Saudi billionaire Saudi Prince Alwaleed bin Talal’s recent $98 million purchase of a 49% share in the satellite broadcasting arm of leading Lebanese television station LBC International has provided a welcome, if modest, boost to Lebanon’s satellite television sector. The industry has been struggling to compete with cash-laden Gulf channels like market leader MBC and Abu Dhabi TV – both backed financially by their respective governments – and to overcome the roughly $30 million, or 20%, loss in 2003 television advertising revenues caused, according to LBC Chairman Pierre Daher, by the war in Iraq and the bombings in Riyadh.

“The move has reinforced the position of LBC as a potential leader in the region,” stated Daher. “Walid bin Talal did not make this jump into LBC just because he felt like it. It was carefully planned. He thinks LBC has potential,” said Daher, who discounted the suggestion that bin Talal, who bought the stake in LBCSAT – valued at $200 million – from Arab Radio and Television (ART) chairman Sheikh Saleh Kamel, might wish to exert editorial pressure on the station. Meanwhile, other Lebanese stations are hoping the development signals a trend that will allow them to forge similar strategic, financially rewarding partnerships.

Not everyone, however, is optimistic. “Lebanon’s satellite television channels have serious problems,” remarked one media professional. “LBC and Future were very good satellite TV stations until the Gulf people decided to invest more in their TV stations. Now you have private stations like LBC and Future competing with MBC, which is funded by the Saudi government, with Abu Dhabi TV, backed by its government, and with al-Jazeera. They can’t compete.” He said annual satellite television budgets had in some instances, in the Gulf, quadrupled in two years, from about $25 million, to $100 million. Lebanese channels, although just as creative and aptly managed, have been left financially adrift in the wake.

The bin Talal move has at least consolidated LBC’s position at the head of the Lebanese satellite television sector. Future TV remains hot on its heels. “It’s mainly LBC and Future that are making money,” said the chairman and general manager of NBN, Nasser Safieddine. “Apart from them, I don’t think any Lebanese station is making serious income from the satellite market.”

Of bin Talal’s foray into LBC, he said: “All of us in the Lebanese media welcome this. A boost for any Lebanese station is a boost for the whole sector,” he said, before adding, “NBN is looking for a strategic partner. We are not ashamed to say this. Because competing, as we do today, with stations that have budgets that are 10, 15, 20 times as big as ours is useless.”

Bin Talal’s establishment of the 24-hour music channel, Rotana – backed by a music production company, and using the old Lebanese MTV infrastructure – has also been hailed as a smart business move that also benefits Lebanon’s satellite TV sector. “Rotana is different. It is a complete organization. It takes care of music production television programming. I think that very soon they will be the leaders of music television in the Arab world,” said one media executive. “And it’s good for Lebanon. It’s money coming in.” “People get fed up with news. They want something different,” added another. “It’s a good move,” agreed Safieddine. “It’s easier to market music and songs than educational programs.”

LBCI has been sub-contracted by the American Harris Corp, which has won a $96 million contract to refurbish Iraq’s official media to train Iraqi anchorpersons.

Still, old habits prevail. The weekly LBC political satire show Bass Mat Watan was suspended at the end of last month by the National Audiovisual Media Council (NAMC) after it played a practical joke that, according to the government body, “harmed the image and authority of the state, and shook the country’s stability”. At the end of 2003, New TV owner Tahseen Khayyat was arrested on charges of treason. All agreed the move constituted a politically motivated attack on the media. Khayyat was released 25 hours later and the charges were dropped. “On the face of it, it looks that way,” remarked Walid Azzi, publisher of ArabAd. “It’s not very reassuring,” noted another newspaper executive. “It was harassment.” Safieddine said he felt Khayyat should not have been arrested, but, interestingly, defended self-censorship as a “wonderful thing.”

Lebanon’s print media, for their part, are reeling under a double scourge: miserable circulation figures and worryingly low advertising expenditures, which observers say dropped by 25% last year. Although the market is characterized by an abundance of publications, especially magazines, most are unable to survive without continual financial top-ups. A vicious circle has, in effect, been created: no one wants to advertise in a publication that doesn’t sell. But publications need advertising revenue to expand circulation. Currently, only 16% to 17% of media-related advertising budgets are spent on the print sector, claimed one publisher. This is due, in great part, to the fact that “no magazine sells more than 3,000 copies and no newspaper reaches more than 10,000 readers,” asserted ARABAD publisher Azzi. However, publishers constantly inflate readership figures – sometimes by as much as 50% to 60%. The tendency has become more pronounced, Azzi lamented, as journalistically below-par, spit-and-stick magazines mushroom and compete. “Spitting and sticking is very easy to do, but it’s not journalism,” he said. “You need quality, in-depth journalism and innovation to get a magazine rolling and to get advertising.”

