News Corp increases Rotana Media stake to boost Middle East presence

Rupert Murdoch's News Corporation has invested $35 million in increasing its stake in the Saudi firm Rotana Media Group.

News Corp has invested US$35 million (Dh128.5m) to increase its stake in the Saudi Arabian company Rotana Media Group, as the global media giant looks to build its presence in the Middle East.

Rupert Murdoch's media empire bought a 9.09 per cent share in Rotana for $70m early last year, in a deal that came with the option to double the stake within 18 months.

It has exercised 50 per cent of that purchase option to lift its stake in Rotana, a News Corp spokeswoman confirmed yesterday.

"We increased our share to 14.53 per cent by acquiring newly issued shares for $35 million," she said.

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News Corp has retained the right to exercise the remaining 50 per cent of the option until November next year, Dow Jones reported.

Rotana, which is controlled by the Saudi billionaire Prince Alwaleed bin Talal bin Abdulaziz Al Saud, is the world's largest producer of Arabic music and a major distributor of Arabic-language films. It also has a number of free-to-air TV channels.

Analysts said News Corp's move could help to grow the Middle East's media industry.

Matthew Reed, an analyst at Informa Telecoms & Media, said the region had a relative lack of "quality local content" available in Arabic.

"On the other hand, there's a big potential market out there, with a large community with a single language … and a very youthful population with an appetite for content," he said.

"This is why News Corp is interested … They see a big opportunity in this region. One could imagine there is some kind of potential for transfer of technical, programming or content skills."

Santino Saguto, a partner at the consultancy Value Partners, said the move was "a confirmation of the potential of the media sector in the region".

He said advertising revenues in the Arab world were, on a per-capita basis, below those in the developed world.

"It's definitely a market with the appetite to grow, and to grow across platforms," said Mr Saguto.

News Corp's Fox International Channels broadcasts 12 channels in the Middle East and North Africa.

Mr Saguto said News Corp could look to boost its pay-TV operations in the Middle East, as it has done in other markets. "News Corporation has a strong international platform on pay-TV. They need to try to replicate that business model in the Middle East," he said.