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3rd EDITION
                                                                                                                                  20
                                                                                                                                  09




                                              ARAB MEDIA OUTLOOK 2009 - 2013
                                                                                               ARAB                               20
                                                                                                                                  13
                                                                                               MEDIA
                                                                                               OUTLOOK

                                                                                                INSPIRING LOCAL
                                                                                                CONTENT
                                                        ISBN 978-9948-15-422-8




                                                                                                FOREC A S T S A ND A N A LY SI S OF
                                                                                                TRADITIONAL       AND     DIGI TA L
                                                                                                MEDIA IN THE ARAB WORLD




P.O. BOX 39333, Dubai, United Arab Emirates
 Tel: +971 4 361 6666, Fax: +971 4 368 8000
              www.dpc.org.ae
Copyright© 2010
This document is provided by Dubai Press Club and Value
Partners for guidance only, and does not constitute the
provision of legal advice, accounting services, investment
advice or professional consulting of any kind. The information
provided herein should not be used as a substitute for
consultation with professional advisers. Before making
any decision or taking any action, you should consult a
professional advisor who has been provided with all the
pertinent facts relevant to your particular situation.


The information is provided “as is”, with no assurance or
guarantee of completeness, accuracy or timeliness of the
information, and without warranty of any kind, express
or implied, including but not limited to warranties of
performance, merchantability and fitness for a particular
purpose. Dubai Press Club holds all copyrights to this report
and no part thereof may be reproduced or replicated without
prior explicit and written permission. In producing this
report, Dubai Press Club was assisted by Value Partners.


Requests for permission should be addressed, in writing,
to Maryam bin Fahad, Executive Director, Dubai Press Club,
P.O. Box 39333, Dubai, UAE (email: info@dpc.org.ae).
For additional information or to acquire further copies of
this publication please visit www.dpc.org.ae


ISBN 978-9948-15-422-8
ARAB
MEDIA
OUTLOOK
2009-2013
INSPIRING LOCAL CONTENT

FORECASTS AND ANALYSIS OF TRADITIONAL
AND DIGITAL MEDIA IN THE ARAB WORLD
Production acknowledgement

    For Dubai Press Club
    Maryam Bin Fahad, Executive Director
    Adel Ibrahim, Senior Manager Operations
    Sadiq Jarrar, Communications & PR Manager
    Mohammad Sabra, Marketing Manager
    Sabah Qussous, Senior Customer Relations Executive
    Mohab Mazen, Assistant Events Manager
    Nour Aldin Al Yousuf, Senior Executive Multimedia
    Afra Matar, Media Relations Executive
    Lubna Otaibi, Media Relations Coordinator


    For Value Partners
    Santino Saguto, Managing Director MENA Region
    Alessandro Araimo, Global Head of Media Practice
    Janice Hughes, Senior Director
    Tabitha Elwes, Head of Broadcasting Practice
    Emmanuel Durou, Senior Manager
    Anurag Arora, Senior Consultant
    Leila Hamadeh, Consultant
    Riwa Sawaya, Consultant


    For Jiwin (Arabic translation)
    Musab Zakarya, Editorial Manager – Arabic


    For Impact BBDO (Report design)
    Spiro Malak, Account Director

    Paul Fayad, Creative Director
4
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
the Arab media consumers. When it comes to monetisation of online content,
there are areas of concern, but the picture that emerges from our study is
one of consistent and successful experimentation. The report has shown that
various models are being tried to effectively monetise online content, with the
‘freemium’ model emerging on top.

I would like to humbly submit that this third edition of the Arab Media Outlook
represents a paradigm shift compared to the previous editions in terms of both
the scope of coverage and depth of analysis. I am sure you will agree with me
that this is not only a delightful source of a wealth of data and information, but
also a reliable reference on all aspects of the media industry in our region. We
hope this report will trigger new studies and researches into the dynamics of
the media in our region.




Sincerely yours,

MONA AL MARRI, CHAIRPERSON
DUBAI PRESS CLUB




                                                                                     7
Arab Media Outlook 2009-2013 - Inspiring Local Talent
At the very outset, let me share the good news that a majority of media
stakeholders that we interviewed across the 15 countries covered in the report
thought future prospects for the media in the region were positive in spite of
the impact of the economic downturn. We also noticed a growing preference
for local Arabic content in countries that produce local content such as Egypt
and Lebanon, indicating further maturation of the media industry and media
consumers away from generalized regional or global media content.

You will notice the structure of the report has changed considerably from the
two previous editions. While the first section offers an extensive overview of the
media market in the region across the different platforms, print, TV and online,
in relation to the global scenario, the second section narrows down on each of
the 15 countries covered, with special focus on the four countries where the
market research was conducted. We then move on to the last section, which
forms the main thematic focus of the report, an assessment of the creation
and dissemination of local/regional content in Arab media. A number of case
studies, offering interesting comparisons or contrasts, have been included in all
the sections, illustrating the myriad ways in which the media is evolving in the
Arab world, even as it grapples with multiple challenges and opportunities.

I trust that the insights and analyses, as well as the data and projections that
this report contains will serve as a reliable source of reference for media owners
and experts, policy makers, journalists, students and the general public.




MARYAM BIN FAHAD, EXECUTIVE DIRECTOR
DUBAI PRESS CLUB




                                                                                     9
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Acknowledgements
14th October Newspaper, Yemen                           du, UAE
26 September Newspaper, Yemen                           Elaph, pan-Arab
Abu Dhabi Media Company (ADMC), UAE                     Endemol Middle East, Lebanon
Al Ahdath Newspaper, Sudan                              Es-Sahafa, Tunisia
Al Ahdath Al Maghribia Newspaper, Morocco               Etisalat, UAE
Al Ahram Centre for Translation and Publishing, Egypt   Filmworks, UAE
Al Ahram Newspaper, Egypt                               Future TV, Lebanon
Al Akhbar Newspaper, Egypt                              Gulf Journalist Association, Bahrain
Alaan Website, Kuwait                                   InMediaPlus, Lebanon
Al Arab Al Yawm Newspaper, Jordan                       International Media Support, Yemen
Al Arab Newspaper, Qatar                                Jeeran, Jordan
Al Arabi Training Centre, Syria                         Jordan Media City
Al Arabi Magazine, Kuwait                               Jordan TV
Al Atheer Media, Palestine                              Knowledge View, pan-Arab
Al Ayam Newspaper, Morocco                              Koulouna Shouraka Online, Syria
Al Bayader Magazine, Palestine                          Kuwait Journalists Association
Al Bayan Newspaper, UAE                                 Kuwait News Agency
Al Bakri Radio Channels, Palestine                      Laha Magazine, Lebanon
Al Bilad Newspaper, Bahrain                             Lammtara Pictures, UAE
Ad-Dustour Newspaper, Jordan                            LBC, Lebanon
Al Hayat Al-Jadedah, Palestine                          Maan News Online, Palestine
Al Hayat Newspaper, Jordan                              MBC, Saudi Arabia
Al Hayat Newspaper, pan-Arab                            Mediaedge:cia Middle East, UAE
Al Horria Newspaper, Tunisia                            National Media Council, UAE
Al Jazeera Talk, Qatar                                  New TV, Lebanon
Al Jazeera TV, Qatar                                    O3 Productions, Saudi Arabia
Al Jazirah Newspaper, Saudi Arabia                      Oman Daily Newspaper
Al Jazeera Media Centre for                             Oman Journalists Association
Training and Development, Qatar                         Oman Mobile
                                                        Orange Jordan
Al Khartoum Newspaper, Sudan
                                                        Orbit, Bahrain
Al Manar TV, Lebanon
                                                        Palestine TV
Al Mehwar TV, Egypt
                                                        Petra Agency, Jordan
Al Qabas Newspaper, Kuwait
                                                        Pyramedia, UAE
Al Quds Newspaper, Palestine
                                                        Qatar News Agency
Al Rai Newspaper, Jordan
                                                        Qtel, Qatar
Al Riyadh Newspaper, Saudi Arabia
                                                        Réalités Magazine, Tunisia
As-Safir Newspaper, Lebanon
                                                        Rotana Digital, Saudi Arabia
Asharq Al Awsat Newspaper, pan-Arab
                                                        Saba News Agency, Yemen
Al Thawra Newspaper, Syria
                                                        Samacom, UAE
Al Waseet Newspaper, UAE
                                                        Sharjah University, UAE
Al Watan Newspaper, Syria
                                                        Sherezade Films, Bahrain
Al Watan Newspaper, Qatar
                                                        Showtime Arabia, UAE
Al Watan TV, Palestine
                                                        Signature Productions, Lebanon
All4media, UAE
                                                        SNRT, Morocco
American University of Beirut
                                                        Starcom Mediavest MENA, UAE
American University of Dubai
                                                        Sudanese Journalists’ Union
An-Nahar Newspaper, Lebanon
                                                        Tariq Al Mahaba Production
Arab Media Group, UAE
                                                        Company, Palestine
Arabian Anti-Piracy Alliance, UAE
Associated Press, UAE                                   TBWA Raad, UAE
Al Ayyam Newspaper, Palestine                           TECOM Business Parks, UAE
Ayyam Wa Layali magazine, Sudan                         The Frame, UAE
BBC Arabic, pan-Arab                                    Teshreen Daily Newspaper, Syria
Cairo News Company, Egypt                               Twofour54, UAE
Centre for Arab Women                                   UAE Journalists Association
Training & Research, Tunisia                            Walt Disney Company, pan-Arab
                                                        Watwet, Jordan
Dar Al Hayat, Lebanon
                                                        Wejhat Nazar Magazine, Egypt
Dar Al Sharq, Qatar
Day Press (dp-news), Syria
Dubai Media Incorporated, UAE

