LBC, Rotana merger details vague

Move raises questions on future of Arab media business

The recently announced merger between the Lebanese Broadcasting Corp. (LBC) and Saudi-owned Rotana network could signal the arrival of Arab media comgloms in what has been a highly fragmented industry.

The head of LBC, Pierre Daher, who will lead the merged group, has also hinted at a possible listing on the U.A.E. stock market. But no financial details have been disclosed and the extent of the merger, which was announced in August, remains vague.

According to press statements, the two companies will continue to operate “organizationally and financially” independent of one another. Still, the prospect of TV heavyweights joining forces has raised questions about the future direction of the Arab media business, which boasts no less than 250 free-to-air satellite TV channels according to most estimates.

LBC, which was established in 1985 as a local news station, has since evolved into one of the region’s most popular entertainment channels, producing massive Endemol hits such as “Star Academy” and “Deal or No Deal.”

Rotana, meanwhile, is the Arab world’s most prominent record label, broadcasting six channels, four of which are devoted to music videos –primarily those featuring Rotana artists — as well as two classic Arabic movie channels. Owned by billionaire Saudi Prince Al Waleed Bin Talal, Rotana is also reputed to posses the region’s largest Arab film archive.

Together, this powerful duo is rivaled only by Middle East Broadcasting Center or MBC, a seven-channel network, which is also Saudi-owned. While LBC and Rotana have focused on Arabic entertainment, MBC, whose flagship MBC 1 channel routinely attracts the most sought after Arabic programming, is also well-known for its rights to blockbuster Hollywood pics and American TV series such as “Grey’s Anatomy,” “Prison Break” and “Law &Order.”

MBC also owns leading Arabic newscaster Al Arabiya and, perhaps in a nod to the competition, has recently launched its own Arabic music video channel Al-Wanasah, a joint venture with Saudi singer Rashed Al-Majed.

In another parallel, MBC announced last year that it, too, was poised for an initial public stock offering, a move that may have hastened the LBC-Rotana alliance, some analysts say.

“If Rotana and LBC want to compete with MBC, they have to start somewhere, especially if MBC launches its IPO,” said Beirut-based TV consultant, Jihad Bitar.

But Bitar, who has produced studies for Al Arabiya and U.S.-owned newscaster Al Hurra, said it’s too early to tell when or if the two broadcasters will consolidate under one brand name.

Dubbed by LBC execs as only a “soft alliance” in the first phase, the deal may initially translate into shared resources such as studio space as well as Rotana talent appearances on LBC programs, said Bitar.

In some ways, the move was inevitable. Bin Talal, the world’s 13th richest man according to Forbes, acquired 49% of LBC’s satellite channel in 2003.

“It had to be done,” added Bitar. “At the end of day, he has one foot in both channels. The real question is will they now add other channels to this group?”

Ziad Kibbe, the head of Endemol’s newly-opened Middle East outfit, is enthused by the move as well as the trend toward larger media enterprises in the region.

“It will probably mean higher production budgets,” he said. “That’s what I’m hoping for.”