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Hollywood Forced to Reevaluate Relationship With Saudi Arabia

The disappearance of Saudi Arabian dissident Jamal Khashoggi sent a horrifying chill down Hollywood’s spine that has developed into a full-blown crisis.

The industry had been cultivating a bond with Mohammed bin Salman, the 33-year-old crown prince who controls billions of dollars of sovereign oil wealth. The barons of entertainment had fully bought into the prince’s vision of a modernized Saudi Arabia, which includes spending $10 billion on film production and opening hundreds of cinemas in the Middle East’s largest economy.

But that bond has been badly damaged by Khashoggi’s Oct. 2 disappearance after entering the Saudi consulate in Istanbul. Khashoggi was living in exile in Virginia and writing harsh columns about the Saudi regime in The Washington Post. The Turkish government claimed that Khashoggi was killed and dismembered, while CNN reported Oct. 15 that Saudi Arabia was preparing to admit that he had died in an interrogation gone bad.

If true, it would be hard for the high-profile entertainment business to sustain ties to the kingdom. Also on Oct. 15, Endeavor was looking for ways to return its $400 million investment from the Saudi Public Investment Fund. (The fund is also an investor in Penske Media Corporation, the parent company of Variety.) Such a move would be fraught with legal entanglements. Speaking onstage at Mipcom in Cannes on Oct. 15, Endeavor CEO Ari Emanuel said the Khashoggi situation was “very, very concerning.”

“On the face of it, it’s upsetting,” he said. “And we are monitoring the situation right now. That’s legally all I can say right now.”

Many others are backing away, at least for the time being. The PIF is scheduled to host its second Davos in the Desert conference next week. Emanuel attended last year since he was courting Saudi investment. Viacom CEO Bob Bakish and STX Entertainment CEO Bob Simonds were scheduled to go this year, but both withdrew, along with media companies like The New York Times and CNBC. Arianna Huffington, who hosted panel discussions during the prince’s visit in April, also backed out.

Richard Branson announced that he was putting a potential $1 billion Saudi investment on hold. Gerard Butler was set to attend a Riyadh premiere of his new film “Hunter Killer,” but chose not to go. Initially, Dubai-based theater chain Vox Cinemas blamed a “family emergency,” but Butler later confirmed that the cancellation was due to Khashoggi’s disappearance.

It’s not yet clear that such gestures will be sustained over the long term. Many of those who said they were “monitoring” the situation were trying to avoid a short-term reaction that would have permanent effects.

Some also clung all week to the uncertainty surrounding Khashoggi’s whereabouts. Privately, they expressed hope that a mitigating explanation would emerge that would allow business to continue.

“This will hit the entertainment industry as a very hard choice,” said Karen Young, resident scholar at the American Enterprise Institute. “I think the penalty by association in the West is rising.”

It was just six months ago that Prince Mohammed was given the kind of reception in Hollywood only afforded to the deepest-pocketed monarchs. His entourage bought out the entire Four Seasons Hotel in Los Angeles and dined in Bel Air at Rupert Murdoch’s Moraga Vineyards with James Cameron, Dwayne Johnson and Bob Iger, among others. The prince met Kobe Bryant at Brian Grazer’s home and talked about Snapchat with co-founder Evan Spiegel.

Saudi Arabia’s human rights record was not on the agenda. The only dissenting voices came from the Code Pink demonstrators outside Endeavor’s offices. That aside, the mood of the visit was celebratory.

Like China, Saudi Arabia wants to invest in entertainment abroad in order to bolster the industry at home. It’s also opening up to Western investment.

As a market, it lacks China’s scale, but it nevertheless presents an attractive opportunity. It is the largest economy in the Middle East, and until recently had no movie theaters. Growth opportunities like that, especially in the mature theater business, are rare. So when the kingdom lifted its 35-year cinema ban in December, it set off an international scramble for market share.

AMC was the first to plant its flag, opening a single-screen theater in a converted auditorium at a half-built financial district in Riyadh. The theater screened “Black Panther” for private audiences in April, making headlines around the globe. Shortly thereafter, Vox Cinemas — the largest chain in the Middle East — opened a four-screen theater in the nearby Riyadh Park Mall.

Two other companies, Al-Rashed Empire Cinema and Lux Entertainment, have been given permits to open theaters as well.

Saudi Arabia has big plans for 350 theaters by 2030, and AMC wants to open 40 theaters in the next five years. It’s not clear whether those plans will stay on track. As of now, the Saudi theatrical market is limited to five screens, one of which shows Imax documentaries.

Adam Aron, the CEO of AMC Entertainment, told The New York Times in April that Prince Mohammed’s modernization plan was “brilliant.”

“The crown prince is aware that Saudi Arabia has had a difficult image in the United States because it’s been such a conservative country for so many decades,” he said at the time. “He wants to transform Saudi society in ways that will be very appealing to Americans.”

It is unclear whether the Khashoggi disappearance will change Aron’s perspective. Aron and AMC public relations representatives did not respond to repeated inquiries in the past week.

Vox — part of the Majid Al Futtaim company, which owns and operates shopping malls — plans to spend $500 million building theaters in Saudi Arabia in the coming years, making it one of the largest investors in Prince Mohammed’s vision. Cameron Mitchell, the CEO of Vox Cinemas, also did not respond to requests for comment.

“This story has got some way to go to play out,” said Colin Brown, a partner at MAD Solutions, an indie distributor based in Cairo. “I don’t know that AMC, Vox or any of the others are necessarily going to put their plans on hold until they know more.”

In the meantime, the crisis poses a threat to Prince Mohammed’s economic program. In order to move away from an oil economy, the crown prince hopes to make Saudi Arabia a more cosmopolitan place to do business. Allowing women to drive automobiles and lifting the cinema ban are part of that effort.

The kingdom still will impose strict religious censorship — trimming sex scenes out of Western films, for example. But the opening to Western culture, and plans to develop a domestic entertainment industry, do represent significant liberalizing moves.

Khashoggi’s disappearance, however, follows a series of authoritarian steps, which include imprisoning women’s rights activists and journalists, feuding with Canada over human rights abuses, and holding wealthy insiders captive as part of an “anti-corruption” campaign.

President Trump has been reluctant to punish Saudi Arabia’s behavior in the past. But some U.S. senators have suggested that if Khashoggi was indeed murdered, then sanctions should be imposed on high-level Saudi officials.

Kristin Smith Diwan of the Arab Gulf States Institute in Washington, D.C., argued that Prince Mohammed needs a healthy relationship with the West to deliver on his promises. “They need this international engagement to create the change they want in the country,” she said. “It will be really a shame if that has been imperiled by these actions.”

MAD Solutions’ Brown maintained that a crisis of some sort was inevitable. “I’m not sure Saudi Arabia fully understood the implications of going overnight into entertainment,” he said. “It puts countries under spotlights that perhaps hadn’t been envisaged.”

Sue Obeidi, director of the Hollywood bureau of the Muslim Public Affairs Council, said that Khashoggi’s disappearance should also put Hollywood on notice about the true nature of the kingdom’s ruling family.

“It amazes me how the crown prince can think that we are going to be like, ‘Oh wow, Saudi Arabia is turning the corner because they opened some movie theaters and they’re showing ‘Black Panther’ and they let women drive,” she said. “That means nothing. What matters is how they’re treating people. They’re the biggest violator of human rights. It’s unfortunate it took this to make people wake up.”

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