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Whys and Wherefores of Satellite Channel Ownership

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Naomi Sakr

From Satellite Relams: Transnational Television, Globalization and the Middle East
© 2001, Naomi Sakr
This text appears here by the permission of I. B. Tauris publishers.

Saudi Space


The daily Al-Riyadh contained an article in November 1997 which began: 'When talk in Arab media circles turns to Arab television news, the sentence "space is Saudi" is often heard'. The author of the article went on to attribute the expression to the satellite media activities of a select and experienced 'elite' of Saudi businessmen. In doing so, he not only highlighted the remarkable concentration of satellite media in Saudi hands, but also touched on two apparently basic distinctions between the predominant Saudi approach to satellite television and that of other Arab states, especially Egypt. Unlike the Egyptian channels, all run by the state-owned ERTU and emanating from the Egyptian capital, Cairo, the three Saudi ventures referred to in Al-Riyadh, namely MBC, ART and Orbit, were established in capitals outside Saudi Arabia by private entrepreneurs. Yet, despite these contrasts, the article also picked up on a nationalistic thread common to both the Saudi and Egyptian efforts. 'As Saudi nationals', the author wrote, 'we are proud of the phrase "Saudi space".'74

It is an important facet of the Saudi nation state that it bears the name of its ruling family, the Al Saud. Abdel-Aziz al-Saud (or Ibn Saud), who unified the Nejd and Hejaz to become the first king of Saudi Arabia in 1932, fathered 45 recorded sons by at least 22 different mothers betWeen 1900 and 1953.75 At the end of the century, up to three generations later, 25 of those sons were still living and the total number of princes was widely estimated at 3000, scores of whom held posts at all levels of government. Even after the appointment of a new Council of Ministers in 1995, the first serious shake-up of the cabinet for 20 years, the key senior ministries of defence, foreign affairs and the interior were reserved for members of the Al Saud -- a situation unchanged by the reshuffle of 1999. Whether as ministers and deputy ministers, provincial governors and deputy governors, head and deputy head of the Department of General Intelligence, head of the Youth Welfare Organization or other official institution, princes occupied the majority of influential positions. King Fahd's youngest and favourite son, Prince Abdel-Aziz,76 took up his first post as minister of state without portfolio in May 1998 and was made head of the Office of the Council of Ministers in January 2000, at the age of just 28. His brother, Mohammed bin Fahd, was meanwhile governor of the Eastern Province. Prince Bandar, son of the defence minister, Prince Sultan, was Saudi ambassador to the USA. These royal appointments are just a few examples from a very long list.

Under the 1992 Basic Law, which is effectively Saudi Arabia's written constitution, there is nothing to prevent members of the ruling family from playing as prominent a role in the media as they do in government. On the contrary, the media are viewed more or less as a tool of government and, internally, Saudi radio and television are run by the Ministry of Information. Article 39 of the Basic Law states:

Information, publication and all other media shall employ courteous language and the state's regulations, and they shall contribUte to the education of the nation and the bolstering of its unity. All acts that foster sedition or division or harm the state's security and its public relations or detract from man's dignity and rights shall be prohibited. The statutes shall define all that.77

In this situation, whether or not the ownership of a Saudi newspaper or externally based broadcasting station could be traced to King Fahd or one of the Saudi princes, the ruling family's control over the Saudi media in the 1990s was something many Saudi nationals took for granted. If a certain columnist in the widely read Al-Riyadh used his column to take the authorities to task over censorship issues, it would be equally widely supposed that he had been given the green light by the minister of the interior, Prince Nayef, to achieve some objective of the Al Saud vis-a-vis the kingdom's conservative religious establishment. If another widely read daily, Okaz, appeared to have the inside track on the border agreement with Yemen, it would be assumed their story had princely blessing. But what of the satellite media? If the media were being used internally in pursuit of the interests of specific members or branches of the royal family, would the same people or groups have a political or economic interest in exerting control through satellite television, and what constituency would these satellite channels be addressing? As the Saudi private sector expanded throughout the 1990s many companies complained, privately and anonymously, that the unwritten requirement on them to share their profits with one or more princes was tantamount to a tax. Could royal involvement in satellite television be explained as a form of tax, or were princes themselves prime movers in the creation of Saudi satellite channels?

