A well established and evolving industry retains considerable potential

With a population of nearly 88m, Egypt’s media industry serves the largest domestic market in MENA. And from its central base in the region, the industry is able to extend far beyond the country’s borders to tap into a broader base of more than 300m readers, viewers and listeners across the Arabic-speaking world with its books, magazines, films, radio and television programmes. The sector has a well established history, and for more than a century has served one of the primary production hubs for broadcast in the MENA region. Its print sector dates back to 1828 when Muhammad Ali Pasha ordered a local gazette of official news to be published under the title Al Waqa’i’a Al Masrya. The media industry has evolved significantly since then, with the technological change of recent years resulting in a proliferation of satellite television channels and digital content on the internet, social media and smartphones.

The Market

According to figures released by the Central Agency for Public Mobilisation and Statistics in February 2014, with nearly 70% of Egypt’s population aged 15 and over the country has an adult audience of almost 60m, although the World Bank estimates that almost one-quarter of that population is illiterate. In a country with extreme contrasts in wealth and education, however, the media is serving diverse groups both socially and demographically, ranging from wealthy urban consumers to low-income rural households. “Media consumption in Cairo is very different from other parts of the country,” Serena Hylton, managing director of TRACCS Egypt Public Relations, told OBG. “If you go out into the governorates, you may find some communities where one literate person will buy a newspaper and read it to 10 people in a coffee shop.”

Media Giants

According to the Supreme Press Council, there were 567 registered newspapers in Egypt in March 2012, up from 142 in 2010 and 113 in 2009. The state has long been the leading player in the sector, with a combined workforce in both broadcast and print of roughly 70,000, spread over roughly eight television channels, three satellite channels and three large print publishing houses. However, the past decade has seen a significant change in terms of private competition, with new outlets being rolled out in the print, television and radio segments.

New Participants

Since early 2011, several new TV channels have launched, such as ON TV, which was founded in 2009 but made a name for itself through its coverage of the 2011 revolution, and Al Nahar TV. Current regulations allow the identity of the owner(s) of a television channel to remain opaque, and some new channels are explicitly partisan operations in favour of a political party, while big businesses are also becoming involved in a number of private radio and television stations. Although ownership can still be unclear, private media exhibits a much broader range of views than before, with some channels offering more “Islamic” content, such as Al Nas or Al Rahma, and others more secular-oriented, such as ON TV. However, both public and private channels tend to shy away from investigative journalism. This is partly due, as in more developed markets, to the high cost of such work in an era when journalists are under pressure to turn in a constant flow of stories and partly to an unclear legal background.

Since the start of the revolution in 2011, several new papers have also been founded, such as El Watan, Al Youm Al Sabi and El Tahrir. The new print media is something of a mixed bag, with the degree of professionalism varying, and some papers have had more success than others. As with TV, a number of papers are either organs of various political parties, or else supported by wealthy proprietors. In addition to the Arabic-language press, there are a number of foreign language publications in Egypt. The government owns The Egyptian Gazette and Al Ahram Weekly, which are issued in English, and Al Ahram Hebdo, which is issued in French. In terms of private foreign language media, The Egypt Daily News is the only remaining independent English-language paper in the country.

Egypt Independent, which was founded in 2010, reached 50 issues, but it was shut in April 2013 by its parent corporation, Al Masry Al Youm.

State Media

The dominant player in the Egyptian media sector has traditionally been the state, which operates across all platforms, although it has faced growing competition from private newspapers and broadcasters, particularly over the last five years. Still, state-owned media has a significant footprint, employing 70,500 people: 27,500 of them on 54 state newspapers and 43,000 at the national broadcaster ERTU, according to UNESCO. The ERTU runs two national channels and six additional channels that provide regional programming. There are also three state-owned satellite channels: Al Masria, Nile News and Nile TV, as well as 10 specialised satellite channels supplied through the Nile Television network. Egypt’s first broadcast satellite Nilesat 101 was launched in May 1998 with an expected lifespan of 15 years and was followed by Nilesats 102, 103 and 104, two of which are operational. The state also runs the Middle East News Agency and three national newspaper houses: Al Ahram, Al Akhbar and Dar Al Tahrir, which publishes the dailies Al Gomhuria and The Egyptian Gazette. Al Ahram is the oldest of the titles and was first published in 1875, and The the state publishing houses have 56 titles, including national, regional and weekly outfits.

The health of Egypt’s print and broadcast industry has been in flux in recent years. UNESCO’s “Assessment of Media Development in Egypt” report published in January 2013 discusses the fortune of the country’s major state-owned media in the aftermath of the 2011 revolution, and the impact the political turmoil has had on advertising revenues for these outfits. Whereas prior to the revolution, some 50-60% of revenues at national newspapers came from government-placed ads, much of this revenue has now dried up, according to the report’s interviewees. The combination of loss of a major revenue stream and economic mismanagement has led many of the state-owned organisations into debt. The overall debt for these print and broadcast entities stood at LE25.5bn ($3.62bn) in 2012, according to the UNESCO report, with this breaking down into LE12bn ($1.7bn) for national newspapers and LE13.5bn ($1.9bn) for ERTU.

Industry leaders remain divided on the best way to address the sector’s economic issues. Many continue to advocate for a state presence in the sector, while others call for privatisation of some publications and the closure of other loss-making outfits. However, according to the UNESCO report, most industry players agree that the state broadcaster ERTU should remain in public hands – albeit as an independent entity not directly controlled by the government.