                                                                                               11
Arab Media Outlook 2009-2013 - Inspiring Local Talent
status of the Arab media industry, relative to both      advertising currently represents just 1% of total
developed and emerging markets, and identify key         spend in the region, it is expected to become the
opportunities for growth. Firstly, an assessment         fastest growing media sector over the coming
of the region’s print sector shows that it, like         years. As broadband penetration increases, online
the global print industry, has been undergoing           advertising will also grow, led by an increase in
significant structural changes, ranging from cost        search advertising and the rising use of social
transformation and rationalisation of title portfolios   media. Similarly, mobile broadband is becoming
to cross-platform consolidation and transfer to new      increasingly popular, driving the use of the mobile
platforms. However, unlike many other markets,           phone as a serious media platform and enabling
the print industry in the region continues to show       growth of applications, particularly for news
continued growth in both the number of titles and        delivery, in some Arab countries.
overall circulation. While the emergence of the
internet as a viable platform for news consumption       Section 2 of the report provides an in-depth
is beginning to affect traditional newspapers in the     analysis of the media markets, along with an
region, most organizations are using the internet        update of advertising forecasts of all 15 markets,
to complement their print edition. Going forward,        split by platform. While the first part focuses on
although we expect the rate of growth for the print      the results of the market research conducted in
industry to slow, we still believe there is further      four “in-focus” markets, Egypt, Lebanon, Saudi
potential to be unlocked. The market in the Arab         Arabia and the UAE, the second part provides
Region remains unsaturated, with low newspaper           a country-by-country update of the remaining
concentration in many countries, as well as strong       markets, including pan-Arab.
potential to increase advertising revenues through
increased auditing of circulation figures and            The market research highlights the importance
industry consolidation.                                  of the unique demographic composition of the
                                                         Arab Region and a strong demand for local Arabic
Secondly, the Arab television industry faces             content. Firstly, the large youth demographic
very different challenges which are being taken          (people below the age of 30) in the region, an
increasingly seriously by industry players and           element common across all 15 markets covered in
governments alike, including the low advertising         the report, largely drives the consumption of media
revenues faced by free-to-air channels and               on the internet. In particular, social networks play
the low penetration of pay-TV. The free-to-air           a significant role, with social networking cited
market is fragmented, having grown to reach              among the favourite activities online and one of
nearly 600 channels today, while remaining               the top methods of communication. On average,
dominated by a few major broadcasting groups.            70% of the people in the four markets researched
However, there is significant potential for growth,      use social networking in some capacity and about
which will be driven by the adoption of accurate         15% use social networking sites at least once a
audience measurement systems, an increase in             day. This is particularly noteworthy as the average
consolidation in the sector and the introduction         time spent on the internet, at about three hours
of new technologies which will enable improved           per day, is already on par with that of TV. Finally,
targeting of advertising. Meanwhile, the pay-TV          the research confirms that the more “local” the
sector faces strong challenges, both from high           content, the more popular it is with consumers
levels of piracy and competition from the free-          ,with over 60% preferring browsing in Arabic, 80%
to-air sector. Yet the recent consolidation of two       preferring watching TV in Arabic, a high preference
major players into the Orbit Showtime Network,           for regional online portals and social networking
coupled with increased investments in anti-piracy        sites and, in countries producing local content
technology, is likely to drive growth. In addition,      such as Egypt, a strong preference for internet
new digital platforms are making their mark in the       content specific to and from their own country.
region, including increasing penetration of DTT in
North Africa and IPTV in some of the Gulf countries,     In the second part of section 2, we present a brief
while new services such as Video on Demand are           assessment of the remaining eleven markets, as
gradually being introduced by pay-TV players as a        well as the pan-Arab market, with a breakdown of
means of differentiation from free TV.                   advertising expenditure by platform. While building
                                                         each country advertising forecast, we have taken
Finally, online and mobile are becoming                  into account the impact of the economic crisis,
increasingly important platforms for media               which was not fully felt in the region until the
consumption in the region. While online                  latter half of 2009. While the impact varied across
                                                                                                                13
markets in the Arab Region, it induced a shift in     From a monetisation point of view, it is clear that
     advertising dollars away from traditional media.      there is strong demand from the Arab population
     While newspapers and pan-Arab TV attract the          for content that is developed in the region.
     majority of advertising spend in the GCC region,      Yet, there remain several barriers to effective
     local television remains the dominant platform        monetisation on the supply side, from effective
     in a few markets in North Africa and the Levant.      use of cross-platform advertising techniques,
                                                           to endemic issues such as the lack of audience
     In Section 3 of this year’s report, we focus on a     measurement systems and the abundance of
     topic of great relevance to both media industry       piracy, among others. However, the situation is
     professionals and to consumers with the               changing fast, particularly in the TV sector, with
     potential to generate significant value for the       broadcasters ramping up their investments in
     industry: the stimulation and exploitation of         developing original Arabic formats. In addition,
     local content in the Arab media industry. We take     alternative methods of funding are increasingly
     into account the two aspects of “local” content,      being adopted in the region, including product
     analyzing it from a pan-Arab point of view, which     placement, advertiser-funded programming
     includes content produced for and consumed            and other new revenue streams, as evidenced
     by a pan-Arab audience (e.g. channels such as         by popular Arab programmes such as Freej
     MBC, newspapers such as Asharq Alawsat) as            and Tash Ma Tash. Talent is the third element
     well as from a national point of view, including      to be tackled, primarily through an increased
     content on terrestrial channels, in national          emphasis on education and training of media
     newspapers and on local websites. Currently,          professionals. Government organisations are
     there remains a major gap in the value of local       key to developing the local media talent pool,
     content in the Arab world when compared to            while international companies can also play an
     other regions. Although the situation varies by       important role in helping to grow the local talent
     platform, the value gap is most pronounced on         base through partnerships and co-productions.
     TV and online. In the TV industry, for example,       Technology and government intervention,
     we estimate the cost per hour of original content     meanwhile, are two further factors that need to
     on the top channels in the UK to be worth two to      be addressed. Broadband adoption, both mobile
     four times as much as the average Arabic series       and fixed, will be a key factor to local content
     on the top 15 pan-Arab channels. However,             exploitation, while governments have a major
     there is strong potential for growth in the quality   role to play, not only in promoting infrastructure
     and quantity of content produced in the Arab          investment, but also in providing incentives
     world. We believe that the industry’s potential       for local production, for example through the
     can be realized through the creation of a local       implementation of quotas, and to encourage
     content virtuous circle, by addressing the key        foreign investment in local media.
     issues of monetisation, funding and talent,
     with government intervention and technology
     improvement as the key enablers of that circle.




14
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Exhibit 1: Industry respondents’ views on prospects for
              Industry respondents’ views on prospects for Arab media industry in 2010
         Arab media industry in 2010



                   Positive                                                                                                59%


                    Neutral                                                   26%


                 Negative                                      15%


              Source:      Based on interviews with 125 industry respondents, Value Partners analysis




     While the Arab Region economies have been impacted by the crisis,
     a fast recovery is expected

     The global economic crisis has had a significant                            However, the Arab Region is expected to bounce
     impact on local economies all over the world, with                          back faster than most markets, and with a forecast
     world GDP not expected to return to its 2008 level                          growth of 10% in 2010 and the same CAGR until
     until 2011.3 The Arab Region’s collective GDP also                          2013, it is expected to return to its position as one
     declined by 10% in 2009, demonstrating a marked                             of the fastest growing regions in the world.
     reduction relative to other regions of the world.


         Exhibit 2: Percentage change in Nominal GDP by region, 2008-2013
         Exhibit 2: Percentage change in Nominal GDP by region, 2008-2013

             Percentage change in GDP by region, 2008-2013

             Annual change in GDP 2008-2009                                   GDP CAGR 2009-2013

                              Asia¹                                    3%                  Asia¹             10%

                   North America                        -3%                      North America          4%

                   South America                       -4%                       South America           7%

                              Africa             -8%                                      Africa         8%

                         Australasia        -10%                                    Australasia         4%

                     Arab Region            -10%                                   Arab Region               10%

                            Europe      -13%                                            Europe          4%

                 Note:     (1) Asia excludes Middle East
               Source:     IMF October 2009, Value Partners analysis




     For the 15 countries that we have studied for the Arab Media Outlook 2009-2013, their collective GDP is
     expected to exceed 2008 levels by 2010 and grow substantially over the following three years.

     3
16       International Monetary Fund, World Economic Database, October 2009
Exhibit 3: GDP projections for the Arab Region, 2007-2013 (US$ bn)
           Arab Region’s GDP forecast, 2007-2013 (US$ bn)




                  Annual change (%)

                  CAGR (2009-13)

                                                                                                            2,054
                                                                                           10%
                                                                                                 1,899                    Palestine

                        30%                -10%                                     1,764                                 Bahrain

                                                                  1,617
                                                                  1 617                                                   Jordan
                                1,563
                                                                                                                          Yemen
                                                  1,402
                                                                                                                          Lebanon
                                                                                                              164
               1,205                                                                              154                     Tunisia
                                                                                                              171
                                                                                     146                                  Oman
                                                                                                  161
                                  158                               135
                                                                                     153                                  Syria
                                                                                                              275
                                  102              115              128
                                                                                                  251                     Sudan
                                                    93                               229
                 112              163                               208                                                   Morocco
                 71                                188                                                        326
                                                                                                  299                     Kuwait
                 130              262                                                276
                                                                    256
                 180                               229                                                                    Qatar
                                                                                                                          Egypt
                                                                                                  515         557
                 384
                                  469                               443              479                                  UAE
                                                   380
                                                                                                                          Saudi Arabia

                2007             2008             2009             2010             2011         2012        2013
          Source: IMF October 2009, Value Partners analysis




The decline in GDP that has been seen in the Arab                                   growth. In particular, Qatar and Sudan are forecast
Region in 2009 was clearly felt more severely in the                                to see the strongest growth between 2009 and
oil-producing countries, whose economies were                                       2013, growing at 17% and 14% CAGR respectively.
significantly affected by the falling oil prices during                             Meanwhile, the majority of countries from the
the year. However, over the projection period 2009-                                 Levant and North Africa are also anticipated to
2013, these countries are also expected to display                                  grow, but at a pace of between 6% and 11%.4
the strongest recovery, showing significant GDP




4
    See appendix for data table with detailed breakdown of projections by country                                                         17
Exhibit 4: GDP growth of oil economies vs. non-oil economies, 2008-2013


        GDP growth of oil economies vs. non-oil economies, 2008-2013

        Real GDP growth (2008-2009)                    Nominal GDP growth (2008 – 2009)                  Nominal GDP CAGR (2009-2013)

        Oil economies
                  i                                    Oil economies
                                                                 i                                       Oil economies
                                                                                                                   i

              Syria                3%                       Syria                   -1%                         Syria                 11%

           Yemen                    4%                    Yemen                  -3%                          Yemen                   11%

            Sudan                   4%                     Sudan               -6%                            Sudan                        14%

             Qatar                             11%          Qatar          -10%                                Qatar                         17%

            Oman                    4%                     Oman           -13%                                 Oman              8%

              UAE             0%                             UAE          -13%                                  UAE                 9%

              KSA -1%                                        KSA       -19%                                     KSA                  10%

            Kuwait -2%                                     Kuwait -27%                                        Kuwait                9%

             Egypt                    5%                    Egypt                                 16%          Egypt                 10%

          Lebanon                        7%              Lebanon                                11%         Lebanon             7%

            Jordan                 3%                     Jordan                             6%               Jordan             8%

          Morocco                     5%                 Morocco                           2%               Morocco             7%

           Tunisia                 3%                     Tunisia                -3%                         Tunisia           6%

           Bahrain                 3%                     Bahrain             -9%                            Bahrain            7%

                             Non-oil economies                                 Non-oil economies                             Non-oil economies
          Note: Countries in which oil constitute at least 15% of their GDPs are considered oil economies in this analysis
        Source: IMF October 2009




     Likewise, advertising revenues in the Arab Region have been hit
     by the economic crisis

     Advertising revenues in the Arab Region have been                               America. Meanwhile, regions like Central and
     severely impacted by the economic crisis, and on                                Eastern Europe, as well as the Arab Region itself,
     a comparative level between 2008 and 2009, it                                   saw their most significant drop in 2009. Turkey, in
     has been one of the most significantly affected                                 particular, saw a 22% drop in advertising revenues
     regions in the world. It is worth noting, however,                              in 2009, having remained almost static in 2008,
     that the effects of the crisis were already starting                            which is a good indication that the characteristics
     to be felt quite substantially in 2008 by many                                  leading to “late” drops in advertising are a
     regions, particularly in Western Europe and North                               regional phenomenon.




18
Advertising spend change from 2008from 2008 to 2009
 Exhibit 5: Advertising spend change to 2009 (%)                                                            (%)




             -21%                                                                                                  C&E Europe

                                                           -13%                                                    Arab Region

                                                           -13%                                                   North America

                                                                 -11%
                                                                    %                                                     Africa

                                                                  -11%                                        Western Europe

                                                                                                            -3%     Asia/Pacific

       Source: Zenith Optimedia, Value Partners analysis                                                          Latin America    1%



While the Arab Region had been the fastest growing                               increase in cross-platform advertising, with major
region in the world in terms of advertising revenues                             media owners offering cross-platform packages to
prior to the crisis, it has also been significantly                              marketers that ensure broader audience coverage.
affected and, based on our projections, we expect                                For example, newspapers that operate online are
to see advertising revenues return to their 2008                                 increasingly offering a combined package for
levels only by 2011. Our interviews with advertising                             advertising in their print and online editions. As a
agencies and media buyers suggest that this is, in                               result, the advertising business model is evolving
part, due to the fact that 2008 was a particularly                               to a situation where advertisers are increasingly
successful year for the region in terms of                                       dedicating portions of their overall budgets to
advertising revenues, displaying over 30% annual                                 specific media groups, rather than paying on a
growth from 2007. Indeed, the sectors which had                                  rate card basis.
previously fuelled the growth of the industry in
the region, notably the real estate and financial                                Going forward, we expect a slight shift in the
services sectors, are also those that were affected                              growth rates in advertising for the different
most by the recession.                                                           Arab countries: while Egypt had been one of the
                                                                                 fastest growing Arab countries in 2008, with
We are also seeing some new trends in the way                                    advertising revenues increasing 43% on 2007,
advertising dollars are being spent, mirroring the                               its growth is expected to slow down to a CAGR
trends of global markets. The economic crisis has                                of 7% between 2009 and 2013. Meanwhile, based
triggered a shift in many markets, including the                                 on our projections, Qatar and UAE are expected
Arab Region, towards below the line advertising5,                                to be the fastest growing countries in terms of
with organizations generally looking for the most                                advertising in the GCC region, both showing a high
efficient ways of spending their marketing budgets                               CAGR of 11%.
and with the fastest results. There has also been an




5
  “Below-the-line” usually refers to promotions aiming to drive short-term sales and typically focuses on
direct means of communication, e.g. direct mail, email etc.                                                                             19
Annual change (%)
          A    l h

          CAGR (2009-13)
                                              Economic crisis impact
                                              on regional advertising



