With a GDP of $81 billion in 2003, up 4.5 percent from the previous year, and an 8.7 percent population growth rate that brought the population to more than four million in 2003, the United Arab Emirates (UAE) have all the economic and business ingredients for the most dynamic Arab media market, and in some ways, the UAE has manifested itself as such, with rate card advertising revenues swelling to $420 million in 2003, a 26 percent increase over 2002. The advertising spree continued spiraling in 2004, where the advertising industry in the first four months alone mushroomed to $238 million, a 49 percent increase over the corresponding four months of 2003. Likewise, the PARC Consumer Confidence Index (PCCI) soured by 21 points, from 145 in the spring of 2003 to 166 in spring of 2004.
But it is not the economy alone that increasingly is making the UAE a regional media magnate. Dubai, spear-headed by Dubai Media City, has gone out of its way to demonstrate that it is a maverick regional business and media center. What this article argues, however, is that despite the surge in the economy, the population, and the media sector, UAE media, and especially the television sector, have yet to harness their full potential. Media ownership and structure, as well as the limited number of media, current low advertising rates, and the UAE political environment, are some of the factors that tend to hamstring this potential.
These aspects apply to UAE media in general. As far as television channels specifically are concerned, their identity seems to be the most crucial aspect. To put it differently, it is the adaptation of local or national TV channels to a pan-Arab (transnational) concept that has been the most critical test. But before identifying the pre-requisites for passing this test and evaluating the performance of the regional UAE TV channels, it may be useful to outline the UAE media scenario from an economic perspective.
In 2003, just 20 percent of the rate card value of the advertising revenues of $446 million were generated by local TV, over one-half (53 percent) by daily newspapers, 16 percent by weekly and monthly magazines, 4 percent by radio, and 8 percent by outdoor advertising. Total advertising revenues do not take into consideration the advertising generated by the UAE's two major pan-Arab satellite TV channels, Abu Dhabi TV and Dubai TV, whose rate card ad revenues registered $141 million and $57 million in 2003 respectively. Both TV channels advise the media research companies that monitor their ad revenues that these should be counted as part of pan-Arab ad budgets. At the claimed rate card value, the two TV channels together account for 18 percent of total pan-Arab television advertising revenues, which stood at $1.1 billion in 2003.
The term "claimed" is a prefix that must precede each advertising figure related to Arab media. Lack of market transparency makes it impossible to provide any reasonably reliable figures. Industry insiders are comfortable limiting the real values to one-third at best.
Without a doubt, a significant portion of the claimed revenues of both TV channels are from local UAE budgets. This is especially true in the case of Dubai TV, and less so with respect to Abu Dhabi TV. As such, the UAE advertising market is under-represented by a considerable proportion--a proportion which, however, cannot be easily determined without advertising monitors taking painstaking efforts to sort out the local budgets from those generated by the pan-Arab market, or by Saudi Arabia more specifically.
This syndrome of wanting to be a pan-Arab satellite TV channel is a double-edged sword. It plagues most Arab TV channels that are on satellite. From the advertising revenues perspective, the pan-Arab market is the other side of the Saudi Arabia market. From a purely political and geographic perspective, however, the pan-Arab market spans the Arab world and even beyond, well into non-Arab countries where there are large populations of Arab origin.
There is justification for this obsession with the Saudi market. It constitutes about 80 percent of the Arab Gulf population. Similarly, it is by far the wealthiest; with a GDP of $265 billion in 2003. Saudi Arabia seems to represent a milch cow before which many of the Arab media want to perform the pan-Arab dance so that they can extract buckets of its milk. And indeed, it is difficult to ignore the potential of a cow that grazes over one-quarter of the world's known oil reserves.
Abu Dhabi TV and Dubai TV are among the many satellite TV channels that go out of their way to reach pan-Arab audiences and pan-Arab advertising budgets, not seeing how lush and green the national pastures can be. UAE alone has 10 percent of the world's known oil reserves. Its GDP is nearly one-third of that of Saudi Arabia, and its population is 16 percent of that of Saudi Arabia.
