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Middle East Moves Cautiously to Build Its Own Entertainment Business

A decade ago, Hollywood received an injection of Middle East oil money when the United Arab Emirates and Qatar decided to build an entertainment industry as part of their economic diversification. But the eager newcomers soon got burned by their knowledge gap and, for the most part, rapidly shrank their investments and redirected their ambitions.

Cut to 2018. The petrodollars are back — but with a more cautious approach — in a new wave of Arab investment led by Saudi Arabia, whose recent entry onto the scene has helped rekindle ties between Hollywood and the Middle East.

The oil-rich kingdom’s decision to lift its 35-year-old ban on movie theaters in December has triggered a flurry of film-related activity at home and in the wider region. AMC Theaters and other multiplex chains are now scrambling to build theaters and screens in Saudi Arabia, the Middle East’s last untapped movie market. The country’s first national film entity, the Saudi Film Council, is set to make a splashy debut at Cannes.

Last month, Hollywood rolled out the red carpet for Saudi Crown Prince Mohammed bin Salman, who set up camp at the Beverly Hills Four Seasons with a large delegation on a self-proclaimed mission to build an entertainment industry from scratch. An agreement is apparently in the works under which the Saudi Public Investment Fund would acquire a minority stake in Endeavor, the holding company for Hollywood talent agency WME, for between $400 million and $500 million.

Veteran U.S. executive Michael Garin says Saudi Arabia’s first steps in the entertainment sphere are “sensible” ones, especially the Endeavor deal, which “gives them one-stop access” to almost every aspect of the industry. “From Hollywood’s perspective, the Arab world is just another bunch of patsies waiting to have their pockets picked,” Garin says. But, he adds, “it’s not … the same kind of stupid investment that has occurred historically.”

Garin was hired by Image Nation Abu Dhabi eight years ago to put the UAE-based organization on a sustainable, financially disciplined course, following some imprudent Hollywood deals. In February, it became a major investor in former IM Global chief Stuart Ford’s new film and TV venture, AGC Studios. The deal makes sense for Image Nation because Emirati film and television productions still don’t make money, Garin says, leaving the organization in need of other revenue streams. Its rapport with Ford stems from his “interest in bringing Arabic productions to the world,” he adds, such as IM Global’s sale of groundbreaking Emirati thriller “Rattle the Cage” to Netflix.

Meanwhile, Qatar’s beIN Media Group, which bought Miramax in 2016, recently made an unsuccessful bid for The Weinstein Co. It was expected then to bid for bankrupt TWC’s assets to fuel its pay-TV expansion, but has apparently opted against that — a wise decision, according to some analysts.

What sets Saudi Arabia apart from other oil-rich Arab nations is a much larger population base on which filmmakers can build an industry. “They can make a movie and recoup the investment from their own territory,” says producer Paul Miller, a former head of financing at the Doha Film Institute in Qatar. Miller has teamed up with Image Nation to produce first-time Saudi director Shahad Ameen’s “Scales,” a magical-realist mermaid movie set during a mythical Arabian past. The film is in post-production. Ameen herself was recently in Beverly Hills with the Saudi delegation.

For fellow Saudi director Mahmoud Sabbagh, real change in Saudi Arabia’s film scene isn’t about hobnobbing with Hollywood. Sabbagh’s risqué 2016 romantic comedy “Barakah Meets Barakah” made an international splash but hasn’t been screened in his home country and was banned in neighboring Kuwait. Sabbagh is concerned about how much freedom local filmmakers will have.

“Films have to be provocative. They have to tap into the cultural wars of this country,” says Sabbagh, whose upcoming comedy, “Amra and the Second Marriage,” addresses patriarchy and women’s struggles.

Saudi censorship standards, which are still being worked out, are also a big question mark for U.S. studios. Most Hollywood films that play in Kuwait, for example, run for only about an hour because taboo scenes get chopped. Disney’s “Beauty and the Beast” was shunned entirely because of the film’s fleeting “gay moment.”

Ties between Hollywood and the Middle East might be reinvigorated, but both sides need to act wisely. “What works in Hollywood and around the world doesn’t work here,” Garin says. “We learned that lesson a long time ago.”

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