                  30%             -13%                                   8.4%                            6,346
                                                                                         5,974
                                                                         5,577
                         5,296
                         5 296
                                                         5,096                                                               Palestine
                                         4,600                                                             408               Yemen
                                                                                           373                               Sudan
                                                                                                           472
          4,068            268
                                                                           338                                               Tunisia
                                                                                           443
                           415                             309             416                                               Syria
                                                                                                           936
                                           284             388                             896                               Bahrain
                           654                                             851
           231                             361                                                                               Oman
                                                           789
           358                                                                                             980               Jordan
                           853             719                                             904
           458                                                             820                                               Lebanon
                                                           726
                                           679
                                                                                                                             Qatar
           710
                                                                                          1,120           1,181              Morocco
                          1,229                                           1,042
                                                           950                                                               Kuwait
                                           784
           839                                                                                                               Egypt
                                                                                                                             Saudi Arabia
                          1,053                           1,049           1,141           1,196           1,252
           802                             965                                                                               UAE
                                                                                                                             Pan Arab
          2007           2008            2009            2010            2011             2012            2013
 Note:     Pan-Arab
           Pan Arab refers to advertising spend by regional media outlets that cover multiple countries in the Arab Region
Source:    Zenith Optimedia, Value Partners analysis
North America                                                                462


                 Western Europe                                            273


                     C&E Europe                   68


                    Latin America                63


                      Asia Pacific          30           Ad spend per capita in the region
                                                       remains one of the lowest in the world

                     Arab Region          22



Source:   Zenith Optimedia, Value Partners analysis
Exhibit 8: Impact of economic crisis on media consumption habits1,2

                 Impact of economic crisis on media consumption habits¹.2

                                                                                “I agree”
                      The crisis has not affected my entertainment habits                                                                51%


                                           I spend more time watching TV                                                               50%


                                            I tend to go less to the movies                                                            50%


                               I spend more time at home with my family                                                  47%


                                               I tend to go out less at night                         43%


                  Notes: (1) This data represents a consolidated view of the market research in Egypt, Lebanon, Saudi Arabia and UAE
                         (2) Base: 1,810; All respondents
                 Source: The Nielsen Company




     As seen in most markets around the world and                                      impacted by economic fluctuations to the same
     the Arab Region, although the pace of pay-                                        extent as advertising.
     TV growth has declined in the past two years,
     the sector has not suffered a contraction of its                                  Secondly, another impact of the crisis has been
     revenues in the same way as free-to-air (FTA) TV.                                 the acceleration in pace of digital migration. The
     For example, Showtime Arabia’s6 subscription                                      proportion of advertising spend on the internet
     base grew at a CAGR of 18% between 2004 and                                       has already grown substantially to make up 12% of
     2007, and continued to grow between 2007 and                                      total global spend in 2009, and is forecast to reach
                                        7
     2009, albeit at a lower rate of 9%, demonstrating                                 18% by 2013, as seen in the exhibit below.
     that subscription-based media services are not


         Exhibit 9:Projections for global advertising revenues by platform,
         2007-2013 (US$ bn)
            Global advertising revenues by platform, 2007-2013 (US$ bn)

                       CAGR 2007-13


                100% =            489             494             444            448            465             487            502           0.1%
                  Radio            8               8               8              8              7               7               7           -1.6%
           Out-of-Home             7               7               7              7              7               7               7
                                                                                  10             9               9               8           0.7%
                                  12               12              10
             Magazines
                                                                                                                                             -5.9%
               Internet            8               10              12             14             15             16              18
                                                                                                                                             13%
           Newspapers             27               25              23             22             21             20              19
                                                                                                                                             -5.7%



              Television                                                                                                                     1.4%
                                  37              38               39            40             40              40              40



                                 2007            2008             2009          2010           2011            2012            2013
          Source: Zenith Optimedia, Value Partners analysis




     The UK has seen particularly dramatic growth                                      Indeed, with newspaper spend currently only 2%
     in internet advertising revenues, and 2009 saw                                    higher than the internet, online advertising is
     a major turning point for the industry when                                       about to become the strongest sector in the UK
     internet advertising overtook TV for the very                                     advertising market.
     first time, accounting for 26% of total revenues.
22   6
         Referred to as Showtime in the remainder of the report
     7
         Informa TM
Internet Ad spend
35%
                                                             overtook TV in Q3 2009    Newspapers

30%                                                                                    Magazines

                                                                                       TV
25%                                                                                    Radio

20%                                                                                    Cinema

                                                                                       Outdoor
15%                                                                                    Internet

10%

5%

0%
  2006                            2007                    2008                  2009

      Source: Zenith Optimedia, Value Partners analysis
Exhibit 11: Arab Region advertising revenue projections by platform (US$ m)

             Arab Region advertising forecasts by platform (US$ m)

             Annual change (%)

             CAGR (2009-13)
                  (2009 13)                                                                                  Platform ad spend
                                                                                                             as % of total
                                                                                              6,346          (2007/2013)
                                                                            8.4%     5,974

                                        -13%                                5,577              395             Radio
                        30%    5,296                                                                  2.6%
                                                                                      370
                                                                5,096                          511
                                                                             345
                                 313                                                  468
                                                4,600                321     428
                                 456
                                                                                                      4.2%     Internet
      2.1%    4,068                               298                367
                                                                                              1,903
                                                                                              1 903
                                                  330
      0.3%      263                                                                   1,818
                                1,566                                        1,731                             Out-of-home
      6.5%      384                                                                                   6.2%
                                                                    1,610

      9.5%                                       1,501
                1,213
       30%                                                                                            8.0%     Magazines



                                                                                              3,104
                                2,819                                        2,753
                                                                              ,
                                                                                      2,937
                                                                                                      30%      Television
                                                                    2,547
                                                                    2 547
       52%                                       2,294
                2,107



                                                                                                      49%      Newspapers


               2007             2008            2009                2010    2011     2012     2013

               Note:    Pan-Arab advertising spend included
             Source:    Zenith Optimedia, Value Partners analysis




24
Arab Media Outlook 2009-2013 - Inspiring Local Talent
The region’s print industry is starting to experience significant structural changes
     already initiated internationally

     On an international level, newspapers have             • Another common response has been a change
     been taking steps to restructure the way they            in newspaper formats in order to minimise
     operate in order to cope with the significant loss       production costs. An example is the San
     of circulation felt as a result of digital migration     Francisco Chronicle, which made some key
     and the severe loss of advertising revenues. The         alterations to its layout and design, including a
     structural changes have taken many different             reduction in size of the paper, in order to keep
     forms around the world, depending on the market          up with changing reader demographics and
     and the context in which companies deal with             achieve cost efficiencies in production. Similarly,
     these economic challenges.                               Polish publishing company Polskapresse took
                                                              an innovative step back in October 2007, as
     • Many publishing groups have begun rationalising        discussed in the next exhibit. Furthermore, other
       their portfolios by shutting down loss-making          newspapers are abandoning their expensive
       titles. A prime example is major US publishing         print editions and moving to a purely online
       group Condé Nast, which shut down four key             publication.
       titles in Fall 2009. Similarly, rising costs in
       India have forced many publications to defer         • There have also been some examples of
       launches or close down. For example, Metro             consolidation in the print industry, for example
       Now, an English newspaper published in Delhi,          in Russia which has seen high levels of M&A
       born of a joint venture between Hindustan Times        activity since 2008. However, in many markets,
       Media and Bennett, Coleman and Company, has            consolidation has been less common than
       deferred its plan to enter the state capitals,         anticipated and large publishing groups have
       reduced its print run for the Delhi region and         adopted the route of closing down titles and
       shelved the idea of a Sunday newspaper. BCCL’s         streamlining staff, rather than merging with
       plans to take its flagship publication, The Times      other companies.
       of India, to smaller towns are on hold, while
       Business Standard has shut down the newly-           In the Arab Region, these trends have been felt
       launched Rajkot edition of its Gujarati newspaper    to a lesser extent than other markets. However,
       and 70-year old The National Herald was forced       interviews with industry experts suggest that Arab
       to temporarily suspend operations in 2008.           publications have still been hit to some extent by
                                                            similar difficulties as global markets and that the
     • The evening press has been particularly affected     structural changes have been accelerated by the
       and is virtually disappearing from many markets.     economic crisis.
       The London regional market in the UK is a prime
       example, with two free evening newspapers, The       • As in other markets, many Arab newspaper titles
       London Paper and London Lite being shut down           have also closed down across the region. Kuwait’s
       within three months of each other in 2009. 180-        Assawt, which only launched in October 2008,
       year old London paper The Evening Standard             ceased its operations in February 2009. Egypt’s
       also ended its long history of paid circulation        El Badeel, which launched in 2006, closed
       and became a free paper in a significant change        down in July 2009. Groupe Maroc Soir, a major
       of strategy.                                           Moroccan publishing company, also closed
                                                              down two of its titles, Assabahia and Assada
     • Some companies have been undergoing                    El Massaia, in 2009. Similarly, The Daily Star in
       major cost transformation by optimising their          Lebanon, the only English language newspaper,
       production centres. Johnson Press in the UK, for       has been battling a difficult financial situation
       example, has reduced the number of production          since January 2009 when it closed down before
       centres it operates and, in the process,               re-launching, and continues to have an uncertain
       significantly downsized its workforce.                 future.




26
• We have also seen some rationalisation of              • There has also been an increase in cross-platform
  production among Arab newspapers, such as                consolidation across the region during 2009. In the
  free newspaper 7 Days in the UAE which made              UAE, for example, several media assets including
  the decision to close its Friday publication in 2009     three newspaper titles, Noor Dubai Radio & TV
  in an effort to increase efficiency.                     and Masar Printing & Publishing Company, were
                                                           transferred from Arab Media Group to Dubai
• New formats are also being introduced into the           Media Inc. in Fall 2009 in an effort to optimise the
  market and, in the same way that has been seen           media industry structure in Dubai.
  in international markets, some newspapers are
  moving to pure online editions. Saudi Arabia’s         • The Arab Region has seen a limited amount of
  Al Majalla is a case in point, which transferred to      redundancies in print organizations relative to
  an e-paper format in April 2009 and is discussed         other markets, but nevertheless some companies
  further in the next exhibit. Similarly, UAE sports       have downsized their operations. Indeed, of the
  magazine Super dropped its print edition in 2009         print industry organisations we interviewed
  and became a purely online publication.                  across the Arab Region, 15% went through a
                                                           redundancy plan.




                                                                                                                  27
group
Circulation of Dziennik Zachodni
(Largest newspaper under Polska brand)

                     -11%
        119,000

                               107,000




         2007                   2008
Despite this challenging environment, the print industry in the region has weathered
the storm better than in other markets

In spite of these major issues, on the whole, the                                         of new titles in 2007 and 2008. In fact, 2009 was
print industry is looking healthier in this region                                        the first time in many years that the number
than most other parts of the world. Overall daily                                         of newspaper titles in the region has actually
circulation and total number of titles are continuing                                     remained almost constant. However, there has
to increase year on year in the region, while in most                                     been some movement, with the number of titles
developed markets circulation levels and number                                           closing down in 2009 almost equalling the number
of titles have consistently decreased.                                                    of new titles launched.

