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MEDIA MOGUL: Rupert Murdoch is the major shareholder of News Corp and 20th Century Fox TV.

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NEXT HOLLYWOOD: With increasing production costs in the US, major entertainment companies such as 20th Century Fox are looking to alternative filming and production locations in the Middle East, which is also attracting new free-to-air TV channels.

The arrival of the Fox television network in the Middle East's free-to-air TV comes as the region's entertainment industry is undergoing a transformation. Hollywood is heading East with big US networks and studios staking their claim to affluent audiences and lucrative airwaves.

Show business has been no business for most of the oil-fuelled economies of the Gulf, with imported Egyptian soap operas and paid-for international satellite channels providing most of the region's 200 million people and 38 million households with their entertainment.

That is about to change as local audiences look forward to an entertainment revolution sparked by the arrival of some of the biggest names in Hollywood bringing new channels and production facilities and aiming to convert plentiful petrodollars into TV advertising revenue and movie box office receipts.

"The Gulf is on the cusp of an entertainment revolution," says Avi Bhojani, the Dubai-based CEO of BPG Group, a unit of WPP Group. "We are seeing an influx of new channels as well as new studios opening up, and big names like Warner and Universal coming to town."

Fox, the most watched US television network, started broadcasting the first free-to-air branded Hollywood channels this month across the Middle East in competition with Dubai-based MBC group.

The arrival of News Corporation-owned Fox is set to shake up the regional broadcasting industry which is also seeing a surge of investment in new production studios and even theme parks branded by the biggest names in movies, including Warner Bros and Universal.

A downturn in US and European TV advertising is also focusing attention on the region as well as negatively impacting advertising revenues in developed markets.

Middle East advertising figures continue to soar. According to a report by global media services agency ZenithOptimedia, forecasts show a decline in advertising growth in the North America and Western Europe from 4.4% to 3.8% last year.

Meanwhile advertising spend in the Middle East is expected to grow by 54.2%, according to the agency.

Advertising spend in the UAE has increased from US$869m in 2005 to US$1.3bn in 2007, the highest figure in the region, according to Spence Felix, exhibition manager for Signage, Imaging and Media.

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