LBC, Future TV and MTV: An Advertising and Political Merger

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Al-Akhbar Management

Owner of LBC, Pierre Daher. Al-Akhbar/Marwan Tahtah

By: Ghassan Saoud

Published Tuesday, February 3, 2015

It is said that when late Lebanese Prime Minister Rafik Hariri established the Future media outlets, he discovered the real cost of media production, compared to the payments that individual newspaper, radio and TV owners demanded of him. Today, former Lebanese Prime Minister Saad Hariri is thinking about sidestepping his political team’s media outlets to save himself from imaginary losses, keep advertisers in check, stop the waste, bridge the deficit, accomplish a qualitative media leap and, most importantly, keep a tighter grip on media outlets.

According to rumors circulating in media circles, Murr TV (MTV) Lebanon’s annual losses exceed $8 million, bringing its total presumed losses since 2009 to $35 million. The Lebanese Broadcasting Corporation’s (LBC), meanwhile, is estimated to have lost more than $20 million in the past few years. That does not mean, however, that the two institutions are bankrupt or in a state of financial crisis. Insiders say that the chairmen of both institutions, Michel Gabriel Murr (owner of MTV) and Pierre Daher (owner of LBC), prepare forecasts of their annual profits that include all their potential revenues — from commercial earnings to political money.

They do not make the desired profits because their earnings are restricted to commercial revenues — and not political money — and because they both continue to invest in their channel’s infrastructure (studios, etc). Their financial losses stem from the discrepancy between their expected and actual profits.

Murr has been undermined by the drying up of political donations, specifically from the March 14 team. Daher, meanwhile, has been hit hard by the financial siege imposed by the Saudi prince al-Waleed bin Talal on the players traditionally behind LBC, the Gulf and Egypt. Daher’s loss of al-Waleed’s support is roughly equivalent to Murr’s recent loss of Rotana, a major regional media and real estate company, and other companies that dispensed with the services of Murr’s production company, Studio Vision.

To make matters worse, Lebanese parliamentarians recently voted to extend their own terms and forgo elections for two-and-a-half years, which deprived TV stations of the political donations they usually receive in return for hosting politicians. As things stand now, these two channels will not see political money flowing into their coffers.

Furthermore, LBC has been undermined by its owner’s legal dispute with the Lebanese Forces, and also by simple competition; Al-Jadeed’s newscasts and other successful formats, and MTV’s entertainment shows, have taken their toll. LBC has lost a considerable segment of its Aounist audience to OTV, and an even larger segment of its Lebanese Forces audience to MTV. With all these losses in programming, audience, advertisement and political money, LBC’s gains are limited to a significant cross section of those concerned with civil society issues, after the changes introduced to its evening news bulletin.

Facing this reality, Daher has considered every means possible to guarantee his station’s continuity. For years, he has been discussing a merger as a possible solution.

The governor of Lebanon’s Central Bank, Riad Salameh, has been involved in devising the financial plan for such a project. Along with the possibility of businessman Gilbert al-Shaghouri funding this project, prominent bankers and former Minister of State Marwan Kheireddine have looked at how Daher could benefit from the central bank’s circular No. 331, which deals with startup companies, as Salameh says. The circular allows banks to participate in the capital of projects centered around the knowledge economy with an amount that may not exceed three percent of the bank’s capital. In this case, however, three percent could amount to $400 million.

For some time now, Daher spends several hours a week walking around MTV — hosted by Murr. He senses an acceptance, among various TV stations, of his proposal to establish a unified fund for TV commercials, which would guarantee a flat rate and therefore end the daily price manipulation to compete for clients.

Two foreign accounting companies examined survey results and the distribution of revenues when an important development took place. Hariri was looking for a way to save himself some of the expenses of his own, as well as “friendly,” media outlets (TV stations, websites, newspapers, magazines and radio stations.) Suddenly, he proposed the idea Daher had been peddling for years.

A merger between three large institutions like LBC, MTV and Future TV could be a first huge and difficult step to be followed by smaller and easier ones. Daher’s vision includes:

1) Unifying an advertising fund and distributing its revenues fairly.

2) Merging the two main production companies in Naccash and Adma, a subject that Daher and Murr have been discussing on a daily basis.

3) Providing one source for all common content, like covering events, press conferences, sports matches, concerts and so on so that the different channels can focus on their specific programs. At this point, there is an agreement to broadcast a unified news bulletin at 8:00 pm. One observer estimates that a project like this could reduce a channel’s expenses to less than half.

Daher approaches the issue from a business perspective. Thus, he tried to convince Al-Jadeed TV of the idea of establishing a common advertising fund. He dreams of a huge media institution that enjoys a great deal of independence. The audience will be the biggest winner in this process as they will notice the common content among all the media outlets when it comes to traditional news, only to discover clearly who is adding something of value. This will guarantee that each station will focus on a specific issue, instead of having four stations covering the same stories simultaneously as they did during the recent fight between the Syrian lawyers and their Lebanese colleagues in Cairo.

Hariri, on the other hand, approaches the issue from a political and financial perspective. He is looking for ways to ease his financial burden and enhance the effectiveness of his media outlet. Therefore, he is trying to exclude Al-Jadeed TV from this deal and to give his advisor Hani Hamoud a bigger role in managing the project, after reconciling Daher with the head of the Lebanese Forces, Samir Geagea. Many people are trying to finalize this reconciliation, given Daher’s concern with upcoming legal challenges and to ensure that he would make new promises that contradict promises made to MP Suleiman Franjieh, former Deputy Prime Minister Issam Fares and head of the Change and Reform parliamentary bloc General Michel Aoun who are in the March 8th camp.

In an interview with Al-Akhbar, Daher denied plans to have a “merger in the literal sense of the word.”

He insisted however on the need for cooperation between TV institutions on many levels because there is a direct link between their complementarity and continued existence. One MTV official suggested that the project is being held up by Murr’s lack of trust in Daher, in addition to the absence of a clear economic advantage. Information at Future TV is restricted to a small circle that sees Daher’s project as an opportunity to free the TV station from the corner it squeezed itself into 10 years ago, and allow Hariri to get a hold of the main media outlets, which appeared, on several occasions, to be closer to the Lebanese Forces than the Future Movement.

A source at Al-Jadeed TV pointed to what has been accomplished in terms of creating a common advertising fund. Keep in mind that Daher would not have pressed his proposal had he not been given a green light from his Choueiri partners.

If Hariri moves ahead with this project, we will likely hear loud complaints by many people who will doubtlessly be laid off, as expenses and salaries will be reexamined.

Nevertheless, Hariri appears to be the biggest winner because a project like this will enable him to win over LBC which, so far, has not been officially associated with his political team and will tighten his grip on March 14 media outlets just as he did with the political group itself. After all, some of these outlets that were built on Hariri funding incited against him on several occasions because of differences among constituent members of the same political team.

This article is an edited translation from the Arabic Edition.

Comments

'estimated to have lost $20 million in the last few years' ....

I suppose everyone was to busy to keep track of how quickly the money flew out the door or where it went I bet.
Ah, to be opulent of nature amongst others of equal demeanour - what a life.
I am a penny pincher due to a lack of a financial abundance, alas.

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