MBC, founded in London in 1991, followed a path already established by the two Saudi-owned pan-Arab daily newspapers, Asharq al-Awsat and Al-Hayat, in being based in London and closely linked to the Al Saud. However, links to the Al Saud did not mean these ventures were based on similar objectives. Grudges exist and score-settling occurs not only among the sons of Abdel-Aziz's different wives but even among the so-called Sudairi Seven. The seven sons of Abdel-Aziz by Hassa bint Ahmad al-Sudairi include King Fahd, the defence minister Prince Sultan, and the governor of Riyadh, Prince Salman. Ahmad bin Salman, the prince behind the daily Asharq al-Awsat, launched in London in 1979, is a son of Prince Salman. As someone who is said to have avoided taking commissions on foreign contracts, Prince Salman earned himself a reputation for integrity and a willingness to listen. When another prince, Khaled bin Sultan, son of the defence minister, nurtured a competitor to Asharq al-Awsat in 1990 by putting his money into a Beirut-registered title, Al-Hayat, his target was not Asharq al-Awsat but King Fahd. As head of the Arab forces in the US-led coalition that repulsed the Iraqi invasion of Kuwait, Prince Khaled attracted too much attention for King Fahd's liking and lost his post. In Contrast to both Asharq al-Awsat and Al-Hayat, MBC was directly linked to King Fahd himself. It was set up by two private entrepreneurs, one of whom, Shaikh Walid al-Ibrahim, is the brother of King Fahd's third wife and uncle of the king's youngest son, Abdel-Aziz, whose favoured position in the royal family was noted above. Shaikh Walid was still in his twenties when he founded MBC.

While the financial support MBC received from King Fahd in its early years will remain a matter of conjecture, the extent of the king's logistical support is a matter of record. Despite the official ban on satellite dishes in Saudi Arabia, there was no attempt to hide MBC's large Saudi following, while the MBC-FM radio station, launched in 1994, became the only commercial radio station allowed to cover the kingdom terrestrially. Saudi Arabia's majority shareholding in Arabsat was deployed to MBC's advantage when the company was allowed to lease the powerful S-band transponder on Arabsat 1C, thereby boosting its signal and increasing its audience in the kingdom. Shaikh Walid al-Ibrahim's company SARAvision, registered in Riyadh in 1995, was granted an exclusive licence to deliver a wireless cable service to major population centres in Saudi Arabia, enabling satellite channels to be screened for objectionable content before being retransmitted to Saudi screens. MBC was to supply four thematic channels to the cable network, later renamed Al-Rawwad. Despite long delays and the eventual cancellation of the Al-Rawwad system, no alternative took its place. The evidence of MBC's support from King Fahd was so strong it gave rise to the joke that Fahd himself had chosen the initials MBC to stand for 'My Broadcasting Company'.78 Given the focus of other Saudi satellite companies set up afterwards, it should be noted here that MBC, launched just in time to cover the October 1991 start of the Arab-Israeli peace talks in Madrid, was promoted on the strength of its international news coverage and for most of its early period considered itself 'news-led'.79 The emphasis was on international and regional news, however, not on news of politically sensitive developments in Saudi Arabia or other Arab countries of the Gulf.80

The second investor in MBC was Shaikh Saleh Kamel, a billionaire banker who started out as a contractor in Saudi Arabia in the 1970s and established the Dallah Albaraka holding company in Jeddah in 1982. During the 1980s Shaikh Saleh was linked with Prince Alwaleed bin Talal bin Abdel-Aziz when the two businessmen took a controlling stake in the kingdom's National Industrialization Company. Their partnership was renewed in 1994 when policy differences led MBC's principal backers to buyout Shaikh Saleh's 37.5 per cent stake and he set up his own company, Arab Radio and Television (ART) together with Prince Alwaleed, the latter holding a 30 per cent share to Kamel's 70 per cent. Prince Alwaleed was at that time rising to international prominence by making timely investments in US and European companies (several of which are discussed as part of the review of Middle Eastern media magnates' international connections contained in Chapter 3).

ARTs first offering, in 1994, consisted of four free-to-air channels: one general, one exclusively for sport, one for children and another showing only films. The company had acquired the rights to a sizeable library of old Egyptian films from the Egyptian Ministry of Culture, allegedly for a knockdown price of $1200 per film.81 Television programmes produced by Egyptian and Jordanian companies backed by Shaikh Saleh had also reportedly built up around 6000 hours of programming.82 In autumn 1995 ART, uplinking from near Rome, began the switch to digital transmission via PanAmSat 4 and then moved to becoming subscriber-only in the spring of 1996. Ample supplies of receiving equipment were reportedly made available on a complimentary basis to promote the ART service to potential subscribers.

