Mid-East Broadcasting Grows, but Faces Challenges

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COVER STORY

Mid-East broadcasting grows, but faces challenges

ast year, in anticipation of the Middle East upcoming CABSAT 2012 trade broadcasting is show, we used the opening words of booming reports La Charles Dickens classic novel, written in 1859, as one of our headlines. Of Chris Forrester, who the Middle East, post Arab Spring, we quoted also warns of Dickens, saying it was “The best of times, the worst of times”. satellite jamming The Dickens headline is just as apt this problems facing the year. Without doubt, the Middle East is region. enjoying the best of times in that broadcasting is booming. Channel numbers are up, HDTV is – at last - making an impact and revenues are improving for the most popular channels. However, the Middle East is also suffering some huge challenges in terms of deliberate and invasive satellite jamming and signal interference. Throughout 2012, signal jamming got worse and worse. Jamming means that national viewers cannot watch broadcasts that originate from their country, and many viewers to international channels beaming into a territory are denied access to those services.ory are denied access to those

MENA: The numbers However, its active base cannot estimates suggest a gross DTH maximum audience penetration The MENA region currently easily be measured accurately revenue of perhaps $150m. and controlling access to premi- remains primarily a DTH satel- because: However, a significant propor- um sports on TV in the MENA lite television market, and most- It is a smart card-only tion of this gross revenue goes to region. ly free to air. Pay-TV penetration network distributors (who purchase Al Jazeera Sport’s card-only remains low, at around 8% of Subscribers pay annually smart cards from Al Jazeera in ‘maximum penetration’ strategy DTH viewers according to the upfront for subscriptions bulk and sell them on to means it is not a platform as 2012 Arab Media Outlook. Smart cards are sold pre- dealers). such. The majority of its The key MENA Pay-TV enabled The annual programming channels are carried in standard Networks are: DTH ARPU is low (circa rights outlay for Al Jazeera definition in order to make them 1. Al Jazeera Sports $80/year) Sports comfortably exceeds accessible to as many open-mar- With 16 channels of sports and Many subscribers will simply $200m, as it controls the rights ket Irdeto and Viaccess (encrypt- sports news, Al Jazeera Sports buy a new card every year, dis- to almost all international and ed) set-top boxes as possible. controls the majority of interna- torting the active base figures. regional football leagues. After 2. Abu Dhabi Media – Abu tional and regional sports rights, Arab Media Outlook estimated considering staff, production and Dhabi TV Network (including UEFA Champions 1.4m subscribers in 2011, so a operational costs, the AJ Sports The Abu Dhabi TV Network, League, and the Italian, French reasonable current estimate DTH network is therefore launched in summer 2010, is and Spanish football leagues), might be 1.5m active cards or running at a significant annual best known for its carriage of and has the largest Pay-TV sub- approximately 3% to 5% of loss. As a network, its primary premium sports in HD, in partic- scriber base in the region. MENA TV households. Local aims appear to be achieving ular the English Premier League,

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services. DISPUTE. Additionally, a long-running dispute between Eutelsat and Arabsat will come to a head this July when a satellite owned by Qatar (ictQatar) and Eutelsat comes into operation at 25.5 degrees East, which is slap-bang up alongside Arabsat’s 26 degrees slot. IctQatar has entered into a ‘strategic partnership’ with Eutelsat to operate a high-power satellite (Es’Hail) direct into the Middle East, and using frequencies that have been bitterly argued “Satellite jamming is over by Arabsat and Eutelsat. a growing scourge Eutelsat is arguing that Arabsat is using and a threat to the frequencies initially allocated to Iran, but not taken vital flow of free up. Arabsat claims that the frequencies have been information.” brought into use, and this is supported by certain PETER HORROCKS, permissions from the influential International BBC Telecommunications Union (ITU). The dispute has been rumbling on since the end of 2010. Indeed, one of the challenges facing Eutelsat is reversing the ITU Radio Regulations Board decisions already made. Also now formally involved in the dispute are the French, Saudi Arabian and Qatari governments, given that orbital slots are administered at governmental level. Further meetings are planned between French and Saudi Arabian government officials. Iran, already a pariah nation as far as many ‘western’ governments are concerned, is also busy arguing that its satellite demands are extremely modest and that Eutelsat has plenty of orbital positions. While this sentiment has no formal merit it could well echo with other emerging nations on the full ITU membership. A full ITU General Assembly might well decide in Iran’s favour, for example. COMPROMISE. Notwithstanding the passion behind each of the operators’ claims, the ITU has advised both parties to go away and talk, and attempt a compromise. In 2012, it was suggested

