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Last Updated: Monday, 7 April, 2003, 08:38 GMT 09:38 UK
Al-Jazeera's cash crisis
By Brian Wheeler
BBC News Online business reporter

Al Jazeera
Al Jazeera has been dubbed the Arab CNN
By any conventional measure, Arab news service Al-Jazeera should be a runaway commercial success.

The station has provoked fury in London, Washington and Baghdad with its no-holds-barred coverage of the war in Iraq.

But it remains the news source of choice in 35 million Arabic-speaking homes around the world.

In Europe, Al-Jazeera subscriptions have doubled since the start of hostilities.

And its English language website was among the most searched-for items on the web last week.

Yet Al-Jazeera remains perilously short of cash.

Powerful enemies

The station's unfettered, hard-hitting style of journalism has made it some powerful enemies in the Middle East, where broadcasters have traditionally been little more than mouthpieces for the state.

Al-Jazeera's reporters have been banned by Jordan, Kuwait, Iran and the Palestinians.

The channel has also upset the ruling elite in Saudi Arabia - about 40% of the Gulf advertising market - by airing interviews with Saudi dissidents.

These countries cannot prevent Al-Jazeera beaming its programmes into their citizens' homes.

But they can bring commercial pressure to bear.

Advertising boycott

Over the past two years, Al-Jazeera claims it has been the victim of an advertising boycott.

The station was launched in 1996 with a $150m (97m) grant from Sheikh Hamad bin Khalifa Al-Thani, the Emir of tiny Gulf state Qatar.

Al-Thani wanted to maintain an independent-minded Arab news service after the closure of the BBC World Service's Arabic television service.

By 2001 Al-Jazeera was meant to be paying its own way.

But that has failed to happen and it was bailed out by Al-Thani last year, after racking up losses of 19m.

How long he will be able to sustain such losses, amid mounting political pressure, is anyone's guess.

Changing situation

The problem, according to media buyers in the region, lies not with US multinationals angry at Al Jazeera's editorial stance, but with their local partner firms.

"These guys are frightened of upsetting the big boss," as one media executive put it.

Gulf television advertising has shrunk by about 50% since the start of the war, but Al Jazeera's broadcasts are now virtually commercial-free.

General Motors, Procter & Gamble, Unilever, Gillette and GlaxoSmithKline are just some of the big names who have advertised on Al-Jazeera in the past.

And ad agencies in the region are understandably keen for normal service to be resumed.

"The war might have an impact on the perception of the station," one Dubai-based media buyer for a large Western agency told BBC News Online.

"It might start getting support from local clients."

It all depends upon the ruling circle changing their attitude towards phenomenon like Al-Jazeera
Jihad Ballout
Al-Jazeera spokesman
The multinationals are unlikely to bear a grudge for too long when dollars are at stake, he argues.

And Al-Jazeera's perceived anti-American stance, in the wake of its decision to show American prisoners of war, may win it a few more friends in the Arab business world.

Big plans

Other observers in the region say it would be wrong to speculate about post-war business attitudes, while bombs are still falling on Baghdad.

"We don't even know how the balance of power is going to be, whether the strategic map is going to remain the same," another media executive told BBC News Online.

Al-Jazeera is also facing competition from newer rivals Al-Arabiyya, a slick Saudi-backed news channel launched earlier this year, and Abu Dhabi TV.

Al-Jazeera remains bullish about its future prospects.

It is a lean operation by Western standards, with 755 employees worldwide - compared with CNN's 4,000 and BBC News's 3,300.

But it has big plans.

Plugging the gap

It is currently working on a semi-autonomous English-language service, which sources say will be ready to launch this time next year.

It is also planning to launch a documentary channel and a sports channel.

Another potential money-spinner is a training college for Arab media, which is being developed with help from the BBC.

In the meantime, it will continue to plug the funding gap with sales of footage to other broadcasters, including the BBC.

Long-term future

It has also begun to exploit the Al-Jazeera brand, on T-shirts, sunglasses and even cosmetics.

Insiders at Al-Jazeera believe there will be no shortage of potential backers for the channel if it fails to bring in the advertisers.

But some observers believe its long-term future will only be secured if it can secure another firm commitment from the Emir, something which is by no means certain.

There is also a question of whether it can maintain its independent-minded stance under different proprietors, who may be more interested in pleasing the advertisers.

Common sense

Al-Jazeera executives are understandably reluctant to talk about commercial issues at such a sensitive time.

The station insists its future is secure but admits it is still short of cash.

Al-Jazeera spokesman Jihad Ballout believes freedom of commercial speech will win out.

"I certainly believe that financial common sense will prevail.

"Eventually people will start to say, why do we not use the optimum medium to sell our product to a market that is ripe for the picking?" he told BBC News Online.

Enough to go round?

But much depends on the spread of liberal values and free speech in the region.

"It all depends upon the ruling circle changing their attitude towards phenomenon like Al-Jazeera," Mr Ballout said.

"They have to start realising that people have different points of view and perhaps they should be allowed to express them.

"People who express dissent don't have to be enemies."

Mr Ballout said Al-Jazeera welcomed competition from Al-Arabiyya, but, he added, "it remains to be seen" if the Gulf advertising pie - thought to be about $1bn - is big enough to go round.





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