Turner Broadcasting has announced a host of deals in the Middle East during the past six months. Digital Broadcast speaks to the network's regional MD Chris Groves, about its bullish aspirations for the region.
Making money in the Middle East is not an easy task for any broadcaster. In the very recent past this task has become harder as advertising dollars have found their way into the pockets of the most established names and the pay TV industry has continued to struggle against sluggish growth and the ever-present threat of piracy.
Despite these challenges, the most recent international network to announce a ramping up of its interests in the region is confident that the opportunities outweigh the challenges.
Turner already operates in the Middle East through its news network CNN. But it is the internationally syndicated Cartoon Network that will be leading the charge in the Middle East when its Arabic-language iteration is launched in Autumn.
"There is a target for a return on investment. It's always challenging with a new business and a new team but we would certainly be expecting to be breaking even by the end of 2011," reveals Chris Groves, senior vice president business affairs and managing director for the Middle East, Turner Broadcasting.
"The launch date of Cartoon Network Arabia is very specific, it's 10/10/10 and will be marked by a big Ben 10 event [Ben 10 being one of the channel's most popular global brands]. As many platforms as possible will be used to promote the launch as well as live events. There have already been several of these in Bahrain and the UAE. There are all sorts of ways of getting awareness of the brand across."
Groves has every reason to be confident. The Middle East public not only watches more TV than other markets, it is also one of the youngest TV audiences anywhere. When you couple this with the fact that the Cartoon Network is the licensee of a host of billion-dollar franchises, it is easy to figure out where this revenue might come from.
"Cartoon Network Arabia will compete not just on air, it has a very successful consumer products business in Europe and the US and there is no reason why that can't be established here in the Middle East as well," says Groves. "That business has been licensed out to several third parties and it's done quite well. Some of these partnerships will continue."
The arrival of the new channel does not mean that these associated franchises will disappear from the schedules of rival stations.
"The aim is to make sure the key shows are on Cartoon Network Arabic, along with some of the local shows, but there's an awful lot of other programming that we are quite happy to have in the market elsewhere," he says.
"We're confident we can get the channel profitable fairly quickly. There needs to be a lot of effort into the marketing. Some of the techniques the company has developed, certainly on ad sales and sponsorship, are viewed as potentially workable in the Middle East and there are talks with a number of fairly large multinationals about working with them from launch. This market is a bit like Turkey where there were very few kids' channels and the Cartoon Network launched there in Turkish, it established itself as number one within two years."
While many international broadcasters have entered the regional market with local partners or by exporting English language content directly into the market, Turner has a different approach.
"The philosophy, generally, is to localise. Since I've been at Turner it has launched 20 to 30 new local-language versions of its brands. These started out with the usual suspects - France, Spain, Italy - and then increasingly going into markets further East," explains Groves.
"We've had a business in the Middle East for about eight or nine years or slightly longer with CNN on pay TV. CNN is still English language however, but it's audience expects it to be. But what has been under consideration increasingly for Turner, is having a new offering in Arabic, with local content and that's what has been worked on for the last nine months."
Although Turner is no stranger to entering markets where English is a secondary language, Groves is under no illusions that the Middle East requires a more considered approach, rather than a cookie-cutter solution.
"I think two or three critical tasks are finding local partners to work with on producing new content, but also establishing a local management team in the region. I firmly believe Turner can't carry on running its regional business from London. So there are several moving parts, but it's all about, this new local language Cartoon Network," says Groves.
In the absence of detailed research on the Middle East market, Turner - like many others - has done its own research before committing further resources to region.
"I think the lack of reliable research has deterred some international companies from moving into this market. Turner has done an awful lot of research in the Middle East and it has become clear that actually, there really is a good opportunity for Cartoon Network to be broadcast in Arabic and to reach a greater audience. In hindsight, the company should have probably done this before in the Middle East. It's very hard with the resources based in London to localise right across the region but I think this is due, if not overdue.
"There's been a mixed reception from the media buying agencies, but most of them seem quite energised. The biggest problem for any commercial broadcaster really is the lack of reliable research. That situation should be changing soon and certain agencies believe there's an appetite among advertisers to really increase spending in the region," says Groves.
"The Middle East is perceived as a difficult market to enter. The proliferation of channels that people can access for free has also been a factor. The tally seemed to hover around 500 and then 600 channels, but there seem to be a few leaders that are well run and operated commercially - as we are."
One particular issue that the network has faced is discovering that Arabic may be one language, but its use varies greatly throughout the Middle East.
"The first challenge is getting the dubbing right, because there are all sorts of bear traps with picking a dialect," explains Groves. "For example, one of our competitors had a lot of their programming dubbed in Lebanon, which was fine in Lebanon but irritated a lot of Arabs outside that country who found it a bit grating. So we've taken quite a lot of advice on that subject. The consensus seems to be that classical Arabic or even Egyptian Arabic is fine because everyone is familiar with it. But it's an easy trap to fall into if you do not do that research. There are local competitors and there's a demand, particularly with kids, to have it in the local language. Kids don't like having subtitles and certain age groups can't yet read."
One of other ventures that the Cartoon Network is embarking on in the region is the development of a branded animation academy in Abu Dhabi's twofour54 media precinct.
"The idea is to try to develop local talent and feeding into one of our strategic strands, which is production of local content. It's certainly an unusual idea, and the discussions with twofour54 are ongoing. The company has done similar things in other markets, but it would be fairly new."
There was one interesting project in South Africa in which viewers were encouraged to participate by contributing ideas. "That generated really great interaction with the audience and also some brilliant new ideas, some of which will be developed and end up on air. There's different ways to do it - direct to your customers or through an academy," says Groves.
Despite the relationship with twofour54, Turner's expansion in the Middle East does not necessarily mean it will base all its operations in the United Arab Emirates capital.
"We're keeping an open mind about Abu Dhabi and Dubai. Dubai is definitely going to be the commercial hub, that's where our commercial director will sit and the ad sales and consumer products teams. But the region is a pretty big place and I would want to keep the options open and also look beyond the Gulf," says Groves.
The company will look to ramp up its local production efforts over time building on the partnerships it has already struck with Jordan's Rubicon and the producers of Freej, Lammtara Pictures. Groves also says that six other production houses in the region have approached Turner to discuss co-production opportunities. So how much content will Cartoon Network develop locally in the future?
"I think it will evolve and certainly it will increase if we keep encouraging local producers and working with them. But the network's top hit shows will always be there as well."
Another route to growth for Turner in the Middle East would be bring more of its stable of channels to the region in Arabic. Groves says there is no rush.
"I think we will take our time with bringing in other channels. The kids channel Boomerang has been very successful in pay TV environments and there's no reason to change that. I see Turners in the medium- to long-term looking at new genres, be it lifestyle or movies, rather than doing another kids' Arabic channel."For all the latest business news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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