In the struggling print media, An Nahar leads the pack both in terms of quality and advertising revenues, observers agreed. “It’s run by master professionals and has acquired a great deal of integrity. This is why it gets the lion’s share of advertising,” said Azzi. A one-page ad in An Naharcosts between $8,000 and $14,000.

However, even An Nahar is feeling the financial pinch, particularly as its has just bought back, for a considerable, undisclosed sum, Prime Minister Rafik Hariri’s 34.5% stake in the paper. In the shadow of An Nahar follow As Safir and L’Orient le Jour, and then the Daily Star. The latter two need to be developed, said Azzi, adding that the Daily Star in particular must not make the mistake of thinking it can rest on its laurels because it is the only English-language paper in town. Daily Star Executive Editor Rami Khouri is attempting to ensure that does not happen. The regional Daily Star is undergoing expansion-oriented change, he said. It is now being printed in Lebanon, Kuwait and Qatar and is being sold in 11 countries. “We’re becoming a truly regional paper in terms of our coverage and distribution. We’re making serious ongoing changes in content,” said Khouri, adding that the regional Daily Star aims to become the leading English-language Middle East newspaper with analysis, commentary, insight and interpretation. The Daily Star is not placing as much emphasis on straight news because it believes readers obtain this from other, local papers or from electronic media. To this end, it has developed a still-expanding network of about 150 contributors from around the world.

Meanwhile, the new newspaper Al Balad has elicited mixed reactions and prognoses. “It’s still early to judge,” remarked a cautious Azzi, although he commended the paper’s marketing efforts. Striking a more positive note, NBN General Manager Safieddine said: “I think it’s a very intelligent move. I think they moved into the market in an intelligent way.” An Nahar editor Tueni said he hoped the Al Balad would succeed because competition was good for the market but added that he did not regard the paper as a direct competitor of either An Nahar or As Safir because it’s profile was different: less political and serious. “I haven’t had any reaction,” said LBC Chairman Daher. “It’s new. But I read a paper for politics. Until now, I haven’t seen an editorial line in Al Balad. The rest is nice, but I am not sure I would by a paper for the rest.” Al Balad is currently sorting out a dispute with the Order of the Press, which has accused it of ‘dumping’ its copies at a price forbidden by applicable laws. A newspaper comprising more than 24 pages cannot be sold for less than LL2,000 – Al Balad is selling for LL1,000.

A spokesperson for Al Balad said that after meeting with Order of the Press representatives the newspaper realized it had a stark choice: raise the price or diminish the number of pages. “We will not diminish the number of pages,” the representative stated clearly, “because that would change the nature of Al Balad.”

Industry insiders have suggested that pressure was brought to bear on Al Balad over the pricing issue because of the paper’s apparent support for An Nahar editor Gebran Tueni in his dispute with Nabih Berri. Tueni had implied in an editorial that Berri was involved in the Union des Transports Africains, the company that owned the plane that crashed off Cotonou, Benin, on Christmas day. The idea was, the insiders said, that a ‘rebel’ Al Balad should be tamed – made to understand that, in the view of the Order of the Press, a new newspaper must refrain from siding with the ‘wrong’ party in disagreements involving important politicians.

Would that the industry watchdogs be always so lynx-eyed in their patrolling of the sector. Although there is widespread acknowledgement that the orders have helped defend freedom of the press in Lebanon, many media professionals argued that the two organizations’ directors have used the bodies to bolster their personal prestige rather than to remedy the sector’s ills, and that qualified journalists are being barred entry because they are not at one with the orders’ directors. “These positions are not there to give you prestige. They are supposed to enable you to see exactly what is going on in the business, so that you can correct things,” noted one publisher, who asked not to be identified. “This is not happening.” Mohamad Baalbaki, president of the Order of the Press, denied the claims. “This is not true,” he said. “Whoever says this, doesn’t know the reality of our activities in the order” Qualified journalists had not, he said, been deliberately denied entry. But, he explained, their membership must be approved in a meeting held by an eight-member committee comprising four senior members of the boards of the Journalists and Press Orders respectively. A minimum of five board members must be in attendance for a membership application to be approved. Unfortunately, for two years, no meeting has been held because no board member from the Order of Journalists is willing to show up. “If the representatives of the other order don’t attend the committee meetings the committee cannot make a decision on memberships. Our colleagues in the other order, especially its president, Melhem Karam, don’t like to come to these committee meetings. He prefers not to expand the membership in his order. We are constantly asking him to come to a meeting where membership requests can be studied. He is always busy or traveling,” said Baalbaki. The committee last met, acknowledged Baalbaki, “about two years ago.”

