An interview with John Tydeman, CEO, Arab Digital Distribution
John Tydeman is CEO of Arab Digital Distribution (ADD), the platform company for the Arab Media Corporation (AMC) group which owns ART. ADD creates and manages bouquets of channels and markets and distributes these channels across Europe, North Africa, and the Middle East. Tydeman, who is thought of as "the fireman" or "town tamer" of transnational broadcasting, honed his management policy skills first in Australia teaching in MBA and policy programs at the University of Canberra, and then in America at a research and consulting center applying statistical techniques and economic analysis to deal with the complex cultural, political, and demographic problems a corporation might face.
Since 1985 he has been on board or an adviser to half a dozen or more major media projects, including ten years with Astra as it moved from insignificance to the most successful satellite program the world has ever seen. His associations include Zee TV and News Corp—Tydeman was the CEO of their joint venture ATL—and for almost two years Tydeman was CEO with Showtime in its startup phase. He joined ART last spring.
TBS Senior Editor S. Abdallah Schleifer and Managing Editor Sarah Sullivan interviewed Tydeman in Cairo.
TBS: A lot has happened since you came on board last April—newly acquired programming, a shakeup in management. When you came to ART, what did you see as the areas you had to concentrate on?
John Tydeman: There seemed to me to be two main things we weren't doing. The first is that we weren't capitalizing on the assets of the group. And this was perhaps for all the right reasons—it's easy in hindsight to see what you think are mistakes. First, ART had started with a bouquet they called 1st Net or al-Awal, and they let that fall when they moved to a la carte channels. That in itself is fine, if you want to be in the channel business. My point to the board was very simple: you have a choice. You can be in the channel business, you have half a dozen channels, make them really good, make them profitable, and it's a nice business. Or, you can be in the business of having a platform—but if you want to have a platform you can't sell three or four a la carte channels. You've got to have a platform. So that was the first area, which was to move from a la carte channels to a platform. I presented this to the board, which said yes, we'd like to do that.
The second area was again to pick up on where ART had a great strength when it started, which was in terms of distribution. It had lost the way a bit. When it started it was free-to-air, and it still has a free-to-air channel. But what the group had decided, which I think made sense, was that at some point in time, if you have the programming and the market understanding you could move from free-to-air into pay-TV. And that's what it had done.
But pay-TV is of course different than free-to-air. With free-to-air your concern is with the ratings, that you have the program at 8:00, that you have the maximum advertising revenue linked to the maximum number of viewers at that time. Pay-TV is about getting viewers who pay you every month. It doesn't matter if you have no top-rated program at all, as long as you have a lot of viewers. To get viewers you have to have a distribution network and a sales strategy to put in place across the region. We started trying to build an independent network, and it was difficult in the region because of the question of experience. A lot of the distributors and dealers had been involved since the Gulf War in selling satellite reception equipment, but they'd never been involved in collecting money and managing subscriptions. There's a huge difference between putting up an antenna, collecting your money, and saying "shukran," and knowing that next month there's going to be a subscription. So the second area I saw that needed a lot of attention was for us to really get back to basics and clean up our distribution network. Then everything else falls into place: you've got the content, you manage the content, package it, price it right, and you've got the infrastructure to support the installation and distribution across the region.
TBS: What have you done in terms of building content?
Tydeman: The way we've addressed content is twofold. First of all, I look after bringing third-party channels to the bouquet, so my job has been to build on the base we have of Arabic content within ART. In doing that, we've structured the group, as you would do in any transfer process situation, where ART in fact sells its channels to the platform, the same way Fox News sells its channels to B-Sky-B or Zee to Star. So we've now established that as a formal principle, which is very good because it has helped make the demarcation very clear, and ensures that people in the different areas now become responsible rather than being part of a giant conglomerate. ADD has been addressing the age-old questions like what's my target market, where do I want to be, how do I get there, who are my competitors, etc.
We've done two things: the expansion of the Arabic bouquet, and the introduction of the Asian bouquet, which has been quite an interesting opportunity for us. The expansion of the Arabic bouquet came about because at the very start between Showtime and ART, it always seemed to me very strange that you have one group selling Western—even though that was me in those days—and one group selling Arabic. My experience from India and other markets was that probably the household wanted a little of both. Sure, there would be households that spoke only Arabic and wanted only Arabic. There are of course the expatriates who want only English. Third, there are the people who are upwardly mobile, educated, or ambivalent or want to maintain their local values on one hand and also want to have the best of Western entertainment. There are a lot of families who want to sit in the morning and watch CNN then come home at night and watch Al-Jazeera, and assimilate the best of both cultures. By focusing just on one part of that we were missing a very large dimension.
