Al-Ahram Weekly On-line 30 Nov. - 6 Dec. 2000 Issue No.510

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The art of monopoly

By Aziza Sami

The creation of the Arab Company for Arts and Publishing signals a new development for both Egypt and the Arab region as a whole, marking the beginning of the formation of a huge multi-national conglomerate in the domain of intellectual property rights for music and cinema production, as well as movie theatre ownership.

The company has already submitted a request to the Companies Authority for the formation of a joint stock entity preliminary to its becoming a holding company to be listed on the stock exchange. According to the daily newspaper Al-Aalam Al-Yom, 79 per cent of the equity is in Egyptian hands, with the remaining 21 per cent being held by Arab partners. Shareholders include, among others, the Egyptian Financial Group EFG Hermes and Al-Arabi Investment Company, which each have a 17.5 per cent share. Jordanian businessman Alaa El-Khawaga and Egyptian publisher Ibrahim El-Moallem each hold a 15 per cent stake. Ahmed Heikal of EFG Hermes, the lawyer Ziad Bahaaedin, and the actress Isaad Yunis also hold a one per cent stake each.

The company, which has an authorised capital of LE400 million (including issued capital of LE40 million and paid-in capital of LE4 million) appears to be making inroads beyond its apparent financial capacities. Over the past months it has acquired several leading music production companies in the Egyptian and Lebanese markets, including Sawt Libnan and Sawt El Fan, and now controls the copyrights of recordings by both Abdel-Halim Hafez and Farid El-Atrash.

Through one of its affiliates, it has also merged with Al-Masa, which operates cinema complexes in Bahrain and the UAE, and has further plans to expand into Oman.

Deals are currently being concluded to acquire a significant stake in the Saudi music production company Rotana, owned by Al-Walid Ibn Talaal and Sheikh Saleh Kamel, both of whom will sit on the parent company's board.

Meanwhile, in Egypt, the Arab Company is concluding a deal to buy Nahdat Misr (Renaissance), which runs a chain of movie theatres and is 40 per cent owned by businessman Naguib Sawiris, who will also sit on the company's board. All of this intense merger and acquisitions activity could raise questions over transparency, given the level of announced capital of the company. And such high-voltage expansion into the Egyptian and the regional markets will certainly make the Arab Company a pivotal force in intellectual property rights.

While its formation may signal a positive interest in the arts which for years have been suffering relative stagnation, the extent of the Arab Company's ambitions inevitably lead to questions of monopoly given the limited size of the market within Egypt.

One wonders whether the current economic administration is aware of the implications involved, as far as monopolistic practices are concerned, in such a company being formed.

Does the government condone the development of this potential giant in the continued absence of anti-trust laws which, incidentally, have been repeatedly pushed off parliamentary agendas? Certainly the absence of any such legislation acts in favour of the interests of the current economic elite, whose predominance in almost every single field has hampered initiatives that fall outside the charmed circle of big business and government.

That one company alone should control the modern sung, seen and written heritage of a country is likely to lead to a certain standardisation in product. Its material clout can only terminate hopes of independent producers and artists, of small theatre owners and publishers who, in less unfair circumstances, naturally act as society's reservoir of creativity, incubating the new talents on which the industry, as a whole, must ultimately depend.

Is it healthy that a newly liberalised economy begin with monopolies in every field or that investment laws be tailored to serve the interests of the emergent, and seemingly all powerful, oligarchy?

Related stories:
The business of culture 5 - 11 October 2000
The world is not enough 5 - 11 October 2000

Related links:
EFG-Hermes
Al-Alam Al-Youm

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