Marked by an insider language and a particular way of life, modern shipping and transportation has long established its very own culture of connecting nations, cultures, and markets. It has a history of its own, which reaches farther back than that of most other economic activities. Today, the industry consists of a huge variety of services and business specializations, and plays a significant role in the global economy.

Compared to its past roles in facilitating international trade and exchange and also viewed against national economic ambitions, Lebanon’s place in transportation has been small – one can even go as far to say dismal. The contribution of the transportation and shipping sectors to GDP is, in typical fashion, not precisely determined. For a nation reputedly mired in mercantilism, Lebanon recently has been awfully short on transportation essentials, beginning with ships and rigs.

With less than 100 vessels (the number exceeded 300 before 1975), the merchant fleet is not only marginal in size but also overage and, critics say, to a large part technically obsolete. Trucking is an underdeveloped industry too, where no government incentives are extended to either individual owner/operators or fleet owners. Banks are said to be overly reluctant in engaging into financing of either merchant vessels or trucks.

Governmental budget allocations to transportation have shrunk in the past five years. In 2002, the expenditure was 2%, and, as throughout the reconstruction era, the vast majority of these funds were committed to boost the infrastructure.

On the side of road construction, acceptable improvements were achieved but progress has been slower than intended, and nothing at all has progressed with respect to rail. Of all infrastructure measures, the airport rehabilitation and expansion project is most complete, even though it was weighed down with expectations that could not be met in the projected time frame.

In both sea and air transportation, Lebanon’s long-term hope and aspiration is to function as a regional transportation hub. The country’s shipping and transport experts have placed their strongest bets on sea-to-sea transshipment, whereby large container “mother” vessels would call on Beirut Port to unload and load cargo to smaller vessels that provide feeder service to regional ports, to Cyprus, Turkey, Syria, Egypt and eventually the Palestinian territories.

Sea-to-land transshipment plays a lesser role in the scenarios because of the limitations on ground transportation, which protectionist practices of governments in the region have created. Local players have voiced higher hopes for succeeding in multi-modal transportation that would also integrate air shipping into a regional hub function. Beirut, with its port and airport, has momentous potential to fulfill the function. Public sector entities have made industry-wide lauded efforts to improve operations of the facilities, reduce red tape, and act upon suggestions by the shipping industry. However, other ports and airports in the region are competing for the coveted role. The port of Tartous – a strong candidate for growth in the opinion of local experts – last year was granted a 50 million euro expansion loan by the European Investment Bank. In a venture that analysts considered less promising, the Israeli government only last month commissioned a feasibility study for a proposed railroad to link its Mediterranean and Red Sea ports and, in this way, establish a niche role in transshipment. Although the discussion over creating a transshipment hub in Lebanon has been very involved, the country still needs to convince all around that it does not only talk-the-talk of transportation but is able to walk-the-walk.

The good news is that beyond verbal commotion over the Lebanese possibilities, chances prevail for real motion in the transport sector. In air travel, national carrier MEA has been resuscitated and outlooks for passenger travel in 2004 are among the economy’s most positive indicators. Aware of this potential, new companies are targeting Beirut for charter and corporate aviation business.

The hottest current optimism factor in the shipping industry is Iraq. Although freight forwarding to Lebanon’s former top Middle Eastern trade partner still presents great security concerns due to the activities of insurgents, the second half of 2003 has already shown that the ports of Tripoli and Beirut could increase cargo throughput to Iraq. Here, 2004 could become the first year of a new future for the Lebanese shipping industry and, within realistic regional possibilities, see the country enter a new phase in writing forth its contribution to the very hands-on culture of connecting nations by shipping.

The alternative wouldn’t be pretty. At least for sea transportation, failure to bring Beirut up to transshipment hub function might condemn the ancient trade center to ‘walk the plank’ and fully plunge into shipping marginality.