Significantly, as a bouquet of encrypted digital channels carrying no news, ART avoided presenting itself as a competitor to MBC. Instead the company found itself in competition with the third Saudi-owned satellite operator to be established in the early 1990s, namely Orbit. The competition was all the more inrriguing since Orbit, like both MBC and ART, was started by members of the Al Saud. The prince behind Orbit was Khaled bin Abdullah bin Abdel-Rahman Al Saud, a cousin of King Fahd.83 Prince Khaled's Mawarid Group had built up interests ranging from gas stations and fast-food chains to banking and Construction and medical supply organizations. Prince Khaled's son Fahd was also involved in Orbit, which chose Rome as its base. Its multiple encoded television and radio channels went on air in May 1994, from Arabsat, and its decoders went on sale for $10,000 each. Subscriptions, priced at $20-60 per channel per month, were handled from an office in Limassol in Cyprus. Orbit's early sales pitch included an emphasis on news coverage that it said would be 'live and uncensored'.84 It certainly seemed, from the high price of the Orbit package and the large audience targeted in the company's business plan, that the investors behind it were aiming primarily for profit. They based their calculations on a target market of 250,000 affluent households in the Middle East and North Africa, a further 5 million speakers of Arabic in Western Europe and 1.5 million potential viewers in the USA.85 Orbit Soon discovered, however, that this audience needed more persuasion. Within. a year of starting up, the company had slashed the price of its decoders to around a quarter of the original amount.

This chapter began by framing three questions to be asked about each satellite venture: who was behind it, why did they get involved and by what means. So far, the investigation into the Saudi channels has confirmed the commonly held view of a ubiquitous Al Saud presence and extensive Al Saud control. But the question of motivation seems to elicit a less uniform response. Acknowledging the unprecedented concentration of media ownership in the hands of members of thc Saudi ruling family is not the same as saying the king and princes acted in concert. It is dearly important that each of the three groups of investors was able to draw on existing political and economic power to establish a major media operation. In pursuit of their objectives, all three groups left the confines of the kingdom, bearing testimony to the fact that harsh censorship laws and the self-appointed but government-financed religious police (the feared mutawwaeen) had created an environment intolerant of public entertainment or media debate. They did so using the billions of dollars at the disposal of ruling family members and their business partners. Thirdly, they did so in spite of the official ban on satellite dishes in Saudi Arabia. When it comes to asking why the Al Saud got involved in satellite broadcasting, the answers for each of the different ventures bear similarities but are not quite the same. Moreover, the answers appear to have changed over time.

Media censorship inside Saudi Arabia has long imposed a straitjacket crafted by the joint efforts of senior, and now elderly, princes and their highly conservative allies in the religious establishment. The tighter the constraints, the greater the turmoil likely to result from relaxing them. Yet the pressure for relaxation is intensified by the weight of the kingdom's population of young people and is recognized at various levels of government. Today, more than two-thirds of Saudis are aged under 40, and a large number of them question the extent and purpose of censor-ship.86 The authorities' censorship dilemma was thrown into sharp relief when Iraq invaded Kuwait and the official Saudi broadcast media remained silent on the event for the next three days. CNN not only filled the breach in terms of coverage but soon gained a reputation for its style, based not on wooden editorializing but on what had all the appearance of instant, live news with minimum editing. The presentation of what one specialist describes as 'pure, untainted, spontaneous' news87 marked a turning point for Gulf viewers. The message was not lost on MBC. 'We want CNN in Arabic' was the phrase one staff member remembers hearing when he was recruited.88

Hundreds of millions of dollars went into the project to emulate CNN. MBC started with $300 million in working capital and an annual budget of $60 million.89 It spent at least $12 million on new headquarters in the London district of Battersea, which were opened by John Major, then British prime minister, in a ceremony attended by the Saudi information minister, Ali al-Shaer, in March 1995. Its staff expanded to well over 300. By 1997 the favoured 'guesstimate' for its annual outgoings was in the region of $100 million. The severe financial cuts that followed in 1998 were widely interpreted to reflect Shaikh Walid's understanding that, given King Fahd's advanced age and failing health, his subventions to MBC would not continue indefinitely. These cuts, including around 120 redundancies, were accompanied by a change in management and editorial direction that shifted the emphasis from news to entertainment. The appointment of Ian Ritchie to the post of managing director in April 1998, replacing Hala Omran of Bahrain, set in train a process of putting control over running the station increasingly in the hands of men with experience of commercial media in Britain. Ritchie, whose background was in the UK's national Channel 5 and in regional television, soon acquired the tide of MBC chief executive officer. He was joined in January 1999 by Philip O'Hara of Mirror Group Newspapers, who took over as sales and marketing director of MBC and was appointed six weeks later as chief executive officer of ARA Media Services.90 October 1999 saw Ritchie taking the major step of combining MBC's news and production departments under the newly appointed Steve Clark, who was formerly head of Regional Programmes at Central TV in the UK.91

