Ian Ritchie, CEO of Middle East Broadcasting Centre (MBC) in an exclusive interview with Interspace, says he expects Arabic broadcasters to be increasingly open to merger and acquisition activity from western media players…
"You don’t see suggestions that Rupert Murdoch is going to do something," says Ian Ritchie, CEO of Middle East Broadcasting Centre (MBC), speculating on likely future players in his stamping ground. "But I am sure you are going to see multinational media companies [looking at the Middle East]…generally they are not present. Viacom is present with Showtime in niche activity, but what we are talking about here is mainstream TV."
Ritchie believes that consolidation is likely to be on the cards. "Middle East advertising revenue is bound to increase hugely, therefore someone will be interested in M&A activity," he says. "Why should our region be any different, and if someone finds an attractive offer on the table they might sell, and why not? That might bring in a strategic investor that can relate one company to another and achieve synergy."
Ritchie, who prior to joining MBC (in March last year) has been chief executive of the UK’s Channel 5, admits that MBC’s chairman Sheikh Walid al-Ibrahim, brother-in-law to Saudi Arabia’s King Fahd, has been courting new investors for the pan-regional station. "When one reads in the Arab press that this Prince or that Sheikh is looking at us, I say ‘absolutely right’. One should be very worried if people were not looking at [us], suggesting we were not worth an investment," he says. "I see no problem [in people looking at us for investment] and when one sees such a crowded region with too many channels competing for still too small a pot of money, it is only natural to look at areas where you can co-operate with one another."
MBC has had a tough 18 months, with Ritchie’s first task being to trim overheads and to knock the station into better financial shape. Some 120 staff were made redundant in July last year. MBC was launched in 1991 but has yet to make a profit. "There has been a significant improvement in our financial position recently," says Ritchie. "MBC is going to be a profitable organisation very soon. I see such a load of rubbish written in terms of ad-revenue generated, and I would much prefer a situation where we could show our results every half-year, but I can’t."
Ritchie has made other changes, most notably by hiring Phil O’Hara from The Mirror to take control of MBC’s ad-sales.
MBC, like the other satellite-delivered pan-regional Arabic-language channels, has huge audience reach numbered in the tens of million with footprints that include North Africa, Egypt and the Levant as well as the whole of the Arabian Gulf region from ArabSat in analogue and digital. MBC also broadcasts to Europe (digitally on Eutelsat) and from NileSat (and to North America as part of the DirecTV platform).
But it is also a culturally diverse audience, covering a five-hour spread of time zones in the Middle East, which gives a clue to some of Ritchie’s future plans. "We need to tailor [output] to our audiences and in the next year or two the technology will exist where we can start doing more of that," he says. "We could copy what Disney does, which is to tailor channels for Germany, France and Italy. They cannot put out a pan-regional product. They needed to recognise the differences." According to Ritchie, MBC needs to look into how to take advantage of network programming, whether it is major sport, drama, entertainment, and decide on the best way to regionalise some of this. "The obvious answer is with news, more regional news that is closer to home," he says. "We already have that capability with an extensive range of correspondents all through the region."
Ritchie is well aware that in many ways the market is underdeveloped, but sees this as changing. "Digital is embryonic in the market, and the same is true of the ad market needed to sustain it these areas," he says. "Although again you see the local ad scene developing in Tunis, in Egypt as well as in the Lebanon and Dubai. It’s a potential area of real growth."
Essential to these expansion plans is similar growth in Middle East advertising. Ritchie says Middle-East ad agencies and their clients are "paying peanuts" for advertising time. "What we have to do is argue the case which says we are worth investing in, and if you look at relative spends in newspapers, magazines and TV in the Mid-East it is the reverse pattern to that everywhere else in the world," he points out. "Publishing takes about 60 per cent and TV about 30 per cent, and everywhere else it’s the other way around. Now why is that the case, especially given that our audience watches more TV than most places, certainly in Saudi Arabia?"
Ritchie is now beginning to see other changes initiated by him begin to bear fruit, largely as in the form of the results of a major research study undertaken by Paradigm Research. "Our research proved we were seen as serious and up-market, and we do not want to lose that," he says. "Our position is to offer a family-oriented channel, but the difficult balance is to stay committed to be a serious news and current affairs channel, with high-quality news and yet not ignore the demographic profile which shows that 68 per cent of Saudis are under 25, and where that percentage is rising throughout the Mid-east, and where [specific] entertainment is important."
MBC has recently secured what it sees as an important programme in the battle to reach this target audience. "When we were discussing the Pepsi music show we decided the last thing we wanted was a western show," he says. "What we wanted was music that reflected local stars and celebrities. It would have been a mistake to create a show featuring Michael Jackson or the Spice Girls, when they wanted [local star] Mohammed Abdul." A locally-based show was seen as the key. "We deliberately based the Pepsi show out of Beirut because we wanted to be bang up-to-date," says Ritchie. "The show gives us a major promotional link-up with Pepsi that takes us onto cans, point-of-sale, restaurants and cafes, all of which helps build our brand and an association with another World brand."
Ritchie sees the Pepsi model as pointing the way ahead. "We are keen for more of these shows, [possibly] in the form of masthead deals with publishers," he says. "We are governed by the ITC regulations, but I see us doing more of this."
