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Sun 7 Aug 2005 04:00 AM

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TV fragmentation accelerates

The number of free-to-air TV stations in the Middle East has increased by 55% in the last 18 months, according to a report from the Arab Advisors Group.

The number of free-to-air TV stations in the Middle East has increased by 55% in the last 18 months, according to a report from the Arab Advisors Group.

But its claims that pay TV operators are being forced to cut prices in an attempt to beat off competition have been challenged by Orbit and Showtime.

The research group has published a study which shows that 55 new free-to-air satellite TV station began broadcasting in the last 18 months — a growth of 55%.

The report says that Arabsat and Nilesat, two of the satellite systems that cover the Arab region, now provide 155 free-to-air TV channels and more than 20 radio stations.

Judeh Siwady, senior research analyst at the Arab Advisors Group, said in the 33-page report: “Pay TV operators have been struggling to gain more subscribers amidst the flood of well-financed free-to-air channels. With the growth of the satellite free TV channels, the task is becoming more challenging.”

But Ali Ajouz, vice president of marketing and public relations at pay TV operator Orbit, slammed the report’s findings, claiming that advertising revenues were being spread too thinly for free-to-air stations to survive in the long term.

“We do not believe that the number of free-to-air channels today is sustainable,” said Ajouz. “It has been estimated that net advertising revenue in the whole TV industry in the Middle East was less than US$200 million in 2004. With the top 10 channels attracting more than 80% of this amount, the rest of the free-to-air channels will have to find other revenue streams, merge, consolidate, sell out or close down.”

Ajouz said that, far from slashing prices, Orbit had increased its price by 25% last year, with the cost of certain packages being raised by 50%.

“Pay TV will continue to grow despite the increase of free-to-air channels. People pay for good quality and variety of content that they cannot get elsewhere.”

Showtime dismissed suggestions that it was competing with free-to-air channels and claimed it expected to see the segment consolidate.

A Showtime spokesperson said: “We are not competing with them because our offering is significantly different. They do not have the same number or quality of first-run movies or series that we do because of our exclusive relationships with major Hollywood studios. So we command a premium and do not have to cut costs to compete.”

The spokesperson added: “There are indeed many free-to-air channels and we expect at some stage there will be a consolidation process.”

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