|Al-Ahram Weekly On-line
5 - 11 October 2000
Issue No. 502
|Published in Cairo by AL-AHRAM established in 1875|
Egypt Elections Region International Economy Opinion Culture Focus Features Travel Living Sports Profile People Time Out Chronicles Cartoons Letters
The business of cultureBy Gamal Essam El-Din
The past two years have seen an unprecedented number of Egyptian enterprises snapped up by other companies. In 1999 alone 44 acquisitions were concluded. This year, the pace of takeovers continues unabated.
Noteworthy among these was the Egyptian Financial Group-Hermes' (EFG-Hermes) purchase of a controlling share of stock in Sawt Al-Fan (Voice of Art), Egypt's largest music production company.
The brokerage house's audacious move has become the talk of both cultural and financial circles. Why would EFG-Hermes, an organisation specialised in investment banking services, be interested in buying a musical production company like Sawt Al-Fan, people asked.
Fuelling this speculation was the news that EFG-Hermes ambitions in the cultural sphere are not limited to control of Sawt Al-Fan alone. In recent weeks it was revealed that the brokerage company plans to invest in the production of movies, establish a nationwide network of libraries and sell literary works over the Internet and on CDs. These plans extend beyond Egypt's borders as EFG-Hermes intends to purchase an interest in companies based in other Arab countries engaged in cultural production.
To manage these activities, EFG-Hermes has established the Arab Holding Company for Arts and Publication, said Ahmed Heikal, the brokerage house's legal representative and one of the new entity's directors. "Our goal is not only to make profits, there is also a nationalist and cultural dimension. We aim to broaden the scope of the market of cultural products and make them available to the largest number of customers possible throughout the Arab world," said Heikal. Ziad Bahaaeddin, an adviser on a consultative basis to the Minister of Economy Youssef Ghali is another director of the new company.
EFG-Hermes' acquisition of Sawt Al-Fan took place gradually this year against the backdrop of disputes among the heirs of the company's original owners. Established in 1960 as a joint-stock company for the production of music recordings and movies, Sawt Al-Fan was owned by composer-singer Mohamed Abdel-Wahab (40 per cent), singer Abdel-Halim Hafez (40 per cent) and cinematographer Wahid Farid (20 per cent). In 1968, the three owners decided to give Magdi El-Amrousy, Abdel-Halim's lawyer and close friend, a stake of 20 per cent in Sawt Al-Fan, in recognition of his efforts to develop the company.
After the deaths of Abdel-Halim and Abdel-Wahab, in 1977 and 1991 respectively, a dispute over the company's profits erupted between Abdel-Halim's family and El-Amrousy. Aleyya, Abdel-Halim's sister and Mohamed Shabana, his nephew, accused El-Amrousy of preventing them from seeing the company's balance sheet and denying them their share of its profits. Only last year, Aleyya claimed that although Sawt Al-Fan's profits reached LE30 million for the previous year she received only LE425.
Earlier this year EFG-Hermes purchased its first stake in the company from Abdel-Wahab's heirs. This portion comprised most of what was owned by the late composer-singer's family. Taking advantage of the escalating tug-of-war between Sawt Al-Fan's heirs, EFG-Hermes obtained an additional 15 per cent, this time from El-Amrousy's stake. Angered by El-Amrousy's sale, Abdel-Halim's family sued him. Mohamed Shabana, Abdel-Halim's nephew alleged that Al-Amrousy was not legally entitled to sell his 20 per cent stake in Sawt Al-Fan because of the terms under which Abdel-Wahab and Abdel-Halim gave it to him.
This conflict, however, did not deter EFG-Hermes. In the midst of the crossfire, it managed to buy the portion of the company remaining in the hands of Abdel-Wahab's heirs and two weeks ago, it was able to buy half of the Abdel-Halim family's stake, bringing the brokerage house's holdings in the firm to 75 per cent. According to Abdel-Halim's nephew Mohamed, the family will never sell its remaining 20 per cent stake in the company.
Also creating waves recently in the cultural world was a deal between a state entity and a private publishing house giving the latter a five-year concession for the sale of the state-owned recordings over the Internet. The LE2 million arrangement between Cairo Audio-Visual Production Company (CAVPC), owned by the Ministry of Information's Television and Radio Union, and the publishing house Dar Al-Shurouq also entitles the state entity to receive royalties to the tune of 15 per cent of profits. The recordings include some of the songs by Egypt's most famous singers, such as Umm Kulthoum, Abdel-Wahab, Abdel-Halim, Fayza Ahmed and the Algerian-born Warda.
The increasing involvement by business conglomerates in the arts, and the selling of Egypt's artistic heritage in particular, has raised concerns among parliamentarians about the potential for the creation of monopolies. While a number of MPs said they do not object to private investment in the arts sector as long as it does not lead to the creation of monopolies, another group of deputies expressed just such a concern. This latter group tried unsuccessfully to submit drafts for anti-trust laws to prevent what they characterised as the "loss of Egypt's heritage to business tycoons."
Although mindful of the dangers of monopoly, Salah El-Taroty, chairman of parliament's Culture and Information Committee, said that large companies should be encouraged to invest in the area of culture. These companies, El-Taroty said, have the necessary financial resources to preserve Egypt's musical and literary heritage for future generations. He added that private sector involvement "helps make this heritage available to ordinary citizens at reasonable prices."
The world is not enough