MBC's new evening schedules for autumn 1998 demonstrated a clear decision to compete head-on with the Lebanese satellite channels. This was evident in an upgrading of entertainment, in the form of films, quizzes and gameshows, and a downgrading of news, reflected in a move to shorten the late evening news and screen it at a later time. A year later Ritchie intimated in a press interview that Walid al-Ibrahim would have no objection to benefiting from the 'synergy' that might be derived from investment by a Western multinational media corporation.92 Saudi Research and Marketing, the group behind Asharq al-Awsat, was seen by some as a natural partner for MBC but declined to become involved.

Like MBC, ART was an expensive operation from the outset, especially given Saleh Kamel's heavy investment in a brand new high-tech production and transmission complex at Avezzano, south of Rome. But Kamel and his parmer in ART, Prince Alwaleed, had ample financial resources. Kamel's Dallah Albaraka business group, with interests ranging from Islamic banking and manufacturing to trade, shipping, farming and tourism, had assets estimated at $7 billion by 1998.93 Prince Alwaleed's fortune by that time was in the region of $13 billion, amassed from land deals and construction work in Saudi Arabia and timely investments in companies such as Citicorp and Saks Fifth Avenue. The prince seemed ready to subsidize the Arab Media Corporation, owner of ART, from the profits of his other businesses. From ARTs staggered launch, between 1994 and 1996, to the end of the 1990s, there was no evidence that it had made any money. On the contrary, some industry estimates suggested it was losing $168 million per year.94 In 1998, the same year that the two shareholders ploughed in another $250 million to cover the cost of adding four more channels, advertising revenue was probably less than $26.5 million.

Prince Alwaleed's motives in absorbing such losses could only be gleaned from his wider preoccupation with the media business as a 'powerful investment tool'. Describing himself as 'proud to be a member of the ruling family of Saudi Arabia', he told one interviewer that he was deeply involved in media not only as an investor but as an enthusiast. 'Media', he said, 'helps me pave the way for new investments and strengthens existing ones.' The prince linked ART's wide reach with his own personal feeling of being at home in 'Riyadh, Paris, Cape Town, New York, Tokyo or any other city on earth'. He continued:

I also believe that this feeling stems from the fact that the telecommunications revolution has put the world at one's fingertips. I, for instance, adore the fact that ART is present wherever I go, given that I travel extensively and my work has necessitated that I travel to every continent. And since ART channels cover the earth, I always feel a little closer to home.95

Shaikh Saleh regularly hinted in speeches and media interviews that ART's content mattered more to him than the money it cost to produce. It was aimed, he told his associates, at a conservative but silent majority of Muslims who were neither secularists nor so-called 'Islamic fundamentalists'.96 The emphasis in programming was on what Shaikh Saleh described as Islamic values and presenting Islam 'as it should be presented to the rest of the world'. 'Someone like me', he told an interviewer in 1997, '[who is] not completely to the left or the right - and there are millions like me - wanted to present a more tolerant, middle-of-the-road message to the Arab and other peoples of the world.'97 This focus on Islam was enshrined in a new ART channel launched in 1998 under the name lqra (Read), to teach the Quran. In all ART channels, however, editorial staff freely admitted to a high degree of self-censorship.98 As already noted in reference to Egypt, producers commissioned by ART were required to conform to guidelines very similar to those issued by Saudi Arabia's domestic terrestrial television in 1982. Shaikh Saleh's associates say he made a deliberate business decision to reject the idea of producing news bulletins or a news channel, calculating that it would either damage his relations with Arab governments in the many countries where Dallah Albaraka has interests or create a means by which the same governments would ask him for favours.