Over the past few years, the number of titles in                                          Internationally, however, the picture is much
the Arab Region has been steadily increasing,                                             bleaker. In the US, the number of newspaper
supported by new licences being awarded – for                                             titles available has been decreasing steadily
example, a total of 10 new licences have been                                             since 2004.8
awarded in Kuwait since 2006 which led to a flood




    Exhibit 13: Number of newspaper titles in the Arab Region, 2003-2009


               Number of newspaper titles in the Arab Region, 2003-2009
                      Sudan                       Saudi Arabia               Kuwait                     Yemen              CAGR
                      Morocco                     Syria                      Bahrain                    Jordan             (2003-2018)
                      Egypt                       UAE                        Oman                       Palestine
                      Lebanon                     Tunisia                    Qatar

                                                                                                                    188      189
                                                                                          4.6%
                                                                                          4 6%
                                                                                                  177
                                                                                   167
                                                                 161
                                               152
                             144
                                                                                                                     17        17
                                                                                                    13
                                                                                      8
                                                                    8                                                10        10
                                                 7                                   10             10
                               7                                   10                                                13        14
                                                 10                                  13             12
                               8                                   12
                                                 10                                                 9                10        10
                               9                                                      9
                                                                    9
                               9                 9                                                                   15        15
                                                                                                    16
                                                                   15                16
                               14                14
                                                                                                                     13        13
                                                                                                    14
                                                                   15                14
                               14                14
                                                                                                                     18        19
                                                                                     16             17
                               14                15                15

                                                                                     17             19               22        20
                               16                16                16



                               26                27                28                29             29               29        29



                             2003              2004              2005              2006           2007              2008      2009

                        Source:      WAN, MENA Media Guide




Overall daily circulation in the Arab Region is                                           in the Arab Region, in spite of the total number of
also continuing to increase, contrary to the                                              daily newspaper titles stalling between 2008 and
developments being seen in many other markets.                                            2009, circulation has continued to increase, as
For example, the US saw a 4% decline in total                                             demonstrated by the exhibit below.
circulation between 2003 and 2008.9 Meanwhile

8
    Editor and Publisher International Yearbook: Toatal number of titles decreased by 3% between 2004 and 2008                                  29
9
    Editor and Publisher International Yearbook: Referring to total paid-for dailies & Sundays
Exhibit 14: Forecast of total daily newspaper circulation in the Arab Region,
      2007-2013 (000 copies)

              Forecast of total daily newspaper circulation in the Arab Region, 2007-2013 (000s)


                  Egypt                  Kuwait               Jordan                Yemen            CAGR
                  Saudi Arabia           Lebanon              Oman                  Sudan
                  UAE                    Syria                Qatar                 Palestine
                  Morocco                Tunisia              Bahrain

                                                                            2.3%
                                 5.5%                                                               12,231
                                                                           11,701       11,961
                                             11,164         11,427
                              10,831
                                                                                                      329
                10,035                                                                      326       418
                                                                             322            413
                                                               317           408                      391
                                                313            404                          388
                                  327           399                          385                      410
                                                               382                          407
                                  369           379                          404
                  302             361                          400                                   1,022
                                                396                                       1,008
                  355             381                                        994
                  358                                          979
                                                96
                                                961                                                   757
                  386             986                                                       742
                                                                             731
                  550                                          722
                                                710                                                  1,153
                                  761                                                     1,142
                  754                                                       1,128
                                                              1,111
                                               1,092
                                 1,011
                  993
                                                                                                     1,980
                                                                                          1,956
                                                                            1,934
                                               1,878          1,903
                                 1,855
                  1,756




                                                                                          4,511      4,686
                                                                                                     4 686
                                               4,018          4,177         4,342
                  3,627          3,774




                 2007            2008          2009           2010          2011          2012       2013

              Source: WAN, MENA Media Guide, Value Partners analysis




     While other markets are struggling to maintain,                   but also by some of the smaller Gulf countries,
     let alone increase circulation of newspapers, in                  such as Bahrain and Qatar. As such, growth will
     the Arab Region we expect the circulation of daily                stem from those countries where newspapers
     newspapers to continue to grow over the next five                 are the preferred media. Egypt, in particular, is
     years, albeit at a slower pace than before. Following             home to a thriving newspaper industry, with some
     a growth rate of 5.5% CAGR between 2007 and                       of the oldest newspapers in the world and, more
     2009, we expect the rate to slow to 2.3% from 2009                recently, several new independent newspapers
     to 2013. Growth will be driven not only by a strong               which have launched following the success of Al
     increase in circulation in the largest market Egypt,              Masry Al Youm.




30
Print revenues in the region have suffered from the recession but have shown more
resilience than international markets

Internationally, advertising spend on newspapers          display sector has also been negatively impacted,
continues to decline and the economic recession           but the effect has not been quite as severe.
has only accelerated an already perceptible
decline in the share of total advertising spend           In the Arab Region, although sales figures from
on newspapers. Newspaper advertising spend                print copies have remained steady in 2009,
has been hit on many fronts, all of which have            there has been a decline in total revenues in the
contributed to the overall decline of the media           newspaper industry due to pressure on advertising
spend. The classified sector in developed markets         revenues. Overall in the Arab Region, we estimate
has all but disappeared in print, substituted, for        that nearly 40% of newspaper revenues currently
the most part, by online. In the UK, for example,         come from copy sales, while just over 60% is
over 60% of the reduction in total newspaper              generated through advertising. Interviews with
advertising revenue between 2004 and 2008 came            newspapers across the Arab Region suggest that
from classifieds, which accounted for a reduction of      approximately 20-30% of advertising revenues
over $1 billion10. Similarly, in the US, the classified   continue to be derived from classifieds, while
advertising sector fell by 40% in 2Q 2009 alone,          around 70-80% of advertising revenues are
largely due to the availability of cheaper online         from display.
alternatives such as Craigslist.11 Meanwhile, the




10
     WARC
                                                                                                              31
11
     Newspaper Association of America
Advertising           Circulation            Source of revenues as %
            revenues              revenues               of total revenues


                                      Advertising revenues slip
                                      as a result of economic
                                      crisis

                                                                                   4,428   4,628
                          4,169                                         4,211
                                                        3,971
                                        3,686
                                        3 686                                              1,525
          3,358                                                                    1,491           33%
                          1,350                                          1,459
                                                           1,424
37%                                       1,392
          1,251



                          2,819                                          2,753     2,937   3,104   67%
                                          2,294            2,547
63%       2,107




          2007            2008           2009            2010           2011       2012    2013
Source:   WAN, MENA Media Guide, Value Partners analysis
Exhibit 16: Analysis of free daily newspapers in the UAE


    Analysis of free daily newspapers in the UAE

     Breakdown of circulation, UAE 2008                  Daily circulation of 7 days (UAE)

                                                         In 000s
                                               Free
                                            newspapers                 67.6       67.8        65.0     67.0
                                                            64.3
                                      25%




                    75%


         Paid
      newspapers
                                                           Mar-05     Mar-06    Mar-07       Mar-08   Mar-09


     Source: MENA Media Guide




The internet has started to impact the print industry in the region

The industry also faces increasing pressure                young demographic in the Arab Region, it is not
from the internet where consumers, both                    surprising that consumption is moving online,
globally and in the Arab Region, are spending an           with 40% of news readers accessing news via the
increasing amount of time. With news being one             internet in 2009.
of the most popular forms of content among the




                                                                                                               33
Exhibit 17: Sources for reading news in the Arab Region1,2

       Sources for reading news in the Arab Region¹



            Newspapers only                                                                                                   41%

                      Internet                                                                                               40%

                         Blogs                                          17%

                       Emails                                12%

            E-bulletin Boards                          9%

             Alerts on mobile                     7%


        Notes:   (1) This data represents consolidated view of the market research in Egypt, Lebanon, Saudi Arabia and UAE
                 (2) Base: 1,810; All respondents who buy newspapers
       Source:   The Nielsen Company




     In particular, the concept of blogging for news                    In spite of the strong popularity of user-generated
     is one that is particularly important for the Arab                 content (UGC) in the region, it is worth noting
     Region. In this respect, competition for printed                   that over 80% of industry experts interviewed
     news comes not only in the form of official news and               said that they do not feel threatened by UGC. This
     current affairs websites, but also from individual                 suggests that while from a consumer point of view,
     bloggers, as was discussed at length in the AMO                    blogging and other forms of UGC offer a popular
     2007-2011. The concept of blogging is becoming                     platform for news consumption, they are seen by
     increasingly popular in the Arab world, where the                  the industry more as an opportunity than a direct
     internet provides a free platform for expression.                  competitive threat.
     Even international news players are increasingly
     turning to bloggers as a source for reporting on
     local events in the Arab world, an example of
     which can be seen in the next exhibit.




34
Iraq: The Baghdad Blogger
In addition, News Corp. and others are looking                 Journal, but other major international titles, such
     for alternative ways to monetise their online                  as The Financial Times and The Economist have
     news content through Search. While Murdoch                     had success in charging for their content online.
     has publicly threatened to block search engines
     such as Google from displaying his companies’                  Meanwhile in the Arab Region, there are further
     news content on their sites15, the advent of                   challenges to charging for content online, such as
     Microsoft’s alternative search engine, Bing, may               low credit card penetration and low take-up of online
     prove to change the dynamics of the online news                payment, but there remains a sense of optimism.
     industry. If Microsoft, as reports suggest, is willing         Indeed, nearly 70% of the industry respondents
     to pay news organizations for featuring their                  interviewed across the Arab Region believe there
     content on its site, news providers could stand a              is a future for charging for content online. As
     strong chance in improving monetisation of their               with international markets, it is already clear
     content online.                                                that consumers are willing to pay for specialized
                                                                    news content online – particularly catering to the
     Meanwhile, many news organizations offering                    business community – as the successful case of
     specialist content, such as business news, have                Zawya in the Middle East demonstrates.
     proved that it is possible to successfully monetise
     specialist content online. Not only The Wall Street




     15
36        During interview with Sky News Australia, November 2009
the print version
Group turnover ($m)     17% of the turnover
                       comes from electronic
                             sources
Group turnover ($m)
                                                         premium content
                                               Tiered subscription offers

                              248      266
      191      197     218                     Business           Projects          Investor
                                               development        membership        membership
                                               membership

                                               • Prices start  • Prices start at   • Prices start at
                                                 at $1,250 for   $1,500 for 6        $3,100 for 6
       04       05     06      07      08        6 months        months              months
video news offering
                                               gulfnews.com
                                               emaratalyoum.com
                    Gulf News has              khaleejtimes.com
                   the highest page            thenational.ae
                         views                 alkhaleej.ae
Daily Reach (%)
  0.12

  0.10
  0.08

  0 06
  0.06

  0.04

  0.02
     0

2009     Sept 28     Oct 5   Oct 12   Oct 19   Oct 26
Exhibit 21: Newspaper concentration by population, 2008


  Newspaper concentration by population, 2008

  Global newspaper concentration (titles/adult million)    Arab newspaper concentration (titles/adult million)


                                                                  Bahrain                              15.2
      Switzerland                                   13.3
                                                                     Qatar                      10.9
                USA                          5.8                    Kuwait                    8.9
                                                                 Lebanon                4.8
              Brazil                         5.7                    Oman              3.7
                                                                 Palestine            3.6
            Germany                       5.0                         UAE             3.3
                                                                   Jordan       1.7
             Russia                    4.1                        Morocco       1.4
                                                                    Sudan       1.2
               India                3.3                            Tunisia      1.1
                                                             Saudi Arabia      0.9
     Arab Region             1.1                                     Syria     0.7
                                                                   Yemen      0.4
              China
              Chi            1.0
                             10                                      Egypt    0.3

    Note:    Based on paid for daily titles only
  Source:    WAN




However, it is worth noting that there is a wide             Evidently, newspaper concentration is dependent
disparity between countries in the region. Some of           on several factors, including not only population
the Gulf states such as Bahrain, Qatar and Kuwait            but also literacy rates, as displayed in the exhibit
could be seen as “saturated” with titles, while              below. However, some key markets, including
others continue to present room for growth.                  Jordan, Saudi Arabia and Syria, could benefit from
                                                             an increase in newspapers.




                                                                                                                    39
Title concentration vs. literacy rates

    Newspaper titles / adult million
         10

              9                                                                                Kuwait

              8

              7

              6

              5
                                                                                  Lebanon

              4
                                                                         Oman
                                                                       UAE                                Opportunity for
              3                                                                            Palestine
                                                                                                         higher newspaper
                                                                                                           concentration

              2
                                                                                         Jordan
                          Morocco                                             Tunisia
                                           Sudan
              1                                                Saudi Arabia
                                                                      Syria
                         Yemen                              Egypt
              0
                40%             50%             60%            70%             80%              90%          100%
                                                                                                        Literacy Rate
    Note: Bahrain and Qatar not included due to their high concentration of newspaper titles
    Source: WAN CIA W ld F tb k V l P t
    S       WAN,      World Factbook, Value Partners analysis
                                                            l i
Exhibit 23: Number of audited newspaper titles in the Arab Region, 2008-2009
    Number of audited newspaper titles in the Arab Region, 2008-2009



                                                                                                2008
                                                                                                2009


                                                                                     21
     Morocco
                                                                 15


                               3
          UAE
                               3


                           2
        Oman
                           2


                       1
          KSA
                   0

     Source:   MENA Media Guide




Growth of the industry will be fuelled by consolidation
and survival of the fittest

In many markets, we expect to see the survival         consistently had low overheads and been able to
of only the strongest companies over the difficult     weather the storm in a more manageable way. The
times that the next few years present. The strongest   ones at a disadvantage in this equation may be the
players are likely to emerge in two forms: those big   medium-sized players, whose existence is likely to
players who have either consolidated or succeeded      diminish substantially in the long-term future of
in making their operations more efficient in other     the industry.
ways, and the very small companies who have




                                                                                                            41
AMG /

   DMI




 Rotana /

   LBC




Al Jazeera /
   ART
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Exhibit 25: TV penetration by platform, 2008


         TV Penetration by Platform 2008
                                                                                                             Free Satellite           Cable
                                                                                                             Terrestrial              IPTV
                                                                                                             Pay Satellite

                                             Gulf                                            Levant                          North Africa

                                        3%          7%         6%                                                                             4%
                  8%         9%                                          10%                                           10%
                                                                                     10%
                                                    5%
                  5%
                                                                                                20%        26%
                            13%
                                       30%                                                                                        35%

                                                    30%
                                                              53%        44%                                                                  59%


                                                    13%

                 86%                                                                 88%                               89%
                                                                         11%
                            77%                                                                 76%        74%
                                       66%                                                                                        64%

                                                    45%       42%
                                                                         35%                                                                  38%




                 Saudi     Kuwait     Bahrain       Qatar    Oman        UAE       Lebanon     Jordan      Syria      Tunisia   Morocco      Egypt
                 Arabia


                             • Relatively high proportion                          • Very limited pay,                • High proportion of
                               of pay-TV, except in KSA
                                    y                                                mostly free satellite
                                                                                          y                             terrestrial with good
                                                                                                                                         g
                               and Oman                                                                                 ground for DTT

         Note:       Penetration rates (of terrestrial TV in particular) may be underestimated due to the presence of multiple platforms within the same
                     household (e.g. terrestrial and free satellite)
         Source:     Informa TM, Value Partners analysis




     In spite of the low pay-TV penetration, revenues                                 rise, with the proportion of advertising revenues
     from pay-TV currently constitute 30% of total                                    expected to reduce over time, as the exhibit below
     TV revenues in the region and are continuing to                                  demonstrates.