Formula One and Wimbledon. It suggest annual gross subscrip- expect to make a decision until Grande at ChannelSculptor also carries other genres of HD tion revenue (excluding the cost January at the earliest. A bid- argues that the two networks channels (19 in total), such as of set-top box) of $50-$70m. ding war is anticipated between should bid jointly and probably the MBC HD channels, National In the two years or so since Al Jazeera Sports and ADM. save $400m or more. Geographic and Sky News launch, AD TV Network has Al Jazeera is expected to try The preoccupation with EPL Arabia. marketed itself as the home of to consolidate control over pre- rights means the value of the AD AD TV Network controls its English soccer (EPL) but now mium international football in TV Network platform itself is platform, as its channels are only appears to be moving towards a the region, even if the move often overlooked. A subscriber available on proprietary Humax broader marketing strategy high- costs a great deal and does not base of (say) 300k to 400k with set top boxes embedded with lighting the range of its HD generate significant incremental HD and using secured IP- Irdeto’s latest encryption system. content. ADM reportedly pays revenues. After two years of enabled boxes all acquired with- About half of the $200+ AD over $100m per year for EPL trading built on EPL, it is in two years is an exceptional Sports package price in year 1 is rights alone. Its current three- questionable whether AD TV achievement in the fragmented the cost of the set top box. year licence agreement will end Network would continue to exist and chaotic MENA TV market. It The Arab Media Outlook in summer 2013, and the English if it lost the EPL. The success of took OSN almost 20 years and a report suggests the 2011 sub- Football Association expects to Manchester City FC (owned by merger to achieve this. scriber base of AD Media is award the licence for 2013-2016 Abu Dhabi) in 2011-12 provides 3. OSN 670k, although this figure is not seasons in the New Year of 2013. further incentive for Abu Dhabi Following the initial disruption directly referenced (and seems As this is written, the Tender is to renew its licence. Competition of the merger between Showtime high to many). This would issued but the EPL does not could therefore be fierce. Nick and Orbit in 2009, the network

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that a 50/50 compromise be engineered, but to date there has been little visible progress. At one stage Arabsat proposed that each party (Arabsat, Eutelsat and Iran) each had one-third of the available 24-transponder capacity (eight transponders each). Last autumn, a further variation was proposed whereby the two parties would set aside their 24-transponder claim. Iran would have to significantly modify their demands, which would then lead to a 50/50 deal as far as the slot’s rights are concerned, but 66.6%/33.3% in terms of JAMMING. Article 19 of the Universal YahLive finds its feet access to commercial capacity. In other words, Declaration Of Human Rights states that Arabsat and Eutelsat would claim 12 individuals should have ‘the freedom to seek, transponders each, but four ‘Arabsat’ receive and impart information and ideas YahLive, the Abu Dhabi-owned HDTV transponders would go to Eutelsat in terms of through any media and regardless of frontiers’, service broadcasting over the Middle capacity, and these four would be subject to a but this right is not universally respected. East, is now carrying more than 40 commercial deal between the parties. This Eutelsat reports that jamming incidents HDTV channels. In October it added proposal was first discussed at CABSAT in doubled between 2010 and 2011. The number Russia Today’s English-language and Dubai last year, and as this is written, remains of incidents has increased three-fold from 2011 Arabic (Rusiya Al-Yaum) channels, both under discussion. to 2102. From January 2012 to November in HD. Also in October, it added six As mentioned, it doesn’t help that for most 2012, 340 incidents have been recorded. Saudi channels to its line-up. of the world Iran is a pariah nation, and by Arabsat has recorded a three-fold increase The 40+ channels means that the common agreement guilty of deliberate in incidents of deliberate jamming of between service is now the region’s market- satellite jamming. At a November 2012 2011 and 2012. Eutelsat estimates that leader in terms of the number of high- conference in London, hosted by the BBC, between 30 per cent and 50 per cent of def channels carried. Mohamed broadcasters and satellite operators jamming in 2010 originated in Iran. In 2011, Youssif, YahLive’s CEO, said the addi- condemned the sharp increase in jamming of the source was mainly Iran with some inter- tion of the channels further strength- broadcasts, and considered what steps can be ference traced to Syria and Bahrain. By 2012, ened the position of YahLive as the taken to address the growing threat of inten- with the Syrian internal conflict, much of the hotspot for High Definition television tional blocking of international broadcasts and interference has been traced to Syria, but jam- in the region. Internet services. ming also continued from Bahrain and Iran.