Being based on concern for content over profit, it appears that some of Shaikh Saleh's decisions actually created obstacles to reception of ART channels rather than facilitating it. In 1997 he suddenly abandoned his shared satellite and decoder arrangements with another pay-TV operator, Showtime, jointly owned by a Kuwaiti company and Viacom. This move was later attribUted to ART's wish to dissociate itself from Showtime's more relaxed and Westernized content.99 Kamel himself declared that advertising revenues could never cover the cost of television production of the kind he wanted to see. Addressing a seminar on the sidelines of the Cairo Radio and Television Festival in 1998, he argued that pay TV offered the best means of financing alternatives to the 'dazzling shows that are offered by the West, which do not suit our religion and our traditions'.100 It is said that the least unprofitable ART channel was the non-commercial one, Iqra (Read). Instead of advertising revenue, this brought in donations form pious Saudis.101

The sums spent on creating Orbit were even larger than those lavished on ART. One well-informed account of the investment involved in establishing Orbit gives a figure of at least $1 billion, suggesting it may well have been the most costly direct satellite broadcast effort in the world.102 Costs were driven up by a series of setbacks, including a weak signal on one of the ageing Arabsat craft and strong resistance to expensively priced decoders. But the company started out with big ambitions and kept going. Its backers were originally interested in buying Star TV, based in Hong Kong, from its first owner, Richard Li. It was when this sale failed to materialize that they headhunted Alexander Zilo, an American who had worked in US television before helping to found Star. Zilo, quoted in Newsweek, said Orbit's aim was to provide a niche market of well-travelled and affluent Middle Eastern professionals with programming that would not otherwise be available to them in their home countries. 'These people travel a lot and watch Western television when they're away. When they come home, there's nothing,' he said.103 Yet Orbit was to be a 'self-regulating, conscientious broadcaster, espousing family values'.104 Rather than flouting local traditions, the company's managers professed themselves committed to socially responsible programming that would reflect the interests, tastes and 'political and religious sensibilities of the region's distinctive cultures'.

By linking political and religious sensibilities in this way, Orbit affirmed its closeness to the thinking that drives government-owned media inside Saudi Arabia, where religious reference points are used to legitimize political structures. Under King Khaled the mutawwaeen or religious police, grouped in the Committee for the Prevention of Vice and Propagation of Virtue, were made state employees, while King Fahd adopted the title of Custodian of the Two Holy Mosques. A Saudi-born researcher has argued convincingly that the mutawwaeen, by preserving a moral order where outward appearances are deemed to matter most have played a crucial role in enforcing a political discipline that benefits the Al Saud.105 Orbit's own role in shielding the ruling family from political questioning was made plain in 1996, less than two years after its start. One of its early initiatives was to sign a ten-year £100 million contract with the BBC in 1994 to provide an Arabic television news service. Although the contract ruled out editorial interference in the BBC's output, friction between the two sides mounted as BBC journalists reported on the activities of an exiled Saudi dissident, Mohammed Masari. Orbit's refusal to screen such items led to breaks in transmission in January 1996.106 When a BBC Panorama programme, called Death of a Principle and highly critical of Saudi Arabia's human rights record, was aired in April, the contract was brought to an untimely end. Orbit's chief executive, Alexander Zilo, denounced the programme as a 'sneering and racist attack on Islamic law and culture'.107 His reaction, while ostensibly defensive of Saudi Arabia's political status quo, may also have reflected the determination of Orbit's management to safeguard business viability by ensuring unbroken transmission to viewers inside Saudi Arabia. Orbit had already encountered distribution difficulties in its early days. Its service had been launched in May 1994, just weeks after Decree No 128 of 10 March banning the use, manufacture or import of satellite dishes and outlawing the delivery of television satellite feeds to subscribers in the kingdom. The Ministry of Interior was charged with enforcing the ban, which it did selectively. In fact the main result of the so-called ban on dishes was not their removal from the market but a steep rise in their price. Nevertheless, the Orbit-BBC news service provided enough coverage of Saudi dissident activities for the authorities in the kingdom to make a special point of confiscating Orbit decoders.

This and other evidence presented here shows the limited explanatory value of saying simply that the three major Saudi-owned satellite ventures were set up under the auspices of members of the Al Saud. The power relations underlying these satellite ventures were complex from the outset because they reflected the shifting alliances known collectively, at any given moment, as the Saudi state. Different branches of the extended Saudi ruling family may have diverging interests vis-a-vis each other, even if they have a shared overall interest in safeguarding the supremacy of the ruling family as a whole. Satellite technology provided a new arena in which state and non-state actors in Saudi Arabia could collaborate and compete. It is in the tension between the interests of individuals, the monarchy and the state that the story of 'Saudi space' is played out.

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