It is true that UAE does not have the population mass that makes news headlines, and a bare one third of its population are Arabs, but it is not quantity that ought to matter. What ought to count instead is quality, in terms of disposable per capita GDP. UAE per capita GPD is $24,000, the second highest-after Qatar-in the Arab World. This may be compared to an $11,000 per capita GDP in Saudi Arabia.
The UAE TV industry is missing out on local (national) advertising revenues on two major counts. Firstly, in the quest of the two major UAE satellite TV channels to be pan-Arab, they have lost sight, in the process, of the grazing available in local audience pastures. Secondly, and perhaps equally importantly from a financial point of view, UAE advertisers are missing out on visual media communication with nearly 2.5 million non-Arab expatriates.
The non-Arab segment of the UAE population has historically been regarded as less affluent that its Arab counterpart, and especially than the UAE nationals. Over the past few years it has registered the highest population growth rate due to an unprecedented influx of a cross-section of expatriates of different professions. Recent security instability in Saudi Arabia has resulted in an increased inflow of professionals with high purchasing power.
The advertising targeting non-Arabs in the visual media is at best pitiful and hardly exceeds $10 million, most of it through the Asian TV channels. Dubai-government-owned Channel 33 is the only local English channel and has been kept languishing on the margins of the local media scene. Reports state that its revival is due in 2005 (see Dubai: Watch This Space in this issue).
The paucity of the TV advertising expenditures that target Arabs in the UAE--less than 20 percent of total advertising revenues--does not stand much taller than the bare 3 percent of the TV budgets that target non-Arabs. Should the share of TV advertising revenues at the level of Arab markets in total be 44 percent, there is no rationale why TV advertising revenues in the UAE market should not be one half what it is at the regional level.
The nearly zero TV advertising budgets that target the nearly ten million non-Arabs who are mostly Asians may best be studied in the context of the scale of the different media that target this important segment, which is not within the scope of this paper. From a transnational broadcasting perspective, however, what is interesting is that this significant sector is catered to by TV channels that target the Indian subcontinent. Only a couple of TV channels have segments produced in the UAE.
Although about ten million in number, the perceived low purchasing power of the sector and the fact that they are spread over six GCC markets reduce their advertising potential at the regional level. Economically however the non-Arab residents of the UAE constitute the segment with the highest purchasing power. And although Saudi Arabia has twice as many non-Arabs of the UAE, their purchasing power is not comparable. Hence for the non-Arab residents of the GCC, the pan-Gulf visual media are feasible from a population homogeneity perspective, while economically the non-Arab residents are not.
A completely different scenario is observed for the GCC Arab population. But just as being pan-Arab could mean opening up new advertising opportunities, it could at the same time mean leaving the local market unattended. The notion of "pan-Arab or perish" has kept the UAE satellite TV channels with national defense lines unprotected in the eventuality that they fail deliver pan-Arab audiences. Indeed with an access to satellite that exceeds 90 percent and over one hundred Arab satellite TV channels in addition to an equal number of non-Arabic satellite TV channels, protecting national audience turfs becomes a nearly impossible mission.
Abu Dhabi Satellite TV made an effort to over-haul its program mix, format, and presentation more than four years ago, but has yet to prove that such efforts are fully appreciated by the Arab audiences in the UAE. Its average day audiences are very much on par with its sister channel Emirates TV, which is earmarked as a channel for a national audience. Yet despite the fact that Emirates TV generates ratings comparable to those of Abu Dhabi TV, in the UAE it functions practically without marketing and barely generated $20 million from local UAE budgets in 2003.