Providing established brands at an affordable price has helped Toy Market Trading sell an estimated $14 million worth of toys in 2003. This represents 35% of the $40 million local toy market and it has China to thank. Cheaper operating costs have allowed the major international toy manufacturers to be more competitive and Toy Market Trading today imports 90% of its toys from the growing industrial superpower. “You get what you pay for in China,” said Wael Sinno, toy division manager at Toy Market Trading and son of Kamal Sinno, who founded the company in 1973. “All the main US toy brands like Chicco and Mattel have factories there.” The China factor, coupled with a slashing of import tariffs from 25% to 5%, has seen Toy Market Trading experience an 8% year-on-year growth for 2003, despite a wintry economic climate. Toy Market Trading – which distributes its products to 750 retailers, including BHV, Spinneys and Fahd Supermarket – employs a staff of 52 as well eight salesmen covering the Lebanese market and three drivers employed to distribute the goods.

Understandably, 40% to 45% of annual revenues come from Christmas and other holiday sales, but the summer season, from April to August, are also crucial selling months because of the sales of outdoor sports items, including bikes, skateboards and pool accessories, among others.

According to Sinno, an average parent or child will spend approximately $300 to $350 on toys per year, with an average of $10 to $15 doled out per toy. During Christmas, however, the average spent per toy increases to about $25 to $35. Toy Market Trading, however, aims to offer clients a wide variety of affordable toys of good quality by providing two to three brands of similar products in different price ranges. “We cater to all types of budgets, even if that means we compete against our own products,” explained Sinno.

Affordable playthings, like balls and water pistols, and high-end toys, like remote control cars and lifelike dolls, comprise a ratio of 60:40 of cheaper to more expensive toys. Some of Toy Market’s main brands, for example, like Blue Box and Playgo offer products that are as much as 30% cheaper than Fisher-Price toys, even though all three produce similar products for pre-schoolers. Some of the hot selling items this season are “everything funky and trendy,” said Sinno, like the Brats (not distributed by Toy Market Trading), which are the anti-Barbie doll. Toy trends usually last up to a maximum of one to two years, except for classic mainstays like Barbie and Disney toys, which have been successful for years. But coming up with a top seller in toys is becoming increasingly difficult in the computer and internet age, especially with eight- to 10-year olds. As a result, Toy Market Trading has shifted focus on pre-school items, targeting six-month- to five-year-olds. “We now have to be very selective,” said Sinno.

Some of their past successes included the pottery wheel, which sold 12,000 units at about $25 each. Other toy hits imported by the company included an ice-cream maker, and a talking pen made by educational toy brand Clementoni. In addition to their successes, Toy Market Trading has also suffered some misses.

“The pregnant doll was not very well received,” admitted Sinno, who explained that the doll, imported in 1993, came with another plastic baby inside the belly of the main ‘mother’ doll. “It was mainly opposed by religious people.”

Surprisingly, film merchandizing has also not done very well in Lebanon. “HARRY POTTER was a failure and HULK was a disaster,” said Sinno. Only very few films have succeeded in merchandizing in the country. “THE LION KING was a great success – we were selling lions for about three years [when the film was released]. ALADDIN was also a hit.”

Other than dealing with toys that flop, Toy Market Trading and the other importers also have to contend with illegal importers. Sinno admitted that his company loses up to $600,000 a year from smugglers who purchase cheap toys from Dubai – where there are no tariffs – and import them into the country through Syria. In fact, illegal traders are what Sinno consider the greatest competition to his company, and not the three other main importers (Middle East Market, Tamer Freres and Boch).

“Retailers are not going to buy from me at prices 10% higher than smuggled toys. They want the best price they can get and this is understandable,” said Sinno. Sinno explained that the lax laws concerning the toy industry extend further than implementing controls over smuggling. “Lebanon is an open chaotic market that is still underdeveloped with no safety regulations,” he said. As a result of Lebanon’s complete lack of regulations, said Sinno, the Syndicate of Toy Importers and Dealers – which was founded by his father – takes the initiative to not import toys that are unsafe. Most recently, the Syndicate decided to stop importing pellet guns and worked with the ministry of the interior to have them banned. “These guns are made China, but even the Chinese government has banned them,” said Sinno, adding that despite the Lebanese ban, illegal importers have made these dangerous toys available in the country.

Although the smuggling business is indeed lucrative, Sinno has no intention to stray from the straight and narrow. “We go by the book 100%,” he said. It is a policy that has kept them on top of their game, together with a new strategy they have adopted over the past five years to shift the focus on brand loyalty as opposed to just importing Chinese items. “We are now focusing on the brands,” said Sinno, who explained that such an approach, is one way to escape competition and to build loyalty among customers. The strategy seems to be working for the company, which currently enjoys its status as the leading toy importer in the country. As to the secret of their success, Sinno put it simply: “A class products for the most competitive prices.”