Reducing the state’s involvement in the sector is also seen as a way to curb public spending, although the timeline and extent of such change remain unclear. In the lead up to the presidential elections, then-presidential-candidate Abdel Fattah El Sisi claimed that the monthly salary bill for ERTU was LE220m ($31.2m). According to Hussein Amin, professor of journalism and mass communications at the American University in Cairo, El Sisi, who would later become president, could not immediately amend the salary budget out of considerations for the institution’s employees and their families. According to UNESCO’s report, just 8% of ERTU’s employees are media professionals. “However, El Sisi did call for proposals and innovative ideas in order to deal with this problem,” Amin told OBG.

Broadcast Content

State television has a monopoly on terrestrial television, which means private operators can offer satellite programming on a free-to-air or pay-tv basis. The free-to-air model relies on high audiences to generate a market for advertising revenue, while the subscription model typically relies on premium content, often sporting events or new releases of Arabic films or dramas. A report published in 2013 by the OECD included findings of a study by Egypt’s Competition Authority on piracy in the country’s television. It found the market for pay-tv was eroded by widespread use of decryption equipment and that broadcasters frequently broke contractual obligations in the number of times an item might be aired. The report concluded that piracy by consumers and by companies was seriously undermining the pay-tv market in Egypt.

One of the most well known faces on Egyptian television is a heart-surgeon-turned-YouTube-star who has opted for satire. Bassem Youssef’s road to television stardom began in the laundry room of his house in Cairo in May 2011, but his YouTube show led to a contract to create “Al Bernameg” on ONTV, and subsequently on CBC and MBC Masr. His YouTube channel became the first in the MENA region to reach 1m subscribers and in 2013 Time magazine included him in its “100 Most Influential People in the World” list. In early June 2014 “Al Bernameg” was due to return to Egypt’s screens after a pause during the presidential election, but Youssef announced it has been cancelled indefinitely.

Magazines

The magazine sector in Egypt remains small and focused on consumer titles rather than trade or business-to-business publications. “We have very few trade publications in Egypt and they have a limited readership,” Hylton told OBG. “We have a magazine called World of Electricity and I might use it once a year for one client, a multinational technology firm, and the rest of the time we deal with the press.”

Across the board, readership is changing as well, as publishing houses begin to target a new generation of entrepreneurs and business leaders. “Our readers used to be the C-suite executives, but over the last three years we have expanded our target readership base,” Fatima El Sadaani, editor at Business Today, told OBG. The publication is part of the IBA Group, which also counts Egypt Today and CEO Insider in its portfolio of print products. “Now we run more pieces about entrepreneurship, innovation and strategy,” she said.

Audit

As is the case in many emerging markets, there is a lack of independently verified data about print circulation and television viewing figures in Egypt. Some newspapers give their own circulation figures: Al Ahram claims 1m a day and 1.2m on Fridays; Al Akhbar says it has 750,000 daily readers; and independent Al Masry Al Youm reports selling 250,000 copies a day. “We inform our clients that there are no guaranteed figures for media circulation. We take the reported figures, average them and present this figure to our clients as an estimate based on an average,” Hylton told OBG. “For us, circulation is a quantitative measure and it’s important, but we’re also interested in qualitative information about the target publication.”

Constitution

In January 2014 Egypt’s new constitution contained six articles directly related to the media in its print, broadcast and online forms and to the legal frameworks pertaining to each. Article 70 guarantees freedom of the press and says every Egyptian has the right to own newspapers or “visual, audio and digital media outlets”. Article 71 prohibits censorship, suspension or closure of media outlets, but makes an exception “in times of war or general mobilisation”. It also says “freedom-restricting” punishments will not be handed down for publication offences, but says crimes that incite violence, encourage discrimination between citizens or lead to “impingement of individual honour” will be subject to penalties stipulated by law. Article 72 says the state will ensure the independence of all state-owned outlets and their neutrality in presenting “all political and intellectual opinions”.

Chapter 10 of the constitution contains Articles 211, 212 and 213, which set out the role of the Supreme Council for the Regulation of Media, the National Press Organisation (NPO) and the National Media Organisation (NMO), respectively. All three bodies are described as independent entities, but in each case the constitution points out that the law “shall determine the composition and regulations” of each body. The Supreme Council’s responsibility is to regulate all media, while the NPO and NMO’s jurisdictions cover with stateowned newspapers and broadcasters, respectively.

Regional Player

Egypt has long been a film and television powerhouse in the region, and Cairo has traditionally played host to international festivals celebrating cinema, broadcast and literature. However, funding of this segment has declined in the wake of recent political events, causing an overall slowdown in the local television and film production industry. The most recent industry figures date to 2010, the year before Egypt’s revolution began, when gross cinema takings were $74.7m, up from $63.1m in 2009. In both 2010 and 2011, Egyptian films received top box office rankings in the region. Egypt’s television and film industry is expected to bounce back to its former size as stability and economic growth return, and the process may even present the industry with new opportunities. “There is potential for the Egyptian film and television industry, but they have to work very hard to bring this on,” Amin told OBG. “Egypt has a great history of making films and television, but we have to work regionally. The global trend is for regional cooperation, and if people look at the trends, especially in the US, they can come up with something creative,” he said.

Outlook

Egypt’s large and storied media sector – one of the biggest and most vibrant in the region – has a wide array of comparative advantages that leave it wellplaced for future growth, including a large consumer market, a diverse range of spending categories, and a high level of production facilities and talent. Competition from state-owned operators does constrain some activity, but the private sector in broadcast, print and digital has been able to expand its presence to a noticeable degree. Retaining talent is becoming more difficult and some media segments are more challenging to navigate than others, but the potential for high returns over the medium and long term is sizable.