How we beat the Americans

By Fouad Tawil
Forgive, O Lord, my little jokes on Thee and I'll forgive Thy great big one on me.
- Robert Lee Frost (1875–1963) American poet
And… the winner is…drum roll... the Middle East. Congratulations! The Middle East has managed to zoom past the USA, the dominating giant in the media industry, according to the latest statistical studies. The question is: In what categories did we outpace the giant? Is it an achievement that will fill the region’s heart with pride? Do you, the reader, care? Do they, the Americans, care? Or are we just pulling your leg by means of a great sensationalist title to grab our reader’s attention and reel them into the article? Fortunately, all the answers to these questions are published on the following pages, so, read on and find out.
Preamble

It is common knowledge that the satellite TV industry in the Middle East is skyrocketing, in terms of the number of stations and advertising monitoring revenues as well.

From only just two satellite TV stations in 1992, to 121 a month ago (2005), the Middle Eastern satellite industry scored an unprecedented growth.

With such astounding figures on hand, the region can now pretend to compare itself to the TV industry of United States of America.

However, before we take on this enormous and complex task of comparison, it would be prudent to quickly cast a general overview of the satellite industry’s evolution in the region.

In order to authenticate the study, we have chosen free-to-air pan-Arab stations only. All figures displayed are in US dollars and reflect the advertising expenditure monitored (courtesy of PARC).
1-General overview of advertising on pan-Arab satellite TV stations
Any outsider to the advertising business would praise the remarkable and outstanding growth monitored by various reports. Below is an example of the monitored currency spent on free-to-air pan-Arab Satellite TVs from 1992 to 2004.
Graph 1                                                                                                                Source: PARC Monitoring Reports
Note: The above stated figures are extracted from PARC Monitoring Reports and consequently do not reflect the real advertising spend, since the monitoring does not distinguish between paid and free spots.
Table 1 (below) details the figures seen in Graph 1
  1992   1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Tot Adv Spend
in 000 US$   

8,500 29,656 65,915 75,963 103,181 244,793 387,866 462,715 560,014 713,971 988,928 1,225,192 1,759,713

Yearly growth %

   248.89%   122.27% 15.24% 35.83% 137.25% 58.45% 19.30%  21.03% 27.49% 38.51% 23.89% 43.63%
Mbc 7,000 21,390 41,296 40,344 49,832 55,790 76,883 91,516 115,133 211,136 294,396 365,612 385,827
Esc 1,500 6,939 16,314 16,519 15,156 13,730 26,685 36,375 32,144 25,060 36,043 35,291 23,679
DXB Sat   1,327 2,996 3,305 6,183 10,621 20,814 22,257 26,083 31,480 41,126 56,726 70,728
Art Variety     1,590 3,318 4,925

Went Encrypted
Art sprt     1,163 2,669 1,905
Art Child.     62 558 191
Art movies     1,602 7,030 4,998
Art Music     627 1,740 4,034
Jordan Sat     265 480 83 49 670 553 1,352 9,834 9,722 6,332 6,554
Lbcsat         13,740 104,832 143,349 166,462 171,367 199,624 210,472 223,293 262,064
Future Int`l.         602 39,938 87,934 114,170 123,902 120,054 165,510 158,039 205,055
Art         1,531 11,990 26,508 21,442 31,733 11,781 9,677 13,151 18,252
A.dhabi Sat           4,975 N/A N/A 30,262 50,181 119,891 141,248 116,441
Al Jazeera Sat           2,308 3,222 8,002 26,005 52,797 65,993 39,284 48,510
Syria Sat           561 1,803 1,939 2,033 2,025 5,641 6,894 4,911
Mehwar Sat                     1,535 5,070 13,725
Mtv Sat                     4,709

closed down
Sudan Satellite                     1,681 1,639 2,430
Cnbc                       17,483 12,407
Al Arabia                       11,281 57,900
Mazzika                       19,113 60,912
Melody Hits                       13,094 30,448
Rotana                       4,346 33,647
Mbc2 (Ar+Nile Sat)                       73,142 291,619
Dream 2                       16,832 13,310
Dream Tv                       14,835 15,125
Strike                       2,486 20,989
JSC Sport                         13,640
Space Toon                         51,542
Others                    

22,533

    
Number of Sat Tv Monitored

 2

3

 9

9

12

10

10

10

10

10

15

21

23
2-Comparison Process

To accurately compare between all pan-Arab Satellite and all American Commercial TV, the statistical data used for this comparison will be based on information from only the last three years, i.e. 2002, 2003, and 2004; however, some demographic information will be used at a later stage.