In the meantime the world had changed, and the Arabic free-to-air programming had multiplied like crazy. So we were caught: the business we'd identified rightly as an opportunity had been inundated with free-to-air, and Western programming was being held in some high esteem—the khawaja complex; people would say, I know these programs are rubbish, but it's Western, and your program is Arabic. It occurred to me then that while you should be careful with that, our viewers should have the right blend of programming. So that's what we've been working on, and over the next two months you'll see some radical changes in the Arabic bouquet. It's started already; we've now got eleven or twelve channels in the bouquet, up from five or six, plus three new additions B4U Music, Fox News, and Bloomberg.
We've always carried TNT, but we let that be an a la carte, and we incorporated it back into the bouquet—of course TNT is an anachronism now because the Turner group has split it into Turner Classic Movies and the Cartoon Network. We took both of those channels, plus CNN, which has always been intended to be part of the ART bouquet. That means we immediately added kids' programming, news, and classic Western movies. We then added a music channel, MCM from France.
Tydeman: That's right, the channel had been in and out of favor with the group because of content, and that's pure and simple a management issue. I understand the whole basis for reacting. There's nothing wrong with the group saying it doesn't want blasphemous programming on its network. But there are several ways to deal with it; one is that the channel tells you in advance when you need to replace videos, and MCM is happy to do that. The channel is now back on.
Then we've been working with the Asian group—and there's a tremendous affinity between Arabs and Indians in movies. We have a premium Hindi movie channel, B4U, which we've put into our basic Arabic package. We've done the subtitling, now it's a matter of working out a minor technical problem, and the Arab viewer will be able to watch with subtitles while the Indian viewer doesn't have to have the subtitles. The three new channels, as I mentioned earlier, are the B4U music channel; Fox News, which we have exclusively in the region; and Bloomberg TV. We'll also have a new, exciting action channel.
TBS: ART has always resisted having news. How did you do it?
Tydeman: Two things: one is the switch I mentioned earlier from being a channel producer to being a platform producer. And the Sheikh [Saleh Kamel] has made that distinction perfectly, both intellectually and operationally. The other thing is that the region has changed. Al-Jazeera has changed everybody's perceptions of what can be a channel. Sure, they get rapped over the knuckles every now and then, like any news channel does, but everybody wants to watch Al-Jazeera.
TBS: But the news channel you're carrying, Fox News, is in English.
Tydeman: Fox News is in English, part of the package of channels we've signed with Star TV out of Hong Kong, which we put into the Asian bouquet. Star built their major platform for the Indian market, which is of course the Hindi channels. And of course India is the perfect country for the mix of English and Hindi. So we've now put together six English and six Hindi channels and packaged them together in a bouquet called Pehla, which we're selling in the Gulf countries—where there are over 5 million expatriate Indians, and it's a market everyone's ignored. We've been very fortunate in the sense that the owners of B4U had been years and years ago buying up the non-Indian rights to movie product, so they have all the top movies. They very cleverly packaged the film channel B4U and paralleled it with a B4U music channel, but with the Indian music they added in the international hits.
So we have six Indian channels: B4U, which is the premium movie channel; Star Gold, which is the best of Indian classic movies; two music channels, B4U and Channel V; Star News; and Star Plus--which is currently showing the program "Kaun Banega Crorepati," or "Who Wants to Be a Millionaire." So we've got a pretty powerful start to a bouquet. We had the press conference in Dubai and went on a local radio station for a three-minute interview, and we were there over an hour. The switchboard was lighting up; people have just gone nuts.
Timing is important, and sometimes you just happen to be there at the right time. About a year ago the Indian programmers realized that for rights issues and other reasons they had to eventually encrypt. And they did—meaning that the Star channels, some of which had been in the Middle East, got encrypted and taken out of the region. People who had a package of channels free-to-air were now deprived of it. The absolute driving force in Indian TV—movies, sport, and to some degree music—were now encrypted. Sure, there were a few entertainment channels, but it wasn't quite the same.
Then of course, the Asian bouquet wouldn't be complete without sport, and there's only one sport, and that's cricket. With B4U we've been able to acquire some rights to Pakistani games, the Indian tours, and to the World Cup knockout competition. We've set up a new channel, Pehla Plus, which will be our premium events channel, on which cricket will play the role that football does in European and Middle Eastern programming.