44
Exhibit 26: Projections for Arab Region TV revenues, 2007-2013 (US$ m)


  Forecast of Arab Region TV revenues, 2007-2013 (US$ m)

                                                             Pay-TV as % of           CAGR         Advertising
                                                             total revenues           (09-13)      Pay-TV


                                                                                           35%
                                                                              34%
                                                              32%
                                                    31%                                   2,933
                                             30%                              2,739
                            27%
            28%                                               2,552
                                                   2,333
                           2,134           2,143                                           1,030
                                                                              922                   13%
                                                               820
          1,693             569                     724
                                             642
            480

                                                              1,731           1,818        1,903     6%
                           1,566           1,501   1,610
           1,213


           2007            2008             2009   2010       2011            2012         2013
    Note: Pan-Arab advertising included
    Source: Informa TM, Value Partners analysis




The TV advertising revenues shown in the exhibit           • The Arab Region has a far higher proportion of
above are split between pan-Arab advertising                 free satellite than other countries in both the
and ‘local’ TV advertising on a country basis, with          developed world and other emerging markets
growth expected to be driven by the pan-Arab
market.                                                    • While 95% of TV households in the region access
                                                             free TV, just 70% of TV revenues come from
When comparing the structure of the Arab TV                  advertising
industry with other markets around the world,
there are two noticeable observations:




                                                                                                                 45
1.3.1 Free-to-air TV

     FTA TV, and in particular pan-Arab FTA satellite,                                very low. Even when compared to other developing
     is the dominant sector in the Arab broadcasting                                  markets, the Arab TV industry suffers significantly
     industry, and yet overall advertising revenues                                   from an undervalued advertising market. For
     across the TV sector in the Arab Region remain                                   example, Brazil’s TV advertising market was worth
     limited to approximately $1.5bn in 2009, split                                   $7.4bn in 2009. This puts the Arab Region on par
     between nearly $900m for pan-Arab satellite and                                  with a country like Turkey, whose population is just
     just over $600m for local channels. For a market                                 70 million but TV advertising is worth over $1bn.
     with a population of over 250 million - making it                                There are several reasons for the low value of the
     almost the same size as the USA, which saw annual                                Arab TV advertising sector, which we explore in
     advertising revenues of $53bn in 2009- this figure is                            the remainder of the section.



     While the FTA market is extremely fragmented, it is dominated by a few
     large broadcasting groups

     With around 450 FTA satellite channels available at                              rapidly year-on-year and is estimated to stand at
     the beginning of 200917, the number has increased                                nearly 600 channels today.




          Exhibit 27: Number of pan-Arab satellite TV channels, 2004-2009

          Number of pan-Arab satellite TV channels, 2004-2009

                                                                                                                                 CAGR


                                                                                                                           450

                                                                              35%                            372
                                                                                          295
                                                                      218
                                                 141
                        100



                      Jan-04                  Jan-05                 Jan-06             Jan-07              Jan-08       Jan-09
              Note:      Total satellite TV channels in 2009 includes channels in test transmission phase
            Source:      Arab Advisors Group, Value Partners Analysis




     With such a high number of channels available,                                   channels catering to different segments of the
     there is a wide variety of genres and content                                    Arab audience. In particular, religious channels
     types on offer for the pan-Arab audience. While                                  make up the second highest number of channels
     the majority are still ‘general interest’ channels,                              after ‘general interest’, with 45 religious channels
     there are also a growing number of specialized                                   available in 2009.




     17
46        Including approximately 40 still under test transmission
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
Arab Media Outlook 2009-2013 - Inspiring Local Talent
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Arab Media Outlook 2009-2013 - Inspiring Local Talent

