MBC plans stock market listing

Saudi-owned satellite television broadcaster Middle East Broadcasting Center (MBC) is planning a stock market flotation worth several hundred million dollars, Arabian Business can reveal.

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By  Massoud A. Derhally Published  January 22, 2006

Saudi-owned satellite television broadcaster Middle East Broadcasting Center (MBC) is planning a stock market flotation worth several hundred million dollars, Arabian Business can reveal. Abdul Rahman Al-Rashed, general manager of Al Arabiya — the 24hour Arabic news channel launched on the eve of the Iraq war by MBC — said the group's parent company is looking to list on one of two markets in the Gulf. The Dubai-based firm also plans to launch an English-language news channel to compete with its arch-rival Al-Jazeera's upcoming international station. “MBC is the most profitable, the most professional in the market [and] the oldest obviously. It is being advised by different financial groups to go public as soon as it’s allowed in Saudi Arabia or in the UAE. It should take place within two years maximum,” said the former editor of the pan-Arab daily Asharq Al Awsat. Bankers and analysts said it is difficult to estimate how much the MBC network, owned and founded by Walid Al-Ibrahim, brother in law of the late King Fahd, could raise in a flotation because of the tradition of non-financial disclosure in the region. “Virtually all media groups in the Arab world don’t disclose financials so you can't really estimate their value, as there is no idea what their revenues are or profitability levels are (assuming they profitable). Without this information it’s anyone’s guess,” Jawad Abbassi, general manager of the Arab Advisors group, a media and telecoms research consultancy explained. With increased competition from the likes of Lebanese Broadcasting Corporation, MBC had been losing viewers before the recent restructuring of its operations, through which it brought in new professionals, changed its marketing strategy and revamped its programme grid. MBC was repackaged to include a bouquet of channels with the goal of beefing up the network’s advertising power in terms of geographic spread and number of viewers. Al Arabiya aside, MBC’s other channels compete with the region's pay-TV operators. Unlike rival firms that rely on subscriptions, MBC’s network offers free to air satellite TV, deriving its revenue from advertising instead. Al Arabiya’s main competitors are Al Jazeera and Al Hura, the US initiative launched after the Iraq war to improve perceptions of America in the Arab World. Entertainment channels, MBC 1 and MBC 2 compete on two levels with pay-TV and free to air channels. Competing digital television platforms comprise ART/FirstNet, Orbit, Star Select, and Gulf DTH/Showtime. Orbit was founded by the Saudi Al-Mawared Group and includes both Arab and Western programming. “The [MBC] strategy is that the future is free TV rather than subscription," explained Abbassi. “That is the model. Orbit, ART and Showtime are from a different school of thought and believe the future is subscription TV.” Al-Rashed also said the network was considering the feasibility of launching an English language news channel, competing with the station Al Jazeera is scheduled to launch later this year. “We are studying it. The company has been looking into a few ideas. Some of them have already been launched, but it's one of the ideas under consideration. The challenge [for] it is the cost. It has no financial value whatsoever. It's very costly … hundreds of millions of dollars definitely to start and launch it, because you end up with the issue of copyrights, you use the same news but if you show it in a different territory like the US you are talking about really big money in this case. We are not going to go ahead with it unless we are sure financially it is secure,” he explained. Al Rashed said that, if a channel was launched, it would not target viewers in the Arab world. “Definitely not. The Middle East has a few English channels. If you launch it internationally you are competing with big elephants like the BBC, CNN and others. The details are quite complicated. It has no value commercially in my opinion,” he added. Al Rashed declined to provide any information with respect to the current ownership structure of MBC but did confirm that the family of former Lebanese premier Rafik Hariri did not have any stake in the network. “It’s not true. The Hariris have their own TV, Future TV. As a matter of fact, Future TV is a competitor for MBC, so why would someone you are competing with go and back you up? Were there contacts? Yes, there were contacts. Were there discussions? I am sure there were discussions at the level of the chairman, not mine,” said Al-Rashed. He added: “Right now all the shares are owned by the MBC Group. It’s a money burning business you don’t have a partner without making sure they will be with you in the long term. “I think MBC was and is still looking for partners who can contribute more. It's not just money it’s more than money.”

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