We've gone the more traditional pay-TV path, which no one has really done here, which is to have a basic reasonable price. Pehla came in with twelve channels, increased on October 1 to fourteen, going maybe to sixteen or seventeen by the end of the year, at $25, which is pretty respectable anywhere. Then we've got Pehla Plus as the events channel, which at the moment is cricket, as a buy-through channel people can purchase. So we've straight-away started with the basic and the buy-through, and we can add other buy-through's or build on the basic if we want to expand.
TBS: Is your operation personally involved in building distributorships?
Tydeman: On the distribution side, we've done two things. ART had spent a lot of time creating in-house organizations, like Saudi Digital Distribution, a little like Showtime and Orbit have done. So we've got those organizations. The philosophy that our team has brought is that we need to have strong control of distribution, but also need to have the support of the independent dealers and distributors. We've worked very hard to build up an independent dealer network to support the organization that we have. That's been a very interesting challenge; our own people originally thought that these are "the competition" as opposed to the people who are going to make our business successful. As soon as we got that cleared up, it's been working very well. We've got a nice distribution network, which is expanding in the UAE, and we've got independent dealers in Saudi Arabia and Egypt. That's been a very important part of the platform: reestablishing a strong distribution base.
TBS: You're now carrying English programming in the bouquets. Wasn't there a "gentleman's understanding" between ART and Showtime over who was doing English and who was doing Arabic?
Tydeman: Not exactly. There are some areas where we don't compete with Showtime, and areas where we try to collaborate and get some channels together. We have different markets. Showtime has nothing for the Asian market, for example, except Sony Entertainment Channel, which is one channel in an English-language bouquet and doesn't really drive a lot of Asian buyers. We've gone the "Arabic-plus" path, while Showtime has gone the "English-plus" path. They've been able to capitalize on the fact that there are so many free-to-air Arabic channels around their English-language bouquet. And eventually Arabic-plus and English-plus meet in the middle.
TBS: Do your responsibilities include Europe?
Tydeman: That's an interesting story. When I was doing some work once with MTV, they had a guy who would say "there's no such thing as a bad transponder." One of the projects they were looking at was how they could upload a large number of transponders; they had a surplus of these when the world changed from analog to digital. That mentality had at one stage permeated our group. There was a period of time when I don't think there was a satellite system in the world that didn't have an option or a lease from our organization. That's changed, but the good news is that we fell across transponders and an opportunity to take our bouquet, since we own the content on the Arabic side, into Europe. We've become a niche-market programmer in Europe. And capitalizing on Hotbird, we were then faced with the dilemma of how to get into North Africa as well. North Africa is an interesting market, because like the Levant, it's French-Arabic. English is a distant third, we've found.
TBS: You're also describing the Arab market in Europe, many of whom live in France and are Magrebis.
Tydeman: That's right. And it means the content has to be different. You had a debate in a previous issue about pan-Arabism, is there such a thing. In North Africa everyone wants to watch the satellite that has French and Arabic on it, which is Hotbird, not Nilesat and not Arabsat. We've built our North African bouquet on Eutelsat. We've aligned with French programmers and now have a very nice French and Arabic bouquet; there are now nine or ten channels, but we'll have twice that many driving straight into the North African market.
TBS: Will that also play in Europe?
Tydeman: The French can't, because of rights issues. But it doesn't matter; and if we do it right it can be an advantage because you can tell subscribers that they'll get, for free, the following French channels.
TBS: So what's the situation in Europe now?
Tydeman: People talk about the "pan-Arab" market; back in 1995 people used to ask the same question about the "European system." I was with News Corp then, and we put up Sky and ran English-language programming across Europe on the grounds that there were one percent English speakers in every country, and if you multiply that it means you have a big audience. And everyone talked about pan-Asian, making the same argument. But none of those things worked. And I don't see many similarities between Jeddah and Casablanca, not just geographically but in terms of culture and attitudes and needs. You can, with digital transmission and relatively inexpensive transponders, package services to meet market needs. We've tried that with the Asian market, saying this is a criss-cross, the English language content is in both bouquets, but we've now tailored another bouquet specifically for the Asian viewer. The reality is that very few people want both bouquets. We can expand that and do the same thing in North Africa, the same thing in the Levant, the same thing in the Gulf. You're tailoring your services to meet the market needs.