  • 1. 3rd EDITION 20 09 ARAB MEDIA OUTLOOK 2009 - 2013 ARAB 20 13 MEDIA OUTLOOK INSPIRING LOCAL CONTENT ISBN 978-9948-15-422-8 FOREC A S T S A ND A N A LY SI S OF TRADITIONAL AND DIGI TA L MEDIA IN THE ARAB WORLD P.O. BOX 39333, Dubai, United Arab Emirates Tel: +971 4 361 6666, Fax: +971 4 368 8000 www.dpc.org.ae
  • 2. Copyright© 2010 This document is provided by Dubai Press Club and Value Partners for guidance only, and does not constitute the provision of legal advice, accounting services, investment advice or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional advisers. Before making any decision or taking any action, you should consult a professional advisor who has been provided with all the pertinent facts relevant to your particular situation. The information is provided “as is”, with no assurance or guarantee of completeness, accuracy or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability and fitness for a particular purpose. Dubai Press Club holds all copyrights to this report and no part thereof may be reproduced or replicated without prior explicit and written permission. In producing this report, Dubai Press Club was assisted by Value Partners. Requests for permission should be addressed, in writing, to Maryam bin Fahad, Executive Director, Dubai Press Club, P.O. Box 39333, Dubai, UAE (email: info@dpc.org.ae). For additional information or to acquire further copies of this publication please visit www.dpc.org.ae ISBN 978-9948-15-422-8
  • 3. ARAB MEDIA OUTLOOK 2009-2013 INSPIRING LOCAL CONTENT FORECASTS AND ANALYSIS OF TRADITIONAL AND DIGITAL MEDIA IN THE ARAB WORLD
  • 4. Production acknowledgement For Dubai Press Club Maryam Bin Fahad, Executive Director Adel Ibrahim, Senior Manager Operations Sadiq Jarrar, Communications & PR Manager Mohammad Sabra, Marketing Manager Sabah Qussous, Senior Customer Relations Executive Mohab Mazen, Assistant Events Manager Nour Aldin Al Yousuf, Senior Executive Multimedia Afra Matar, Media Relations Executive Lubna Otaibi, Media Relations Coordinator For Value Partners Santino Saguto, Managing Director MENA Region Alessandro Araimo, Global Head of Media Practice Janice Hughes, Senior Director Tabitha Elwes, Head of Broadcasting Practice Emmanuel Durou, Senior Manager Anurag Arora, Senior Consultant Leila Hamadeh, Consultant Riwa Sawaya, Consultant For Jiwin (Arabic translation) Musab Zakarya, Editorial Manager – Arabic For Impact BBDO (Report design) Spiro Malak, Account Director Paul Fayad, Creative Director 4
  • 7. the Arab media consumers. When it comes to monetisation of online content, there are areas of concern, but the picture that emerges from our study is one of consistent and successful experimentation. The report has shown that various models are being tried to effectively monetise online content, with the ‘freemium’ model emerging on top. I would like to humbly submit that this third edition of the Arab Media Outlook represents a paradigm shift compared to the previous editions in terms of both the scope of coverage and depth of analysis. I am sure you will agree with me that this is not only a delightful source of a wealth of data and information, but also a reliable reference on all aspects of the media industry in our region. We hope this report will trigger new studies and researches into the dynamics of the media in our region. Sincerely yours, MONA AL MARRI, CHAIRPERSON DUBAI PRESS CLUB 7
  • 9. At the very outset, let me share the good news that a majority of media stakeholders that we interviewed across the 15 countries covered in the report thought future prospects for the media in the region were positive in spite of the impact of the economic downturn. We also noticed a growing preference for local Arabic content in countries that produce local content such as Egypt and Lebanon, indicating further maturation of the media industry and media consumers away from generalized regional or global media content. You will notice the structure of the report has changed considerably from the two previous editions. While the first section offers an extensive overview of the media market in the region across the different platforms, print, TV and online, in relation to the global scenario, the second section narrows down on each of the 15 countries covered, with special focus on the four countries where the market research was conducted. We then move on to the last section, which forms the main thematic focus of the report, an assessment of the creation and dissemination of local/regional content in Arab media. A number of case studies, offering interesting comparisons or contrasts, have been included in all the sections, illustrating the myriad ways in which the media is evolving in the Arab world, even as it grapples with multiple challenges and opportunities. I trust that the insights and analyses, as well as the data and projections that this report contains will serve as a reliable source of reference for media owners and experts, policy makers, journalists, students and the general public. MARYAM BIN FAHAD, EXECUTIVE DIRECTOR DUBAI PRESS CLUB 9
  • 11. Acknowledgements 14th October Newspaper, Yemen du, UAE 26 September Newspaper, Yemen Elaph, pan-Arab Abu Dhabi Media Company (ADMC), UAE Endemol Middle East, Lebanon Al Ahdath Newspaper, Sudan Es-Sahafa, Tunisia Al Ahdath Al Maghribia Newspaper, Morocco Etisalat, UAE Al Ahram Centre for Translation and Publishing, Egypt Filmworks, UAE Al Ahram Newspaper, Egypt Future TV, Lebanon Al Akhbar Newspaper, Egypt Gulf Journalist Association, Bahrain Alaan Website, Kuwait InMediaPlus, Lebanon Al Arab Al Yawm Newspaper, Jordan International Media Support, Yemen Al Arab Newspaper, Qatar Jeeran, Jordan Al Arabi Training Centre, Syria Jordan Media City Al Arabi Magazine, Kuwait Jordan TV Al Atheer Media, Palestine Knowledge View, pan-Arab Al Ayam Newspaper, Morocco Koulouna Shouraka Online, Syria Al Bayader Magazine, Palestine Kuwait Journalists Association Al Bayan Newspaper, UAE Kuwait News Agency Al Bakri Radio Channels, Palestine Laha Magazine, Lebanon Al Bilad Newspaper, Bahrain Lammtara Pictures, UAE Ad-Dustour Newspaper, Jordan LBC, Lebanon Al Hayat Al-Jadedah, Palestine Maan News Online, Palestine Al Hayat Newspaper, Jordan MBC, Saudi Arabia Al Hayat Newspaper, pan-Arab Mediaedge:cia Middle East, UAE Al Horria Newspaper, Tunisia National Media Council, UAE Al Jazeera Talk, Qatar New TV, Lebanon Al Jazeera TV, Qatar O3 Productions, Saudi Arabia Al Jazirah Newspaper, Saudi Arabia Oman Daily Newspaper Al Jazeera Media Centre for Oman Journalists Association Training and Development, Qatar Oman Mobile Orange Jordan Al Khartoum Newspaper, Sudan Orbit, Bahrain Al Manar TV, Lebanon Palestine TV Al Mehwar TV, Egypt Petra Agency, Jordan Al Qabas Newspaper, Kuwait Pyramedia, UAE Al Quds Newspaper, Palestine Qatar News Agency Al Rai Newspaper, Jordan Qtel, Qatar Al Riyadh Newspaper, Saudi Arabia Réalités Magazine, Tunisia As-Safir Newspaper, Lebanon Rotana Digital, Saudi Arabia Asharq Al Awsat Newspaper, pan-Arab Saba News Agency, Yemen Al Thawra Newspaper, Syria Samacom, UAE Al Waseet Newspaper, UAE Sharjah University, UAE Al Watan Newspaper, Syria Sherezade Films, Bahrain Al Watan Newspaper, Qatar Showtime Arabia, UAE Al Watan TV, Palestine Signature Productions, Lebanon All4media, UAE SNRT, Morocco American University of Beirut Starcom Mediavest MENA, UAE American University of Dubai Sudanese Journalists’ Union An-Nahar Newspaper, Lebanon Tariq Al Mahaba Production Arab Media Group, UAE Company, Palestine Arabian Anti-Piracy Alliance, UAE Associated Press, UAE TBWA Raad, UAE Al Ayyam Newspaper, Palestine TECOM Business Parks, UAE Ayyam Wa Layali magazine, Sudan The Frame, UAE BBC Arabic, pan-Arab Teshreen Daily Newspaper, Syria Cairo News Company, Egypt Twofour54, UAE Centre for Arab Women UAE Journalists Association Training & Research, Tunisia Walt Disney Company, pan-Arab Watwet, Jordan Dar Al Hayat, Lebanon Wejhat Nazar Magazine, Egypt Dar Al Sharq, Qatar Day Press (dp-news), Syria Dubai Media Incorporated, UAE 11
  • 13. status of the Arab media industry, relative to both advertising currently represents just 1% of total developed and emerging markets, and identify key spend in the region, it is expected to become the opportunities for growth. Firstly, an assessment fastest growing media sector over the coming of the region’s print sector shows that it, like years. As broadband penetration increases, online the global print industry, has been undergoing advertising will also grow, led by an increase in significant structural changes, ranging from cost search advertising and the rising use of social transformation and rationalisation of title portfolios media. Similarly, mobile broadband is becoming to cross-platform consolidation and transfer to new increasingly popular, driving the use of the mobile platforms. However, unlike many other markets, phone as a serious media platform and enabling the print industry in the region continues to show growth of applications, particularly for news continued growth in both the number of titles and delivery, in some Arab countries. overall circulation. While the emergence of the internet as a viable platform for news consumption Section 2 of the report provides an in-depth is beginning to affect traditional newspapers in the analysis of the media markets, along with an region, most organizations are using the internet update of advertising forecasts of all 15 markets, to complement their print edition. Going forward, split by platform. While the first part focuses on although we expect the rate of growth for the print the results of the market research conducted in industry to slow, we still believe there is further four “in-focus” markets, Egypt, Lebanon, Saudi potential to be unlocked. The market in the Arab Arabia and the UAE, the second part provides Region remains unsaturated, with low newspaper a country-by-country update of the remaining concentration in many countries, as well as strong markets, including pan-Arab. potential to increase advertising revenues through increased auditing of circulation figures and The market research highlights the importance industry consolidation. of the unique demographic composition of the Arab Region and a strong demand for local Arabic Secondly, the Arab television industry faces content. Firstly, the large youth demographic very different challenges which are being taken (people below the age of 30) in the region, an increasingly seriously by industry players and element common across all 15 markets covered in governments alike, including the low advertising the report, largely drives the consumption of media revenues faced by free-to-air channels and on the internet. In particular, social networks play the low penetration of pay-TV. The free-to-air a significant role, with social networking cited market is fragmented, having grown to reach among the favourite activities online and one of nearly 600 channels today, while remaining the top methods of communication. On average, dominated by a few major broadcasting groups. 70% of the people in the four markets researched However, there is significant potential for growth, use social networking in some capacity and about which will be driven by the adoption of accurate 15% use social networking sites at least once a audience measurement systems, an increase in day. This is particularly noteworthy as the average consolidation in the sector and the introduction time spent on the internet, at about three hours of new technologies which will enable improved per day, is already on par with that of TV. Finally, targeting of advertising. Meanwhile, the pay-TV the research confirms that the more “local” the sector faces strong challenges, both from high content, the more popular it is with consumers levels of piracy and competition from the free- ,with over 60% preferring browsing in Arabic, 80% to-air sector. Yet the recent consolidation of two preferring watching TV in Arabic, a high preference major players into the Orbit Showtime Network, for regional online portals and social networking coupled with increased investments in anti-piracy sites and, in countries producing local content technology, is likely to drive growth. In addition, such as Egypt, a strong preference for internet new digital platforms are making their mark in the content specific to and from their own country. region, including increasing penetration of DTT in North Africa and IPTV in some of the Gulf countries, In the second part of section 2, we present a brief while new services such as Video on Demand are assessment of the remaining eleven markets, as gradually being introduced by pay-TV players as a well as the pan-Arab market, with a breakdown of means of differentiation from free TV. advertising expenditure by platform. While building each country advertising forecast, we have taken Finally, online and mobile are becoming into account the impact of the economic crisis, increasingly important platforms for media which was not fully felt in the region until the consumption in the region. While online latter half of 2009. While the impact varied across 13
  • 14. markets in the Arab Region, it induced a shift in From a monetisation point of view, it is clear that advertising dollars away from traditional media. there is strong demand from the Arab population While newspapers and pan-Arab TV attract the for content that is developed in the region. majority of advertising spend in the GCC region, Yet, there remain several barriers to effective local television remains the dominant platform monetisation on the supply side, from effective in a few markets in North Africa and the Levant. use of cross-platform advertising techniques, to endemic issues such as the lack of audience In Section 3 of this year’s report, we focus on a measurement systems and the abundance of topic of great relevance to both media industry piracy, among others. However, the situation is professionals and to consumers with the changing fast, particularly in the TV sector, with potential to generate significant value for the broadcasters ramping up their investments in industry: the stimulation and exploitation of developing original Arabic formats. In addition, local content in the Arab media industry. We take alternative methods of funding are increasingly into account the two aspects of “local” content, being adopted in the region, including product analyzing it from a pan-Arab point of view, which placement, advertiser-funded programming includes content produced for and consumed and other new revenue streams, as evidenced by a pan-Arab audience (e.g. channels such as by popular Arab programmes such as Freej MBC, newspapers such as Asharq Alawsat) as and Tash Ma Tash. Talent is the third element well as from a national point of view, including to be tackled, primarily through an increased content on terrestrial channels, in national emphasis on education and training of media newspapers and on local websites. Currently, professionals. Government organisations are there remains a major gap in the value of local key to developing the local media talent pool, content in the Arab world when compared to while international companies can also play an other regions. Although the situation varies by important role in helping to grow the local talent platform, the value gap is most pronounced on base through partnerships and co-productions. TV and online. In the TV industry, for example, Technology and government intervention, we estimate the cost per hour of original content meanwhile, are two further factors that need to on the top channels in the UK to be worth two to be addressed. Broadband adoption, both mobile four times as much as the average Arabic series and fixed, will be a key factor to local content on the top 15 pan-Arab channels. However, exploitation, while governments have a major there is strong potential for growth in the quality role to play, not only in promoting infrastructure and quantity of content produced in the Arab investment, but also in providing incentives world. We believe that the industry’s potential for local production, for example through the can be realized through the creation of a local implementation of quotas, and to encourage content virtuous circle, by addressing the key foreign investment in local media. issues of monetisation, funding and talent, with government intervention and technology improvement as the key enablers of that circle. 14
