deliberate change of policy, reversing our original position, which kept such production facilities for ourselves. In Cairo we have a brand new studio complex, for example, available to all broadcasters.”

Saleh says the biggest improvement made in the past year is in customer churn. “Subscriber churn is well down, we have almost 87 per cent renewals this year, or 13 per cent churn, and this is really excellent. I am delighted with this figure, because it wasn’t always so good, and shows not only are we getting our programming right but we are more proficient in gathering in the cash. Now we succeed in keeping our viewers, and to build on the base numbers.”

ART admits that despite the opportunities now existing in Saudi Arabia, it still has operational difficulties in Egypt and Syria, potentially giant markets. They have established their own box distribution company in Cairo which is now making progress, after some years of struggling to work through the government-backed distribution company. In Syria they are not yet licensed, although ART say this is expected to be formalised in May. Boxes are available in the market, but a licence would make advertising and promotion easier to handle.

Saudi Arabia is ART’s jewel, not only the largest Gulf market, but the market for which most of ART’s programming is targeted. The closure of Sara Vision and relaxation on dish ownership will make a huge difference. “In Saudi Arabia, everything is now legal,” says Sheikh Saleh. “We bring the decoders through customs officially, we pay 11 per cent import tax and everyone is happy.”

Kamel’s partner in ART is Prince Al Waleed bin Talal, although it has been widely reported that the Prince has ceased investing in ART, effectively reducing his stake to around 24 per cent. Sheikh Saleh declines to comment, although stresses that Prince Al Waleed is still vice-chairman of ART and still “personally supervises our music channel.”

As to the future, Saleh says PPV and pay-per-event is ART’s next goal. “We will start to charge for PPV and events later this year. Mainly it will be for sport and very new Arabic movies.” He says he is in this business for the long haul, adding: “In America, in Britain and France, these [pay-TV] businesses were slower to start, and it is the same for us. We will reach our goals.”