has now consolidated its HQ in version of its platform (OSN reasonable, however, to assume rival. MBC’s English Language Dubai, rationalised its manage- Play) to future-proof its that subscriber revenues exceed channels contain premium ment and staff, and established a content rights deals and pre- $200m per annum, and OSN Hollywood output, in some cases consistent and secure platform pare for challenges from the may well now be EBITDA (for example Warner) buying out using NDS encryption. OSN has likes of Amazon, Netflix and positive, a first for Orbit. the pay TV window. MBC, like kept clear of the price war for pre- Google Perhaps more importantly, its OSN, has also developed an mium sports rights, concentrating Developing some original consolidation of its platform and Online/OTT platform instead on: Arabic content content licensing positions has (Shahid.net), and through its Leveraging what is now The result, says Grande, is a given OSN a degree of protection massive DTH audience reach has effectively a MENA monopoly platform that continues to deliv- in an industry plagued with created a potential platform for on encrypted Western enter- er high ARPU (probably $50+ irrational commercial behaviour future growth. tainment, to renegotiate its per month across DTH and IPTV (such as bidding wars for sports 4. Al Majd deals with Hollywood studios subscribers) and a stable sub- rights) that constantly under- Al Majd provides Arabsat viewers and 3rd party networks scriber base. The claim of 600k mines the underlying MENA with religious programming and Securing its platform against subscribers in 2011, as quoted in market potential. culturally appropriate entertain- card piracy and against wire Arab Media Outlook, seems high OSN always maintains that ment - partially FTA and partially in piracy (through deals with to many and probably refers to its main competitor is piracy. a pay-TV package. Its primary audi- local cable operators) viewing points (which includes The MBC group of channels, ence is Saudi Arabia, where it has Developing an OTT/online hotel rooms and the like). It is although free to air, is also a successfully established a high

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The current regulatory process offers no technologies specifically direct sanction against countries that allow designed to support users in jamming to originate from within their countries where access to the borders. Internet is restricted) to Michel de Rosen, Eutelsat CEO, deliver content into China, Iran: The opposite view condemned the “polluting of the airwaves” by Iran, Kyrgyzstan and jamming, and called for decisive action to Uzbekistan so that people “The Islamic Republic of Iran Broadcasting (IRIB) combat it. Conference keynote speaker Jamie who want to read BBC news has contracts going back 20 years with Eutelsat, Saunders, director international cyber policy are still able to do so. Over which were renewed for five- or 10-year periods,” at the UK’s Foreign and Commonwealth one million pages are viewed IRIB vice president Mohammad Sarafraz was Office, said: “The FCO is a strong supporter of weekly through the BBC’s cited by state television as saying. “The contract freedom of expression, and we believe that the Psiphon web proxies. In a was still valid, and the decision to stop broadcast- existing framework of international human study commissioned by BBC ing 19 Iranian channels is political. Eutelsat broke rights law is as equally applicable in the in Iran, 97% of respondents the contract between us unilaterally and without digital environment as it is on the off-line believed that unmonitored legal justification,” he said, adding that IRIB world. Specifically, we believe that efforts to and uncensored access to the lawyers planned a formal complaint. block and suppress broadcasting are wrong Internet is a universal right. and are bound to fail over time: we need to Chairman of the Foreign understand what more can be done to address Affairs Select Committee, deliberate interference, and what part the Richard Ottaway MP said: Government should play.” “Gunboat diplomacy is histo- SCOURGE. Peter Horrocks, director of glob- ry. Soft power is the future. al news at the BBC, said: “Satellite jamming is We live in a globally net- a growing scourge and a threat to the vital worked world where human flow of free information. Throughout its histo- rights abuses cannot hide.” ry the BBC World Service has countered the The International efforts of jammers, whether on old shortwave Broadcasting without Barriers or new satellites. We always called on the Conference brought over 100 guile of the best editorial and technical minds delegates from a variety of satellite operators, for sat-jamming. NileSat’s MD Salah Hamza to overcome jamming. Today we do that again broadcasters and stakeholders together to is firmly blaming “major institutions”, and to help tackle the menace of jamming.” consider what political and technical steps not individuals, for the heavy bout of satellite On the Internet, BBC Chinese has been could be taken to make the distribution of jamming being suffered by Middle East and blocked in China since its launch in 1999. BBC media less vulnerable to interference. They European satellite operators. NileSat has Persian has been blocked intermittently from face the challenge that jamming is becoming suffered jamming from Syria, Libya, Bahrain 2006 onwards, and routinely since 2009. The more frequent and there is currently no viable as well as Iran recently. BBC has run pilot services with Psiphon (a technical solution that can protect direct to Speaking on Egypt’s Good Morning Egypt Canadian corporation that develops advanced home broadcast satellites. TV show on Channel 1 in November, Hamza censorship circumvention systems and BLAME. NileSat has blamed “institutions” said the jamming was being tackled and