  • 16. Exhibit 1: Industry respondents’ views on prospects for Industry respondents’ views on prospects for Arab media industry in 2010 Arab media industry in 2010 Positive 59% Neutral 26% Negative 15% Source: Based on interviews with 125 industry respondents, Value Partners analysis While the Arab Region economies have been impacted by the crisis, a fast recovery is expected The global economic crisis has had a significant However, the Arab Region is expected to bounce impact on local economies all over the world, with back faster than most markets, and with a forecast world GDP not expected to return to its 2008 level growth of 10% in 2010 and the same CAGR until until 2011.3 The Arab Region’s collective GDP also 2013, it is expected to return to its position as one declined by 10% in 2009, demonstrating a marked of the fastest growing regions in the world. reduction relative to other regions of the world. Exhibit 2: Percentage change in Nominal GDP by region, 2008-2013 Exhibit 2: Percentage change in Nominal GDP by region, 2008-2013 Percentage change in GDP by region, 2008-2013 Annual change in GDP 2008-2009 GDP CAGR 2009-2013 Asia¹ 3% Asia¹ 10% North America -3% North America 4% South America -4% South America 7% Africa -8% Africa 8% Australasia -10% Australasia 4% Arab Region -10% Arab Region 10% Europe -13% Europe 4% Note: (1) Asia excludes Middle East Source: IMF October 2009, Value Partners analysis For the 15 countries that we have studied for the Arab Media Outlook 2009-2013, their collective GDP is expected to exceed 2008 levels by 2010 and grow substantially over the following three years. 3 16 International Monetary Fund, World Economic Database, October 2009
  • 17. Exhibit 3: GDP projections for the Arab Region, 2007-2013 (US$ bn) Arab Region’s GDP forecast, 2007-2013 (US$ bn) Annual change (%) CAGR (2009-13) 2,054 10% 1,899 Palestine 30% -10% 1,764 Bahrain 1,617 1 617 Jordan 1,563 Yemen 1,402 Lebanon 164 1,205 154 Tunisia 171 146 Oman 161 158 135 153 Syria 275 102 115 128 251 Sudan 93 229 112 163 208 Morocco 71 188 326 299 Kuwait 130 262 276 256 180 229 Qatar Egypt 515 557 384 469 443 479 UAE 380 Saudi Arabia 2007 2008 2009 2010 2011 2012 2013 Source: IMF October 2009, Value Partners analysis The decline in GDP that has been seen in the Arab growth. In particular, Qatar and Sudan are forecast Region in 2009 was clearly felt more severely in the to see the strongest growth between 2009 and oil-producing countries, whose economies were 2013, growing at 17% and 14% CAGR respectively. significantly affected by the falling oil prices during Meanwhile, the majority of countries from the the year. However, over the projection period 2009- Levant and North Africa are also anticipated to 2013, these countries are also expected to display grow, but at a pace of between 6% and 11%.4 the strongest recovery, showing significant GDP 4 See appendix for data table with detailed breakdown of projections by country 17
  • 18. Exhibit 4: GDP growth of oil economies vs. non-oil economies, 2008-2013 GDP growth of oil economies vs. non-oil economies, 2008-2013 Real GDP growth (2008-2009) Nominal GDP growth (2008 – 2009) Nominal GDP CAGR (2009-2013) Oil economies i Oil economies i Oil economies i Syria 3% Syria -1% Syria 11% Yemen 4% Yemen -3% Yemen 11% Sudan 4% Sudan -6% Sudan 14% Qatar 11% Qatar -10% Qatar 17% Oman 4% Oman -13% Oman 8% UAE 0% UAE -13% UAE 9% KSA -1% KSA -19% KSA 10% Kuwait -2% Kuwait -27% Kuwait 9% Egypt 5% Egypt 16% Egypt 10% Lebanon 7% Lebanon 11% Lebanon 7% Jordan 3% Jordan 6% Jordan 8% Morocco 5% Morocco 2% Morocco 7% Tunisia 3% Tunisia -3% Tunisia 6% Bahrain 3% Bahrain -9% Bahrain 7% Non-oil economies Non-oil economies Non-oil economies Note: Countries in which oil constitute at least 15% of their GDPs are considered oil economies in this analysis Source: IMF October 2009 Likewise, advertising revenues in the Arab Region have been hit by the economic crisis Advertising revenues in the Arab Region have been America. Meanwhile, regions like Central and severely impacted by the economic crisis, and on Eastern Europe, as well as the Arab Region itself, a comparative level between 2008 and 2009, it saw their most significant drop in 2009. Turkey, in has been one of the most significantly affected particular, saw a 22% drop in advertising revenues regions in the world. It is worth noting, however, in 2009, having remained almost static in 2008, that the effects of the crisis were already starting which is a good indication that the characteristics to be felt quite substantially in 2008 by many leading to “late” drops in advertising are a regions, particularly in Western Europe and North regional phenomenon. 18
  • 19. Advertising spend change from 2008from 2008 to 2009 Exhibit 5: Advertising spend change to 2009 (%) (%) -21% C&E Europe -13% Arab Region -13% North America -11% % Africa -11% Western Europe -3% Asia/Pacific Source: Zenith Optimedia, Value Partners analysis Latin America 1% While the Arab Region had been the fastest growing increase in cross-platform advertising, with major region in the world in terms of advertising revenues media owners offering cross-platform packages to prior to the crisis, it has also been significantly marketers that ensure broader audience coverage. affected and, based on our projections, we expect For example, newspapers that operate online are to see advertising revenues return to their 2008 increasingly offering a combined package for levels only by 2011. Our interviews with advertising advertising in their print and online editions. As a agencies and media buyers suggest that this is, in result, the advertising business model is evolving part, due to the fact that 2008 was a particularly to a situation where advertisers are increasingly successful year for the region in terms of dedicating portions of their overall budgets to advertising revenues, displaying over 30% annual specific media groups, rather than paying on a growth from 2007. Indeed, the sectors which had rate card basis. previously fuelled the growth of the industry in the region, notably the real estate and financial Going forward, we expect a slight shift in the services sectors, are also those that were affected growth rates in advertising for the different most by the recession. Arab countries: while Egypt had been one of the fastest growing Arab countries in 2008, with We are also seeing some new trends in the way advertising revenues increasing 43% on 2007, advertising dollars are being spent, mirroring the its growth is expected to slow down to a CAGR trends of global markets. The economic crisis has of 7% between 2009 and 2013. Meanwhile, based triggered a shift in many markets, including the on our projections, Qatar and UAE are expected Arab Region, towards below the line advertising5, to be the fastest growing countries in terms of with organizations generally looking for the most advertising in the GCC region, both showing a high efficient ways of spending their marketing budgets CAGR of 11%. and with the fastest results. There has also been an 5 “Below-the-line” usually refers to promotions aiming to drive short-term sales and typically focuses on direct means of communication, e.g. direct mail, email etc. 19
  • 20. Annual change (%) A l h CAGR (2009-13) Economic crisis impact on regional advertising 30% -13% 8.4% 6,346 5,974 5,577 5,296 5 296 5,096 Palestine 4,600 408 Yemen 373 Sudan 472 4,068 268 338 Tunisia 443 415 309 416 Syria 936 284 388 896 Bahrain 654 851 231 361 Oman 789 358 980 Jordan 853 719 904 458 820 Lebanon 726 679 Qatar 710 1,120 1,181 Morocco 1,229 1,042 950 Kuwait 784 839 Egypt Saudi Arabia 1,053 1,049 1,141 1,196 1,252 802 965 UAE Pan Arab 2007 2008 2009 2010 2011 2012 2013 Note: Pan-Arab Pan Arab refers to advertising spend by regional media outlets that cover multiple countries in the Arab Region Source: Zenith Optimedia, Value Partners analysis
  • 21. North America 462 Western Europe 273 C&E Europe 68 Latin America 63 Asia Pacific 30 Ad spend per capita in the region remains one of the lowest in the world Arab Region 22 Source: Zenith Optimedia, Value Partners analysis
  • 22. Exhibit 8: Impact of economic crisis on media consumption habits1,2 Impact of economic crisis on media consumption habits¹.2 “I agree” The crisis has not affected my entertainment habits 51% I spend more time watching TV 50% I tend to go less to the movies 50% I spend more time at home with my family 47% I tend to go out less at night 43% Notes: (1) This data represents a consolidated view of the market research in Egypt, Lebanon, Saudi Arabia and UAE (2) Base: 1,810; All respondents Source: The Nielsen Company As seen in most markets around the world and impacted by economic fluctuations to the same the Arab Region, although the pace of pay- extent as advertising. TV growth has declined in the past two years, the sector has not suffered a contraction of its Secondly, another impact of the crisis has been revenues in the same way as free-to-air (FTA) TV. the acceleration in pace of digital migration. The For example, Showtime Arabia’s6 subscription proportion of advertising spend on the internet base grew at a CAGR of 18% between 2004 and has already grown substantially to make up 12% of 2007, and continued to grow between 2007 and total global spend in 2009, and is forecast to reach 7 2009, albeit at a lower rate of 9%, demonstrating 18% by 2013, as seen in the exhibit below. that subscription-based media services are not Exhibit 9:Projections for global advertising revenues by platform, 2007-2013 (US$ bn) Global advertising revenues by platform, 2007-2013 (US$ bn) CAGR 2007-13 100% = 489 494 444 448 465 487 502 0.1% Radio 8 8 8 8 7 7 7 -1.6% Out-of-Home 7 7 7 7 7 7 7 10 9 9 8 0.7% 12 12 10 Magazines -5.9% Internet 8 10 12 14 15 16 18 13% Newspapers 27 25 23 22 21 20 19 -5.7% Television 1.4% 37 38 39 40 40 40 40 2007 2008 2009 2010 2011 2012 2013 Source: Zenith Optimedia, Value Partners analysis The UK has seen particularly dramatic growth Indeed, with newspaper spend currently only 2% in internet advertising revenues, and 2009 saw higher than the internet, online advertising is a major turning point for the industry when about to become the strongest sector in the UK internet advertising overtook TV for the very advertising market. first time, accounting for 26% of total revenues. 22 6 Referred to as Showtime in the remainder of the report 7 Informa TM
  • 23. Internet Ad spend 35% overtook TV in Q3 2009 Newspapers 30% Magazines TV 25% Radio 20% Cinema Outdoor 15% Internet 10% 5% 0% 2006 2007 2008 2009 Source: Zenith Optimedia, Value Partners analysis
  • 24. Exhibit 11: Arab Region advertising revenue projections by platform (US$ m) Arab Region advertising forecasts by platform (US$ m) Annual change (%) CAGR (2009-13) (2009 13) Platform ad spend as % of total 6,346 (2007/2013) 8.4% 5,974 -13% 5,577 395 Radio 30% 5,296 2.6% 370 5,096 511 345 313 468 4,600 321 428 456 4.2% Internet 2.1% 4,068 298 367 1,903 1 903 330 0.3% 263 1,818 1,566 1,731 Out-of-home 6.5% 384 6.2% 1,610 9.5% 1,501 1,213 30% 8.0% Magazines 3,104 2,819 2,753 , 2,937 30% Television 2,547 2 547 52% 2,294 2,107 49% Newspapers 2007 2008 2009 2010 2011 2012 2013 Note: Pan-Arab advertising spend included Source: Zenith Optimedia, Value Partners analysis 24
  • 26. The region’s print industry is starting to experience significant structural changes already initiated internationally On an international level, newspapers have • Another common response has been a change been taking steps to restructure the way they in newspaper formats in order to minimise operate in order to cope with the significant loss production costs. An example is the San of circulation felt as a result of digital migration Francisco Chronicle, which made some key and the severe loss of advertising revenues. The alterations to its layout and design, including a structural changes have taken many different reduction in size of the paper, in order to keep forms around the world, depending on the market up with changing reader demographics and and the context in which companies deal with achieve cost efficiencies in production. Similarly, these economic challenges. Polish publishing company Polskapresse took an innovative step back in October 2007, as • Many publishing groups have begun rationalising discussed in the next exhibit. Furthermore, other their portfolios by shutting down loss-making newspapers are abandoning their expensive titles. A prime example is major US publishing print editions and moving to a purely online group Condé Nast, which shut down four key publication. titles in Fall 2009. Similarly, rising costs in India have forced many publications to defer • There have also been some examples of launches or close down. For example, Metro consolidation in the print industry, for example Now, an English newspaper published in Delhi, in Russia which has seen high levels of M&A born of a joint venture between Hindustan Times activity since 2008. However, in many markets, Media and Bennett, Coleman and Company, has consolidation has been less common than deferred its plan to enter the state capitals, anticipated and large publishing groups have reduced its print run for the Delhi region and adopted the route of closing down titles and shelved the idea of a Sunday newspaper. BCCL’s streamlining staff, rather than merging with plans to take its flagship publication, The Times other companies. of India, to smaller towns are on hold, while Business Standard has shut down the newly- In the Arab Region, these trends have been felt launched Rajkot edition of its Gujarati newspaper to a lesser extent than other markets. However, and 70-year old The National Herald was forced interviews with industry experts suggest that Arab to temporarily suspend operations in 2008. publications have still been hit to some extent by similar difficulties as global markets and that the • The evening press has been particularly affected structural changes have been accelerated by the and is virtually disappearing from many markets. economic crisis. The London regional market in the UK is a prime example, with two free evening newspapers, The • As in other markets, many Arab newspaper titles London Paper and London Lite being shut down have also closed down across the region. Kuwait’s within three months of each other in 2009. 180- Assawt, which only launched in October 2008, year old London paper The Evening Standard ceased its operations in February 2009. Egypt’s also ended its long history of paid circulation El Badeel, which launched in 2006, closed and became a free paper in a significant change down in July 2009. Groupe Maroc Soir, a major of strategy. Moroccan publishing company, also closed down two of its titles, Assabahia and Assada • Some companies have been undergoing El Massaia, in 2009. Similarly, The Daily Star in major cost transformation by optimising their Lebanon, the only English language newspaper, production centres. Johnson Press in the UK, for has been battling a difficult financial situation example, has reduced the number of production since January 2009 when it closed down before centres it operates and, in the process, re-launching, and continues to have an uncertain significantly downsized its workforce. future. 26
  • 27. • We have also seen some rationalisation of • There has also been an increase in cross-platform production among Arab newspapers, such as consolidation across the region during 2009. In the free newspaper 7 Days in the UAE which made UAE, for example, several media assets including the decision to close its Friday publication in 2009 three newspaper titles, Noor Dubai Radio & TV in an effort to increase efficiency. and Masar Printing & Publishing Company, were transferred from Arab Media Group to Dubai • New formats are also being introduced into the Media Inc. in Fall 2009 in an effort to optimise the market and, in the same way that has been seen media industry structure in Dubai. in international markets, some newspapers are moving to pure online editions. Saudi Arabia’s • The Arab Region has seen a limited amount of Al Majalla is a case in point, which transferred to redundancies in print organizations relative to an e-paper format in April 2009 and is discussed other markets, but nevertheless some companies further in the next exhibit. Similarly, UAE sports have downsized their operations. Indeed, of the magazine Super dropped its print edition in 2009 print industry organisations we interviewed and became a purely online publication. across the Arab Region, 15% went through a redundancy plan. 27
  • 28. group Circulation of Dziennik Zachodni (Largest newspaper under Polska brand) -11% 119,000 107,000 2007 2008
