LONDON — Arab pay TV platforms Showtime Arabia and Orbit have merged their operations in a move that creates the biggest single pay TV company in the region.
The move, effective as of Aug. 1, also highlights the challenges that pay TV operators face in a highly competitive marketplace with more than 300 free-to-air Arab TV channels.
The new company will be an equal partnership between the Orbit Group, a member of the Saudi Arabia-based Mawarid Group, and Showtime Arabia, a subsidiary of Kuwaiti investment company Kipco.
Showtime Arabia was originally launched in 1996 as a joint venture between Kipco and Viacom, with the Sumner Redstone conglom owning a minority stake.
Kipco execs are believed to have bought out Viacom’s stake in Showtime Arabia prior to the merger with Orbit, although the terms of that deal — or the merger as a whole — were not being revealed by execs at either company.
The Showtime-Orbit partnership leaves ART, owned by billionaire Saudi sheik Saleh Kamel, as the only rival pay TV platform left in the Arab market.
Despite the promise of uncensored and first-run programming, as well as exclusive access to popular sports events such as soccer’s World Cup, all three companies have struggled in recent years against the unfettered boom in free-to-air Arab satellite channels. Market leader MBC in particular, which has remained the most popular net ever since its 1991 launch as the Arab world’s first privately owned satellite channel, has in recent months been able to compete with the pay TV networks in offering first run films on its 24-hour movie channel, MBC 2.
The consolidation between Orbit and Showtime Arabia, which will offer subscribers both platforms’ additional premium channels for free, makes financial sense for both companies.
“We’ve been calling for consolidation of the market for some time,” said Faisal al-Ayyar, Kipco vice-chairman. “Joining forces in this way is good news for customers, staff and the regional television industry.”
The merger covers both platforms’ programming, marketing, distribution and subscriber management operations. Other Orbit Group operations such as Media Gates. Orbit Data Systems and Noorsat are not part of the partnership. Media Gates — Orbit’s Arabic production company — will continue to distribute its content exclusively to the newly created platform.
The new company will run its core operations out of Bahrain and Dubai.