ARPU package and (according to market presence. ents for a successful pay-TV networks in the GCC Arab Media Outlook) has in MyHD was established in 2012, market (large population, high 3. Packaging of basic tier excess of 500k subscribers. It does and also offers premium encrypt- GDP per capita and high TV IPTV content as standard in not compete with any of the other ed MBC HD content on a high consumption). broadband offerings MENA Pay-TV networks, and as definition box at a near FTA 4. Enormous financial and yet has not seen any players repli- price. It anticipates further IPTV Players political strength of telcos in cate its model. As a result, it is premium content to follow, and There are also a growing number the region probably the most profitable pay- aims to establish an independent of IPTV-based players, either 5. The potential for GCC TV network in the region! platform. using fibre or DSL lines. The governments to establish and Players such as ICHD and UAE’s ‘Du’ is the largest of these enforce satellite dish bans in Others MyHD recognise the price sensi- with more than 100,000 subs, future ICHD was established in 2011 as tivity of the MENA consumer, and helped by having distribution 6. The inability of pan- a platform carrying the MBC HD and the need to have a low-cost rights with almost all the major regional FTA DTH delivery to channels. The idea of the network compelling basic offering in order pay-TV operators. serve the various countries in was to sell a pay-TV box offering to achieve significant market pen- Whilst IPTV consumption the MENA region individually premium encrypted HD content etration for a new platform. They remains small relative to DTH in according to their respective at a near FTA price, and use rapid also recognise the commercial the region (less than 500k demographics growth as the basis to establish a potential for new low cost Pay TV subscribers in total), there are *Data, and comments on the pay-TV platform. The network bouquets, once a platform has several reasons why it is strategi- local broadcasting aggregators encountered pricing, technical gained a strong foothold in the cally important for Pay-TV: compiled by Nick Grande, and distribution issues during its market. The GCC (Gulf 1. Global shift towards Channel Sculptor, Dubai first year of operations, and has Cooperation Council) in particu- content delivered over IP [nick.grande@channelsculp- not yet achieved significant lar has many of the key ingredi- 2. Rapid growth of fibre tor.com]

