Broadcast Conundrums


Economic News

22 Jul 2010
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The announcement this week that Qatar-based satellite news channel al-Jazeera is among the world's top five brand names could not have come at a better time for the controversial broadcaster. Recently, with reports that the channel's privatisation is to be accelerated, there have also come doubts about whether one of the world's most popular TV stations could ever make a profit.

A recent survey by Brandchannel, an online trade magazine, of nearly 2000 advertising executives, academics and brand managers asking them to rank companies on the basis of the impact a brand had on people's lives put al-Jazeera in the number five slot.

However, whilst the channel's peers at the peak of global consumer recognition may be raking in the cash, al-Jazeera has never turned a profit. Despite ranking alongside the likes of Nokia, Starbucks and iPod manufacturer Apple, some even cast doubt on how the channel could ever make money.

Al-Jazeera took to the air in 1996 with a $150m grant from the Qatari government and the emir's blessing for independent editorial. Whilst coverage of Qatar's internal affairs has been largely absent, the station has dedicated itself to hard hitting political content which often criticises regimes in the region.

International notoriety came during "Operation Desert Fox", the US military's bombing of Iraq in 1998. The station's coverage was soon attacked by the US and Israeli administrations for allegedly inciting violence and hatred with its graphic and emotive images.

The airing of taped messages from the world's No.1 most wanted man, Osama bin Laden, in the period since the September 11, 2001 attacks on New York and Washington - coupled with extensive ongoing coverage of Israeli military operations in the occupied Palestinian territories - have done little to pacify this discontent.

Yet despite its fame, a little over eight years after its founding, the station's budget still requires a subsidy of between $40m and $50m a year - far from the original plan that the channel would be financially self-reliant after five years.

News that privatisation was being explored first came in late 2003, but the announcement that sell off plans are to be brought forward was brought to the fore last week by a report in the New York Times. The content was widely picked up by international news sources, with coverage highlighting the fact that despite the obvious financial burden al-Jazeera is to the Qatari government, the move has much more to do with diplomatic and political pressure.

The peninsula state has long enjoyed a warm strategic partnership with the US, particularly regarding security arrangements. The state hosts the US military's Central Command facility, from which the 2003 invasion of Iraq was launched. With this kind of presence in the background, the New York Times report drew attention to the fact that US Vice President Dick Cheney, Defence Secretary Donald H. Rumsfeld, Secretary of State Condoleezza Rice, former Secretary of State Colin L. Powell and other important US officials have all complained to Qatar's leaders about al-Jazeera, especially over its Iraq war coverage.

In response, an un-named Qatari official told the New York Times, "We have recently added new members to the al-Jazeera editorial board, and one of their tasks is to explore the best way to sell it... We really have a headache, not just from the United States but from advertisers and from other countries as well."

The official added that he hoped the move would not result in the station's content being "diluted".

The New York Times report also suggested that the US stance over the satellite channel contained a whiff of hypocrisy, given that the US proclaims it is bent on the extension of democratic values, such as freedom of expression, throughout the Middle East.

Yet it is not just Qatar's major strategic partner that has had its feathers ruffled by al-Jazeera. The station has trodden on toes around the region, with countries such as Iran and Saudi Arabia being particularly unhappy over some coverage. Neighbouring Bahrain has also been particularly put out, with the station's existence being coupled with territorial disputes to sour relations between the two neighbours in the late-1990s. The Bahrainis, in an ironic twist, even went so far as to dub the channel "Zionist".

The pressure to change the ownership may result in the station having to tone down its content. As it stands, advertising revenue has never picked up as expected, with most commentators hypothesising that potential airtime buyers are reluctant to attach their name to such political controversy.

"Sadly, decisions to advertise are often still based on politics rather than on market forces and the ability of a medium to communicate with target markets," explained Waddah Khanfar, managing director of al-Jazeera, when talking to OBG in 2004. "Any other medium blessed with viewer figures comparable to al-Jazeera's would have advertisers queuing outside its gates."

With viewing estimates put between 30m and 50m there is little wonder that the impact the channel has was rated so highly by mass-communication experts. But leveraging the brand's strength is not easy.

"Popularity does not necessarily make it easy to sell," explained a diplomatic source speaking to OBG recently. "They're not like a regular TV station because people turn-on for the same reasons that advertiser's turn-off; but the government would save themselves a few headaches if they weren't paying for it at the end of the day."

New owners and a fresh set of market incentives could herald diluted, less contentious content, but could harm the basis of the channel's popularity. However, finding a way to leverage the brand's strength whilst retaining its heated edge is not necessarily what those who want the sale brought forward would like.

Details of the plan are currently pending a feasibility report. The day after the New York Times story, a spokesman for the channel announced that whilst reports of US pressure for a sell off were widespread, he had "no first-hand knowledge of them". He went on to emphasise al-Jazeera's code of ethics, which forbids it succumbing to commercial or political pressure.

As the station pushes ahead with plans for other stations to cover sport and provide children's entertainment, the future of its ownership and control structure will be in the balance. Meanwhile, it's business as usual in the Doha studios.

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