  • 29. Despite this challenging environment, the print industry in the region has weathered the storm better than in other markets In spite of these major issues, on the whole, the of new titles in 2007 and 2008. In fact, 2009 was print industry is looking healthier in this region the first time in many years that the number than most other parts of the world. Overall daily of newspaper titles in the region has actually circulation and total number of titles are continuing remained almost constant. However, there has to increase year on year in the region, while in most been some movement, with the number of titles developed markets circulation levels and number closing down in 2009 almost equalling the number of titles have consistently decreased. of new titles launched. Over the past few years, the number of titles in Internationally, however, the picture is much the Arab Region has been steadily increasing, bleaker. In the US, the number of newspaper supported by new licences being awarded – for titles available has been decreasing steadily example, a total of 10 new licences have been since 2004.8 awarded in Kuwait since 2006 which led to a flood Exhibit 13: Number of newspaper titles in the Arab Region, 2003-2009 Number of newspaper titles in the Arab Region, 2003-2009 Sudan Saudi Arabia Kuwait Yemen CAGR Morocco Syria Bahrain Jordan (2003-2018) Egypt UAE Oman Palestine Lebanon Tunisia Qatar 188 189 4.6% 4 6% 177 167 161 152 144 17 17 13 8 8 10 10 7 10 10 7 10 13 14 10 13 12 8 12 10 9 10 10 9 9 9 9 9 15 15 16 15 16 14 14 13 13 14 15 14 14 14 18 19 16 17 14 15 15 17 19 22 20 16 16 16 26 27 28 29 29 29 29 2003 2004 2005 2006 2007 2008 2009 Source: WAN, MENA Media Guide Overall daily circulation in the Arab Region is in the Arab Region, in spite of the total number of also continuing to increase, contrary to the daily newspaper titles stalling between 2008 and developments being seen in many other markets. 2009, circulation has continued to increase, as For example, the US saw a 4% decline in total demonstrated by the exhibit below. circulation between 2003 and 2008.9 Meanwhile 8 Editor and Publisher International Yearbook: Toatal number of titles decreased by 3% between 2004 and 2008 29 9 Editor and Publisher International Yearbook: Referring to total paid-for dailies & Sundays
  • 30. Exhibit 14: Forecast of total daily newspaper circulation in the Arab Region, 2007-2013 (000 copies) Forecast of total daily newspaper circulation in the Arab Region, 2007-2013 (000s) Egypt Kuwait Jordan Yemen CAGR Saudi Arabia Lebanon Oman Sudan UAE Syria Qatar Palestine Morocco Tunisia Bahrain 2.3% 5.5% 12,231 11,701 11,961 11,164 11,427 10,831 329 10,035 326 418 322 413 317 408 391 313 404 388 327 399 385 410 382 407 369 379 404 302 361 400 1,022 396 1,008 355 381 994 358 979 96 961 757 386 986 742 731 550 722 710 1,153 761 1,142 754 1,128 1,111 1,092 1,011 993 1,980 1,956 1,934 1,878 1,903 1,855 1,756 4,511 4,686 4 686 4,018 4,177 4,342 3,627 3,774 2007 2008 2009 2010 2011 2012 2013 Source: WAN, MENA Media Guide, Value Partners analysis While other markets are struggling to maintain, but also by some of the smaller Gulf countries, let alone increase circulation of newspapers, in such as Bahrain and Qatar. As such, growth will the Arab Region we expect the circulation of daily stem from those countries where newspapers newspapers to continue to grow over the next five are the preferred media. Egypt, in particular, is years, albeit at a slower pace than before. Following home to a thriving newspaper industry, with some a growth rate of 5.5% CAGR between 2007 and of the oldest newspapers in the world and, more 2009, we expect the rate to slow to 2.3% from 2009 recently, several new independent newspapers to 2013. Growth will be driven not only by a strong which have launched following the success of Al increase in circulation in the largest market Egypt, Masry Al Youm. 30
  • 31. Print revenues in the region have suffered from the recession but have shown more resilience than international markets Internationally, advertising spend on newspapers display sector has also been negatively impacted, continues to decline and the economic recession but the effect has not been quite as severe. has only accelerated an already perceptible decline in the share of total advertising spend In the Arab Region, although sales figures from on newspapers. Newspaper advertising spend print copies have remained steady in 2009, has been hit on many fronts, all of which have there has been a decline in total revenues in the contributed to the overall decline of the media newspaper industry due to pressure on advertising spend. The classified sector in developed markets revenues. Overall in the Arab Region, we estimate has all but disappeared in print, substituted, for that nearly 40% of newspaper revenues currently the most part, by online. In the UK, for example, come from copy sales, while just over 60% is over 60% of the reduction in total newspaper generated through advertising. Interviews with advertising revenue between 2004 and 2008 came newspapers across the Arab Region suggest that from classifieds, which accounted for a reduction of approximately 20-30% of advertising revenues over $1 billion10. Similarly, in the US, the classified continue to be derived from classifieds, while advertising sector fell by 40% in 2Q 2009 alone, around 70-80% of advertising revenues are largely due to the availability of cheaper online from display. alternatives such as Craigslist.11 Meanwhile, the 10 WARC 31 11 Newspaper Association of America
  • 32. Advertising Circulation Source of revenues as % revenues revenues of total revenues Advertising revenues slip as a result of economic crisis 4,428 4,628 4,169 4,211 3,971 3,686 3 686 1,525 3,358 1,491 33% 1,350 1,459 1,424 37% 1,392 1,251 2,819 2,753 2,937 3,104 67% 2,294 2,547 63% 2,107 2007 2008 2009 2010 2011 2012 2013 Source: WAN, MENA Media Guide, Value Partners analysis
  • 33. Exhibit 16: Analysis of free daily newspapers in the UAE Analysis of free daily newspapers in the UAE Breakdown of circulation, UAE 2008 Daily circulation of 7 days (UAE) In 000s Free newspapers 67.6 67.8 65.0 67.0 64.3 25% 75% Paid newspapers Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Source: MENA Media Guide The internet has started to impact the print industry in the region The industry also faces increasing pressure young demographic in the Arab Region, it is not from the internet where consumers, both surprising that consumption is moving online, globally and in the Arab Region, are spending an with 40% of news readers accessing news via the increasing amount of time. With news being one internet in 2009. of the most popular forms of content among the 33
  • 34. Exhibit 17: Sources for reading news in the Arab Region1,2 Sources for reading news in the Arab Region¹ Newspapers only 41% Internet 40% Blogs 17% Emails 12% E-bulletin Boards 9% Alerts on mobile 7% Notes: (1) This data represents consolidated view of the market research in Egypt, Lebanon, Saudi Arabia and UAE (2) Base: 1,810; All respondents who buy newspapers Source: The Nielsen Company In particular, the concept of blogging for news In spite of the strong popularity of user-generated is one that is particularly important for the Arab content (UGC) in the region, it is worth noting Region. In this respect, competition for printed that over 80% of industry experts interviewed news comes not only in the form of official news and said that they do not feel threatened by UGC. This current affairs websites, but also from individual suggests that while from a consumer point of view, bloggers, as was discussed at length in the AMO blogging and other forms of UGC offer a popular 2007-2011. The concept of blogging is becoming platform for news consumption, they are seen by increasingly popular in the Arab world, where the the industry more as an opportunity than a direct internet provides a free platform for expression. competitive threat. Even international news players are increasingly turning to bloggers as a source for reporting on local events in the Arab world, an example of which can be seen in the next exhibit. 34
  • 35. Iraq: The Baghdad Blogger
  • 36. In addition, News Corp. and others are looking Journal, but other major international titles, such for alternative ways to monetise their online as The Financial Times and The Economist have news content through Search. While Murdoch had success in charging for their content online. has publicly threatened to block search engines such as Google from displaying his companies’ Meanwhile in the Arab Region, there are further news content on their sites15, the advent of challenges to charging for content online, such as Microsoft’s alternative search engine, Bing, may low credit card penetration and low take-up of online prove to change the dynamics of the online news payment, but there remains a sense of optimism. industry. If Microsoft, as reports suggest, is willing Indeed, nearly 70% of the industry respondents to pay news organizations for featuring their interviewed across the Arab Region believe there content on its site, news providers could stand a is a future for charging for content online. As strong chance in improving monetisation of their with international markets, it is already clear content online. that consumers are willing to pay for specialized news content online – particularly catering to the Meanwhile, many news organizations offering business community – as the successful case of specialist content, such as business news, have Zawya in the Middle East demonstrates. proved that it is possible to successfully monetise specialist content online. Not only The Wall Street 15 36 During interview with Sky News Australia, November 2009
  • 37. the print version Group turnover ($m) 17% of the turnover comes from electronic sources Group turnover ($m) premium content Tiered subscription offers 248 266 191 197 218 Business Projects Investor development membership membership membership • Prices start • Prices start at • Prices start at at $1,250 for $1,500 for 6 $3,100 for 6 04 05 06 07 08 6 months months months
  • 38. video news offering gulfnews.com emaratalyoum.com Gulf News has khaleejtimes.com the highest page thenational.ae views alkhaleej.ae Daily Reach (%) 0.12 0.10 0.08 0 06 0.06 0.04 0.02 0 2009 Sept 28 Oct 5 Oct 12 Oct 19 Oct 26
  • 39. Exhibit 21: Newspaper concentration by population, 2008 Newspaper concentration by population, 2008 Global newspaper concentration (titles/adult million) Arab newspaper concentration (titles/adult million) Bahrain 15.2 Switzerland 13.3 Qatar 10.9 USA 5.8 Kuwait 8.9 Lebanon 4.8 Brazil 5.7 Oman 3.7 Palestine 3.6 Germany 5.0 UAE 3.3 Jordan 1.7 Russia 4.1 Morocco 1.4 Sudan 1.2 India 3.3 Tunisia 1.1 Saudi Arabia 0.9 Arab Region 1.1 Syria 0.7 Yemen 0.4 China Chi 1.0 10 Egypt 0.3 Note: Based on paid for daily titles only Source: WAN However, it is worth noting that there is a wide Evidently, newspaper concentration is dependent disparity between countries in the region. Some of on several factors, including not only population the Gulf states such as Bahrain, Qatar and Kuwait but also literacy rates, as displayed in the exhibit could be seen as “saturated” with titles, while below. However, some key markets, including others continue to present room for growth. Jordan, Saudi Arabia and Syria, could benefit from an increase in newspapers. 39
  • 40. Title concentration vs. literacy rates Newspaper titles / adult million 10 9 Kuwait 8 7 6 5 Lebanon 4 Oman UAE Opportunity for 3 Palestine higher newspaper concentration 2 Jordan Morocco Tunisia Sudan 1 Saudi Arabia Syria Yemen Egypt 0 40% 50% 60% 70% 80% 90% 100% Literacy Rate Note: Bahrain and Qatar not included due to their high concentration of newspaper titles Source: WAN CIA W ld F tb k V l P t S WAN, World Factbook, Value Partners analysis l i
  • 41. Exhibit 23: Number of audited newspaper titles in the Arab Region, 2008-2009 Number of audited newspaper titles in the Arab Region, 2008-2009 2008 2009 21 Morocco 15 3 UAE 3 2 Oman 2 1 KSA 0 Source: MENA Media Guide Growth of the industry will be fuelled by consolidation and survival of the fittest In many markets, we expect to see the survival consistently had low overheads and been able to of only the strongest companies over the difficult weather the storm in a more manageable way. The times that the next few years present. The strongest ones at a disadvantage in this equation may be the players are likely to emerge in two forms: those big medium-sized players, whose existence is likely to players who have either consolidated or succeeded diminish substantially in the long-term future of in making their operations more efficient in other the industry. ways, and the very small companies who have 41
  • 42. AMG / DMI Rotana / LBC Al Jazeera / ART
  • 44. Exhibit 25: TV penetration by platform, 2008 TV Penetration by Platform 2008 Free Satellite Cable Terrestrial IPTV Pay Satellite Gulf Levant North Africa 3% 7% 6% 4% 8% 9% 10% 10% 10% 5% 5% 20% 26% 13% 30% 35% 30% 53% 44% 59% 13% 86% 88% 89% 11% 77% 76% 74% 66% 64% 45% 42% 35% 38% Saudi Kuwait Bahrain Qatar Oman UAE Lebanon Jordan Syria Tunisia Morocco Egypt Arabia • Relatively high proportion • Very limited pay, • High proportion of of pay-TV, except in KSA y mostly free satellite y terrestrial with good g and Oman ground for DTT Note: Penetration rates (of terrestrial TV in particular) may be underestimated due to the presence of multiple platforms within the same household (e.g. terrestrial and free satellite) Source: Informa TM, Value Partners analysis In spite of the low pay-TV penetration, revenues rise, with the proportion of advertising revenues from pay-TV currently constitute 30% of total expected to reduce over time, as the exhibit below TV revenues in the region and are continuing to demonstrates. 44
  • 45. Exhibit 26: Projections for Arab Region TV revenues, 2007-2013 (US$ m) Forecast of Arab Region TV revenues, 2007-2013 (US$ m) Pay-TV as % of CAGR Advertising total revenues (09-13) Pay-TV 35% 34% 32% 31% 2,933 30% 2,739 27% 28% 2,552 2,333 2,134 2,143 1,030 922 13% 820 1,693 569 724 642 480 1,731 1,818 1,903 6% 1,566 1,501 1,610 1,213 2007 2008 2009 2010 2011 2012 2013 Note: Pan-Arab advertising included Source: Informa TM, Value Partners analysis The TV advertising revenues shown in the exhibit • The Arab Region has a far higher proportion of above are split between pan-Arab advertising free satellite than other countries in both the and ‘local’ TV advertising on a country basis, with developed world and other emerging markets growth expected to be driven by the pan-Arab market. • While 95% of TV households in the region access free TV, just 70% of TV revenues come from When comparing the structure of the Arab TV advertising industry with other markets around the world, there are two noticeable observations: 45
  • 46. 1.3.1 Free-to-air TV FTA TV, and in particular pan-Arab FTA satellite, very low. Even when compared to other developing is the dominant sector in the Arab broadcasting markets, the Arab TV industry suffers significantly industry, and yet overall advertising revenues from an undervalued advertising market. For across the TV sector in the Arab Region remain example, Brazil’s TV advertising market was worth limited to approximately $1.5bn in 2009, split $7.4bn in 2009. This puts the Arab Region on par between nearly $900m for pan-Arab satellite and with a country like Turkey, whose population is just just over $600m for local channels. For a market 70 million but TV advertising is worth over $1bn. with a population of over 250 million - making it There are several reasons for the low value of the almost the same size as the USA, which saw annual Arab TV advertising sector, which we explore in advertising revenues of $53bn in 2009- this figure is the remainder of the section. While the FTA market is extremely fragmented, it is dominated by a few large broadcasting groups With around 450 FTA satellite channels available at rapidly year-on-year and is estimated to stand at the beginning of 200917, the number has increased nearly 600 channels today. Exhibit 27: Number of pan-Arab satellite TV channels, 2004-2009 Number of pan-Arab satellite TV channels, 2004-2009 CAGR 450 35% 372 295 218 141 100 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Note: Total satellite TV channels in 2009 includes channels in test transmission phase Source: Arab Advisors Group, Value Partners Analysis With such a high number of channels available, channels catering to different segments of the there is a wide variety of genres and content Arab audience. In particular, religious channels types on offer for the pan-Arab audience. While make up the second highest number of channels the majority are still ‘general interest’ channels, after ‘general interest’, with 45 religious channels there are also a growing number of specialized available in 2009. 17 46 Including approximately 40 still under test transmission