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analysed in order there were just to locate the 50 satellite chan- source of interfer- nels. Now that ence, noting that number is more this process might than 650 and take “one or two growing weekly. days”. One could The downside say, “if only!” of the changes is Hamza added that that despite the source of inter- “We want to prevent this claiming freedom ference came from interference via international of expression, in a “big institution” agreements.” many countries and was most SALAH HAMZA, NILESAT the new-found probably an freedoms were “immobile” source, not quite so free! in other words Kazan said that from government- some new backed facilities. governments “We have empha- were even sised that the tougher than interference came their predeces- from an outside sors. “They’re [transmission] sta- happy enough for tion, but we cannot determine whether this In November 2012, Iran TV started up a criticism, provided that criticism doesn’t was for political or technical reasons,” he Facebook petition to ‘save’ its channels over affect them! They only want criticism of a said. Europe, although some of its other state- neighbouring country.” “We have been suffering from this prob- ments border on the ridiculous. For example, BENEFITS. However, on the benefits side lem for four years and want to prevent this Press TV described its banning as hypocriti- he said the Middle East was again finding its interference via international agreements,” cal: “Never there was freedom of expression feet in terms of production. “We produced Hamzah said. He added that his company was in US or EU, only selective loose talk is 160 drama series in 2012 compared to just 81 strengthening transmission to overcome this branded as Freedom of Expression.” Another in 2011,” said Kazan. And ad-revenues, jamming, but all these attempts were useless – equally ridiculous note - in a non-stop flow always a major grumble from broadcasters, because the “interfering signal was stronger”. of rhetoric out of Tehran, described Eutelsat were slowly improving. At Rate Card ad- He noted that the jamming must have come as “actually Israeli” and that “French-sound- expenditure was up 35% during 2011 to some from a “big satellite [up-link dish] of up to ing ‘Michel de Rosen’ who heads up Eutelsat, $14.3 billion, and more again this year. nine metres radius”, suggesting that no is an Israeli citizen, and the company has “Television represents 67 per cent of total private individual could own such a dish. Israeli stockholders [and is] a company long media spend in the MENA region,” he stated, BAN. Last year, Eutelsat stopped carrying dictated to by extremist groups within Israel, and the winners were the pan-Arab stations, channels from Iranian state broadcaster IRIB the militant ultra-nationalists of the Likudist taking about half of the expenditure. Of (Islamic Republic of Iran Broadcasting). UK- regime of Netanyahu.” course, it must be remembered that not all based Arqiva was the service supplier and GOOD NEWS. But set against this list of this cash actually flows into the broadcaster’s held the formal IRIB contract, which it termi- very real problems there is plenty of good coffers. The numbers quoted are gross at Rate nated. 19 TV and radio channels are affected, news out of the Middle East. Nabil Kazan, Card, and the Middle East operates its own mostly transmitting from Eutelsat’s popular president/CEO at Beirut’s K & Partners TV ‘net-net’ system of discounts, severely trim- ‘Hotbird’ satellites. French media regulator Services, said the ‘Arab Spring’ series of polit- ming this total to nearer $5.5 billion at ‘net- the Conseil superieur de l’audiovisuel (CSA) ical revolutions had made some positive – net’ rates. started the ball rolling and confirmed that the and negative - differences in the broadcasting Nevertheless, the increased local produc- Iranian channels violated human rights in its mix. The upside was clear, he said: govern- tions were to some extent countering the dom- transmissions. Earlier last year, the EU ments were toppled and allowed a flood of inance of well-produced but imported Turkish placed the head of IRIB, Ezzatollah Zarghami, new channels from newly-liberated voices. melodramas and telenovelas. More cash is on a list of people ‘sanctioned’ on human Kazan says that 154 new Arabic-language going into local efforts and some were gaining rights grounds. Eutelsat says it is duty bound channels had launched covering news and considerable viewer acceptance. Overall, said to obey the CSA ban. Intelsat, as well as politics as well as new drama and cultural Kazan, these efforts must continue. AsiaSat, also subsequently barred all the IRIB channels. Kazan is right, and everyone knows that channels, which included English-language The new channels had flowed from Egypt, viewers watch good programming, and propaganda station Press TV. Libya, Tunisia, Yemen, Sudan, Jordan, Middle East viewers are as savvy as any other. The prospects of IRIB getting its channels Lebanon and from expat Syrians. New As local production output is improved the onto international satellites in the near future channels had also come from within the Gulf eyeballs will follow. Other than the question now look very slim. Satellite operators Cooperation Council (Saudi Arabia, Bahrain, of sport - and sport is hugely important to the themselves, were they to carry the channels, UAE, Kuwait, Oman and Qatar). He whole region – it is this boost to local produc- would be facing problems from the USA and explained that the core audience now num- tion, whether in the form of telenovelas, its tough regulations covering the supply of bered some 80 million Arab households, with comedy, drama, or factual programming that goods and services to Iran. 95% watching free to air TV. Twelve years ago will see further maturity achieved.

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