Abu Dhabi TV is a typical illustration of a TV channel that has invested heavily in vying to attract pan-Arab audiences but has not fully realized its goals either at the pan-Arab level or at the UAE national level. Abu Dhabi TV has largely succeeded in shedding its image as a national TV channel (or rather a local TV channel bearing the name of the Emirate of Abu Dhabi) that showcases the political ambitions of the Abu Dhabi government. From its re-launch inception in 2001 it had to compete against formidable odds: primarily Al Jazeera, MBC, LBC, and Future TV. The latter three are a mix of general TV channels, while Al Jazeera is a news channel.
Abu Dhabi TV wanted to be the pan-Arab satellite TV that combines the best of both worlds: news and political talk shows on the one hand, and entertainment on the other. This concept worked very well for MBC for over ten years when the concept of general TV channels was very much the norm on the pan-Arab satellite TV scene. For instance MBC's 9 o'clock evening (Saudi time) main news bulletin for ten years consistently maintained 10 percent ratings. That ended with the advent of Al Arabiya in the spring of 2003; with Al Jazeera, the latter made it the norm that news be viewed on news TV channels.
During the US-lead invasion of Iraq, Abu Dhabi TV invested heavily in making itself one of the main TV news channels for information about and insights into the war. By Arab TV industry, and even international, standards, it did achieve this objective to a large extent. But once the guns of war went silent so did Abu Dhabi TV. Industry observers were left without answers as to why Abu Dhabi TV decided not capitalize on its success in covering the war on Iraq. But again, had it done so this would have increased even further the confusion about its product concept, in terms of general programming versus news.
Abu Dhabi TV could be a case-book study of a TV channel that is less likely to succeed as two-in-one-that is, unless certain conditions are met. Experiences of the main US news networks demonstrate to us that one premium-quality main news program could be an anchor program in a premium-quality general entertainment TV channel. With an unconfirmed budget of over $100 million, the recent re-launch of Dubai TV in a more upbeat format means that it must have learnt many lessons from the successes and failures of Abu Dhabi TV since its re-launch in 2001.
Five months into its re-launch, national TV audience studies carried out by PARC in the UAE during the summer and early fall of 2004 indicate that Dubai TV had consolidated its audience base during several parts of the day. Relative improvement in performance has been reported in Saudi Arabia as well, although this is not comparable to that achieved in its home market of the UAE.
Dubai TV sought to establish a formidable presence during Ramadan through a half dozen Egyptian, Syrian, and Gulf serials run exclusively on its screen. Ramadan is just one month out of twelve where most of the programming on Arab TV channels goes dry, and many end up recycling what was shown during the saturated Ramadan program grid.
At any rate, it may be too early to evaluate the performance of the new Dubai TV. We need to keep in mind that the re-launch of Dubai TV is long overdue. It is reported that internal politics has kept it from establishing itself as one of the more prominent pan-Arab satellite channels on a par with the many that played a significant role in creating the pan-Arab satellite TV market.
The re-launch of Dubai TV is part of the rejuvenation of Dubai government owned media, which include the daily newspaper al-Bayan, the weekly family magazine al-Usra al-'Asriya (The Modern Family) and a number of local AM and FM radio stations. All three media titles are now under the direct authority of the Dubai Media Incorporated set up by Dubai Crown Prince Sheikh Mohammed. It is headed by a UAE national Hussein Lootah. Falling under this umbrella are three other TV channels-Channel 33 (English language), Dubai Sports, and the older version of the Dubai Satellite TV Channel. At the time of re-launching Dubai TV, Dubai Business Channel, which was launched over two years ago, was shut off.
Both Abu Dhabi and Dubai government owned media account for a total of one third of the advertising revenues generated by the UAE media (at rate card value, of course). The Abu Dhabi government owned media operate under the umbrella of Emirates Media Incorporated. In addition to Abu Dhabi TV and Emirates TV, it owns Abu Dhabi Sports TV Channel (part of the Showtime pay-TV network), a national newspaper Al-Ittihad, family weekly magazine Zahrat al-Khaleej, Majed (a monthly children's magazine), and a number of radio stations.