TBS: A couple of years ago the only thing that was making money was ART's American operation. What's happening there?
Tydeman: My mandate doesn't include America, but the strategy for America has been that you can in fact bring Indian, Filipino, Chinese channels, and not even touch the content, because there are a huge number of expatriates and immigrants living in America. And there's a distribution system, whether it's cable or satellite, to deliver to the households. I think the American strategy of taking select channels for which 100 percent of the rights are owned by ART, packaging them, and using cable distribution can just be expanded and continued. It's a nice niche-market business. It exists because you've already got the core channels, so you can marginalize the costs against the revenues. If you had to actually set up a channel to put into America it would be a very unprofitable business.
TBS: But the next generation growing up there barely knows Arabic.
Tydeman: That's what they said about Zee, when we took it to the UK. Everyone feared it was anachronistic—the audience left India twenty years ago, India has changed. But the channels themselves also keep evolving, and there is still a strong desire by all of us who live outside our home countries to keep a link back there. And yes, the kids don't speak Arabic, they don't speak Hindi, but that's not because the parents don't want them to. The idea of having the channel, of having some link, is seen as desirable. So in that sense you capitalize on the desire to maintain cultural values, which is entirely natural.
TBS: There have been some significant and very positive changes in personnel at ADD. How did you manage to do it?
Tydeman: When I arrived at ADD, the mandate I had was to try to shift the organization from what it had been doing into those areas I mentioned: bouquet creation, management, marketing and distribution. What became very clear is that we didn't have in-house a lot of skills that were needed in the specialist areas. For example, we didn't have people with years of experience in pay television on the distribution side. We went about building up a team of as good professionals as we could find who had the experience in the region, had the experience in the business. Parallel to that, there were a lot of people at very senior levels who didn't really have the drive to move forward, or have the experience. So we tried to find other locations within the group and other ways to use the skill base of some of these people. Some moved into other places within the Dallah group [the original, non-broadcasting corporate vehicle for ART's president and source of many ART and ADD personnel], which was just perfect. We've been able to shape a top management team that is totally focused on achieving the objectives we've stated.
TBS: What projects are you working on now?
Tydeman: We're working on refinements to a pay-TV platform, which the digital age allows you to indulge yourself in—actually, it's not as much an indulgence but a necessity if you're going to survive. We're working on interactive programming and content; it's a little premature because the Open TV platform hasn't quite been released yet, that's three or four months away. Once the box and software are released we'll be ready with an interactive dimension. We're working on expanding the ART website into quite a dynamic portal, which will come online in the next couple of months. We're expanding and strengthening all of our SMS [subscriber management system] call centers across the region so we'll have state-of-the-art telesales and call center capability.
The bete noire of this region is EPGs—like everybody, we're working on fixing the EPG. You can invest a lot of time and effort to get the EPG working at the moment, but through the new Open TV platform, there'll be the capability of providing a lot more. Like everyone, we're trying to increase the potential for the viewer in giving them electronic information. We're also trying to expand our print-based presence in the region; because there wasn't a platform-focus before, we had lost the way a little bit in making sure all the newspapers and magazines had our listings. Even when there is an EPG, there are a lot of people who might not be getting your service but pick up the paper and see that you're carrying the Arsenal vs. Manchester match of the day.
TBS: How will Open TV work?
Tydeman: It provides the base from which the interactive TV and Internet TV work, and provides a framework to expand the EPG. I'm of the opinion that you need to be totally ambivalent to technology; one on hand you need to be aware as an organization of where it's going, you need to have somebody who's at the cutting edge of it--and you have to be hitting that person over the head when they try to get you to buy it. Because you really don't want to be at the forefront; it's changing so fast. We want to be moving in maybe in the second or third wave. Just because they've launched, for example, an interactive shopping service in the UK, where there are six million households with DTH receivers, doesn't mean we want to jump in with that service in a market where we don't even have a uniformity of receivers across the region.
Our philosophy is to be at the forefront of technological developments, so we know what's happening, but not necessarily to be the first to launch in the region. There's no real advantage to being first, as we found with digital boxes, launching them and then having to replace the boxes over time, or launching a service and having to modify it, or launching and then finding that there's no viewer base for the service that you're offering. The important thing is not to design your service to lock the technology out, and that's what we've been trying to do on the technology management side, to make sure that as these new services become available, we can add them.