A- All pan-Arab Sat TV from 2002 to 2004

1- Number of commercial TV Stations monitored: 23 ( in 2004)
2- Expenditure in ‘000s of US$: 988,928 and 1,225,192 & 1,759,713 respectively
3- If 70 percent of ALL is destined to KSA, then 692,250 and 857,634 & 1,231,800 are the Saudi Arabia expenditure share
4- For easy reference, let us fix KSA population to 23 Million (Total Population, 2004 Est.)



 B- All American TV Commercial Stations from 2002 to 2004
The source of the information displayed here-under is from the American TVB (Television Bureau of Advertising - www.tvb.org):

1- Number of commercial TV Stations (excluding cable TV in the USA):       1,362 (March, 2004)
2- Expenditure in ‘000s of US$: 42,142,000,                                                      42,423,000, and 47,213,000 respectively
3- For easy reference, let us fix USA population to                                              293 Millions (Total Population, 2004 Est.)
First Finding: Average Yearly Growth & Revenues of pan-Arab versus USA TVs

As Table 2 shows (below), the pan-Arab Satellite TV growth surpassed the USA’s by 35-fold in 2003, and almost four-fold in 2004.
With reference to the average yearly returns by station, once again the Middle East ahead; reaching, in 2004, a revenue record of US$76 million per station, while American TV stagnated at US$34 million.
 

2002

2003

2004
PAN-ARAB SAT TV All 23 Pan Arab Sat. Tvs in ‘000US$ 988,928 1,225,192 1,759,713
Average Yearly growth   23.89% 43.63%
Average PAN ARAB Tv Yearly Revenue by Station (in ‘000 US$) 42,997 53,269 76,509
 
USA COMMERCIAL TVS All   1,362   Commercial USA TVs -Excl. Cable TV-in ‘000US$ 42,142,000 42,423,000 47,213,000
Average Yearly growth   0.67% 11.29%
       
Second Finding: TV Expenditure Per Capita (pan-Arab Saudi share versus USA)

In order to calculate the TV expenditure per capita, Saudi Arabia was selected for the comparison, because it is the primary leaders in terms of advertising spend in the region.
In this particular comparison, the USA scored better than the region. With only US$77 in KSA, the pan-Arab TV expenditure per capita is less than half of the American sample, as shown below (Table 3).

However, once again, the region is far ahead in terms of the growth of the index concerned.
  2002 2003 2004

PAN ARAB SAT TV

 All 23 Pan Arab Sat. TVs in ‘000US$ 988,928 1,225,192 1,759,713
Saudi share of the P.A being 70% of the total 692,249 857,634 1,231,799
Saudi total population- in ‘000s-(fixed for easy calculation) 23,000 23,000 23,000
pan-Arab TV Expenditure Per Capita in US$ 43 53 77
Per Capita Yearly pan-Arab TV Growth (Saudi Share)   23.89% 43.63%
 
USA COMMERCIAL TVs All   1,362   Commercial USA TVs -Excl. Cable TV-in 000 $ 42,142,000 42,423,000 47,213,000
USA Population – in’000s - (fixed for easy calculation) 293,000 293,000 293,000
USA TV Expenditure Per Capita in US$ 144 145 161
Per Capita Yearly USA TV Growth   0.67% 11.29%
3- Paradox

Unfortunately, this ideal scenario, if well scrutinized, will show a bitter reality.
All reliable research sources set the Total Advertising Expenditure Per Capita in the Kingdom of Saudi Arabia between US$20 and US$30 for the total population (23 million).

Obviously, this index will increase if (a) only adults are taken into consideration and (b) will decrease if one Media Type is considered.

However, our own reckoning sets the 2004 Advertising Expenditure Per Capita in KSA at around US$27 (Total Population).

This raises the obvious question: Why did the Expenditure Per Capita Pan-Arab (Saudi share) TV only, amounts to US$77, whereas the TOTAL expenditure by capita does not exceed US$27? Certainly, this result is due to the lush and generous deals granted by Pan-Arab TVs.

In order to have an idea of the pan-Arab TV real money spent, let us proceed to the calculation of the Total Expenditure Per Capita in KSA:

For general information, the formula for Advertising per capita appears below:
                                                            TOTAL ADVERTISING SPEND
Advertising Expenditure Per Capita =
                                                                 TOTAL POPULATION



All advertising expenditure figures displayed hereafter (Table 4) are for 2004, 25 percent have been deducted from the figures to allow for the average Agencies Commission and Yearly Volume Rebates (with the exception of SATV and pan-Arab TV), hence, excluding any hidden deals or any favoritism that may have occurred.
Saudi Media in 2004 Gross less 25%
 
Saudi Newspapers 362,338,500
Saudi Magazine 25,884,000
Outdoor 60,000,000
SATV -all channels- NET - 35,000,000
Share of P.A TV (Saudi Share) - NET - X
 
T  O  T  A  L $423,222,500 + X