Cautious optimism prevails in the Middle East television industry after a year of turmoil sparked by the Arab Spring.
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Hopes of bumper revenues last year were dashed after the Egyptian advertising market crashed in the first six months.
MBC, the region's largest broadcaster, expects better figures this time around. "One has to be cautiously optimistic for 2012," says Mazen Hayek, the group director of public relations and commercial at the MBC Group.
Total spending on TV advertising in the Middle East and North Africa is in excess of US$1 billion (Dh3.67bn) a year. MBC pulls in the lion's share of this, although it does not disclose exact revenue figures.
MBC, which operates 10 channels including MBC1 and Al Arabiya news station, did not meet "bullish" revenue predictions last year because of the impact of the Arab Spring.
"We had a good performance in 2011, but not as good as we had envisaged," he says. "We are closing off on a fairly good year, in spite of all the turbulence. The first two quarters of the year would have sent alarming messages. The last two quarters balanced it out."
Mr Hayek adds that MBC hopes for "a two-digit percentage growth" in advertising revenues this year, compared with last year.
More than 500 free-to-air channels vie for viewers' attention in the region's crowded TV industry. The largest, such as those run by MBC, cater for the pan-regional market.
Martin Fabel, a partner at the consultancy AT Kearney who is based in Dubai, acknowledges that although there are hundres of channels, most viewers watched only a few stations regularly.
"Seven to 12 channels is what people focus on," he says. "So you could ask the question, 'what about the rest?'. Not all of them are fully fledged, top-quality channels.
"We have a big, long tail. But both the viewership as well as the advertising money is concentrated on a smaller number of channels."
The regional TV space is to become even more crowded with the launch of two Arabic-language news stations this year.
The Saudi Arabian billionaire Prince Al Waleed bin Talal is expected to roll out his Alarab station, which will be based in Bahrain. Sky News Arabia, which has its headquarters in Abu Dhabi, is scheduled to go on air in the spring.
The two stations will compete with the incumbent Al Jazeera and MBC's Al Arabiya in what is the costly business of producing TV news.
"You have two new entrants … in a crowded category that makes little or no profits," Mr Hayek says.
Mr Fabel points out that Middle Eastern news stations often have wider aims than just turning a profit.
"Here in the region, news is not necessarily profitable but follows a bigger agenda," he says. "If we have a multitude of opinions in the news arena, that's certainly helpful for the market overall. But I'm not sure that's suited to grow the market economically."
Despite the upcoming launch of two pan-regional news channels, some commentators point to a more pressing demand for country-specific news and entertainment stations.
Saad Mohseni, the chairman of Moby Group, Afghanistan's largest media company, is convinced there will be more demand for localised news.
"I think [Alarab and Sky News Arabia] will still have an opportunity to make a dent," he says. "But longer term, I think they may well have to tailor their business plan and localise some of their news."
Mr Mohseni questions the dominance of pan-regional broadcasters such as MBC, which he predicts will come under pressure this year.
"It's the beginning of the end for these pan-regional [TV channels]," he says. "People are opting to launch their own [local] channels, rather than the pan-regional channels. I think that trend will continue. Local always wins."
Sunil John, the chief executive of the PR firm Asda'a Burson-Marsteller, sees demand for more "niche" television stations in the future.
"There are [around] 500 television stations, but I still think there is room for good-quality television stations to come, provided they have niche content," he says.
Prince Al Waleed's Alarab, which will provide several hours of business coverage through a partnership with Bloomberg News, fits that slot. But Mr John is not sure about Sky News Arabia.
"They are focused on general interest, and there is a hell of a lot of competition out there for them," he says. "So it will be a tough challenge for Sky Arabia."
Despite the challenges for individual operators, the TV industry overall will remain the dominant platform for advertising this year.
"In terms of media, television will continue to take the lion's share," Mr John says.
bflanagan@thenational.ae
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Sheikh Mohamed bin Zayed, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the Armed Forces, established Edge in 2019.
It brought together 25 state-owned and independent companies specialising in weapons systems, cyber protection and electronic warfare.
Edge has an annual revenue of $5 billion and employs more than 12,000 people.
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
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“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
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“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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