Al-Ahram Weekly Online   25 - 31 August 2011
Issue No. 1062
Economy
 
Published in Cairo by AL-AHRAM established in 1875

Putting money on air

Ahmed Kotb reports on the trend to invest in the media business

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Hundreds of millions of pounds were pumped in advertisements promoting new channels and programmes shortly before the advent of the holy month of Ramadan

Right after the ouster of president Hosni Mubarak in February, many new satellite channels started to appear with advertisements promoting the wide range of programmes that these channels host.

The continuing unrest that has been sweeping the country since 25 January has kept many people glued to television screens waiting for a continuous stream of events and commentary. Although there is no consensus on the average time Egyptians spend watching television, there is no doubt its usage has grown significantly during the last seven months.

But, is that enough to make investors race to open new channels?

According to Tarek Atia, managing director of Egypt Media Development Programme (EMDP), it is a natural continuation of a trend to invest in the media market which has already been expanding before the revolution. However, he believes the television market has rapidly expanded after the ouster of Mubarak because some barriers -- like security approval -- to enter this field have been reduced. Besides, he added, new channels do not have to certify a huge initial capital anymore. A minimum initial capital of LE25 million was required to open a new channel.

Another reason why many choose to invest in a TV station, Atia asserts, is influence. "Political influence is a very important motive for several channels, along with social and cultural behaviour influence," he said, adding that some channels are being used to promote certain concepts that would benefit other businesses that investors have, although these channels might not yield any direct profits.

There are 160 Egyptian satellite channels broadcasting from Egypt's NileSat, and 15 new channels have already obtained licences to broadcast after the 25 January Revolution. An annual rent of $200,000 is the average rate that each satellite channel is paying to reserve a bandwidth of two megabits, which is the least in terms of quality. The highest is six megabits.

Renting a 50 square metre studio in the Egyptian Media Production City (EMPC), which currently has a total of 70 studios that are all rented, costs LE500,000 per year. The growing demand, despite high rental costs, urged EMPC to start building a new studios' complex with a capacity of 20 studios.

Several media outlets have reported that hundreds of millions were pumped in advertisements promoting new channels and their programmes shortly before the advent of the holy month of Ramadan. In many cases, though, billboard advertisements and supplements inserted in the newspapers are paid for by media buyers who have exclusive contracts with some channels and try to attract advertisers to them.

Questions were raised of whether spending all that money is a wise thing to do after the revolution, especially that media production houses have tightened their spending this year due to political and economic unrest that hit the country since 25 January.

Last year, 140 television series were produced as opposed to only 40 for this year. EMPC alone produced seven series last year and could not create more than three for this year. Similarly, Al-Ahram Advertising Agency (AAA) produced three TV programmes this year and nine last year. "The uncertainty on the political scene is the reason of the drop in spending on TV shows this year," noted Assem Khalifa, general manager of AAA.

Owners of satellite channels, however, appear to be the only group who are still adopting an open- budget trend in regard to spending on advertisements to promote their newly opened channels. "Fewer advertising deals are made in the post-revolution era by companies and institutions who used to be regular clients, but ads for new TV channels and shows are significantly making up for the losses," said Khalifa, adding that his agency had to decrease outdoor advertisement costs by 30 per cent.

The monthly rent of an average-sized billboard stands now at LE90,000. "A full-page ad in the daily Al-Ahram costs LE200,000," Khalifa stated.

The ads mainly brag about the channels' highly paid presenters, unique programmes that use fully equipped and spacious studios, or announcing that a certain channel has the most viewers. The latter's credibility is questioned by many experts.

Atia believes that there is no proper television viewership measurement in Egypt. "Proper audience measurement is fundamental for the media industry to grow," he said.

Likewise, Mohamed Gohar, owner of the newborn channel "25", says he does not trust viewership measurement companies. "The only way to find out how many people are watching my channel is through calculating the number of views the live streaming of channel "25" on the Internet has. There are 16,700 views per hour and no other channel has reached that number," Gohar claims.

On the other hand, Aiman El-Kaissouni, media manager at Ipsos, a leading research company that operates in 66 countries, explains why his company's work should be trusted. "Audience measurement is conducted monthly on television, quarterly on radio, and twice a year on print media," he said. During Ramadan, El-Kaissouni added, "we work on a daily basis."

Ipsos, which has been working in Egypt for six years, measures television viewership by calling 200 people from all governorates every day, and divides them into groups based on their gender, age and social strata in order to represent the population to a great extent. The selected people are asked about the TV station they watch the most, their favourite programme, for how long they stay watching and when do they watch the programmes. "Those who participate are not contacted again for at least six months," El-Kaissouni stressed.

"The majority of advertising agencies in Egypt depend on our reports to reach their target audience. Owners of TV channels also want to know where they stand in the competition," he said.

Gohar's "25" channel did not get a single ad since it started broadcasting in April despite the large number of views per hour that Gohar mentioned. The channel depends on a group of young presenters and reporters who have no experience in the media field, and the owner did not spend any money on advertising the channel. "Video Cairo Company is financing '25' and has allocated $3 million for the expenses during the first year of broadcast," Gohar said.

Despite the low budget given out in comparison to other channels, Gohar said it is enough. "Other TV stations spend tens of millions because of the insanely high wages that the so-called media super stars receive, as well as paying for the construction of fancy décors in the studios that cost hundreds of thousands," he said, adding that all of the programmes in his channel take place in natural settings, such as reading the news from Tahrir Square every Friday morning.

"Sooner or later, our work will be appreciated and attract a lot of ads because good content is what matters to people not famous names," Gohar said.

"It is too early to tell which of these channels will succeed. It is going to take years before seeing which of them have survived and which have not," Atia asserted.

There is still one thing that all parties agree upon. There will be more channels soon.

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