The earlier re-launch of Abu Dhabi TV in 2001 and now the re-launch of Dubai TV, are efforts by the respective governments of Abu Dhabi and Dubai to rejuvenate the media that are under their control. Nevertheless, their efforts are not coordinated under one national government body. The Sharjah Emirate also owns a satellite TV channel as well as a local FM radio. Both are heavily loaded with religious and educational content. The first UAE privately-owned TV was Ajman TV (Channel 4), which started as a terrestrial channel in the second half of the 1990s. No sooner, however, had the federal government provided it with a satellite C-band frequency on Arabsat than it pulled the plug and sent it into a financial free-fall. Now it subsists on an annual federal assistance of about $1 million.
While one foot of the UAE media is galloping freely in the private sector--especially the print media--the second foot--especially TV--is still firmly rooted in the state-funded sector. UAE state-funded media have much of the look of privately owned media but this dual media economy is creating media creatures that are not necessarily totally fit for survival off the umbilical cord of the two main city-state governments of Abu Dhabi and Dubai. These two operations have grown into media adults which the state has found itself unable to wean.
In effect, the continued excessive reliance on state funding seems to set no clear estimates for when they can expect to claim semi-independence--let alone total independence--from the state. On the contrary, for them to be more competitive locally and regionally the state will have to pump more funds into them. This seems to be particularly the case with Dubai TV. In this regard, UAE state-owned media does not differ from any other Arab state-owned media, with possibly one difference: the Dubai government has been especially successful in running state-owned enterprises with a private- enterprise mentality.
Just as Abu Dhabi TV attained considerable success in shedding its local image, the new Dubai TV, however late, ought to capitalize on the brand image of Dubai as the most dynamic and vibrant city-state in the Arab region. The motto of Dubai Crown Prince Sheikh Mohammed bin Rashid has been "The business of government is manufacturing opportunities." While the new Dubai TV has many of the ingredients of a successful pan-Arab and national TV channel, similar potential needs to be demonstrated in its marketing, an activity that has been delegated to Choueiri Group (Tehama-Mems). Choueiri Group is by far the major media marketing representative; in addition to representing LBC and Al Jazeera, it also represents MBC, MBC2, Al- Arabiya, ESC (Egypt Space Channel) and Spacetoon, a children's TV channel.
It is evident, however, that opportunities for the UAE visual media are still far from being realized locally or regionally. One could argue that the sophistication demonstrated by the media in realizing their full potential lags behind that depicted by the advertising agencies as well as the marketers. In terms of both dynamics and the tools, the advertisers and advertising agencies who are supposed to be "partnering" with the media differ greatly from their partners. For instance, while the advertising agencies continue to upgrade their media planning tools and know-how through international affiliations and research, the UAE Arabic media, both audio-visual and print, have been moving at a snail's pace in adapting themselves to the new trends.
On the other hand, because of its population composition, the UAE is blessed by being a microcosm of a pan-Arab market as far as catering to diverse TV viewing needs is concerned. Success at the national UAE level could have regional implications. TV advertising inactivity at the national level has resulted in marked ambivalence, with the bulk of the advertising budgets channeled to the print media. National TV channels that carry local adverting have been stigmatized as "local" TV channels, depriving them of regional budgets or, more bluntly, of budgets that target the Saudi market.
The success of the UAE pan-Arab satellite TV channels means that they are required to walk on a very narrow rope that needs to be tightly stretched between national-regional audiences and advertising budgets. So far this rope is as slack as it can get. TV channels have yet to take the lead in showing an effective performance that could lure both regional and national audiences and advertising budgets. So far, the advertising agencies have been in the driver's seat. This is an only natural outcome of two business activities run with very different mentalities--the private, which can only survive if proves its worth (the advertising agencies), and the UAE national TV channels, which do not have to prove their worth as long those in charge of their governments' coffers set no limit to their support.