It started as the $40,000 pet project of a young entrepreneur in 1995 and ended up a trend that today seems to have been with us forever. The Ramadan tent, originally an Egyptian invention, was stunningly simple in that it offered a venue for people to meet and socialize after breaking the fast. Today, such is their popularity that practically every major hotel has jumped on the bandwagon, raking in as much as $550,000 for the month.

“I came to Lebanon in 1992 after living in Egypt and realized there was nothing to do in the evening for SOHOOR during Ramadan – there was only Barbar,” said Wassim Tabbara, who started the first Ramadan tent eight years ago at the age of 26.

While successfully participating in the organization of an Egyptian week in Lebanon with the Lebanese-Egyptian Association, of which he was a member, Tabbara had the idea of bringing an Egyptian-themed tent to Beirut. Patching together several boy scout tents provided by the Makassid Foundation, and spending about $20,000 on accessories from Egypt – including tablecloths, Egyptian NARGILEHS and an old Egyptian FURN – Tabbara set up shop in a family-owned plot of land by the LAU. With seating for 130 people, the tent was an instant success and packed to capacity every night. The menu offered the traditional SAHOOR fair, including MANAKESH and SAHLAB, and entertainment consisted of NARGILEHS, a TV set and music playing from a cassette deck. There was no cover charge and the average customer spent about $8 to $10. “I had a lot of costs, so I did not make huge profits,” admitted Tabbara, “it was my first experience in the food business.”

It was an experiment, however, that proved successful despite the paltry returns. “Everyone called for reservations, but I did not take any to be fair. So, by 7pm, people would send their drivers to wait in line till we opened at 8pm to reserve tables,” said Tabbara. “When we would tell people they couldn’t come in because we ran out of chairs, they would go home, bring a chair and come back. It was really funny.”

With such popularity, Tabbara had discovered an untapped market, but by the next year, in true Lebanese fashion, others wanted a piece of the action. The Coral Beach and the Escape club both opened tents in 1996. Both provided serious competition to Tabbara’s second tent, which by now had moved to the newly renovated BCD. The second tent saw profits increase fivefold, but by 1997, a sponsorship dispute and government red tape forced Tabbara to abandon his project. By now, Khaymat al Hanna had opened its doors and Tabbara’s previous alliance with Future TV was abruptly severed to solely advertise Bcharra Namour’s venture. After nine days of tough negotiating, Future reinstated its agreement with Tabbara, but as it was nearly two weeks into the month, and much of the financial momentum was already lost. “I was shocked [by Future’s actions],” said Tabbara. “And then the ministry of tourism said they would not give me a permit to open a tent [the next year] because all the hotels complained about the competition. In the end, I just gave up.”

Although Tabbara is no longer in the business for now –

“maybe I’ll come back with a KHAYMI next year” – he certainly paved the way for Ramadan tents today. There is no clearer legacy to his innovation than the splendid tents operated by Lebanon’s finest hotels.

“There is a good market for Ramadan tents, but unfortunately in Beirut, there is no high quality in terms of décor, entertainment and food. That’s why we focus on those parts,” said Simon Saade, food and beverage manager at the InterContinental Phoenicia. “We wanted to have a tent for the people to enjoy the luxury and ambiance of Ramadan.” Part of that luxurious ambiance includes extravagant decorations á la 1001 Nights, which one insider estimated at costing $200,000. Still, with a seating capacity of 640, a relatively full house every night of the month, and the average customer doling out $28 a night on a set menu (not including a NARGILEH), the expense seems worth it. Just across the street, however, is the more rustic Fishawi tent, run by the St. Georges Yacht Motor Club, which does not have a set menu. According to Michel Farhat, the operations manager at the St. Georges, the average client spent about $20 a night at the Egyptian-themed tent, which included a LL10,000 cover charge for the live entertainment.

“The Fishawi tent offered people something simple, an affordable way of capturing the idea of Ramadan,” Farhat explained. “The Phoenicia tent was more upscale.”

Operation costs for running a Ramadan tent vary according to type. At the Phoenicia, for example, about 80% of the tent staff consisted of fulltime employees in the food and beverage department at the hotel, which kept overhead down. “We used our own people to construct everything [in the tent] and we saved money by using our own people. It has proven a successful business experience,” said Saade. For establishments that do not have a hotel’s business to rely on, they are faced with a different situation. For the St. Georges, the Fishawi tent was an effective way of keeping its summertime staff (from it’s beach club) employed during the winter, which would otherwise be a dead season. Farhat estimated overhead costs at $50,000 to $60,000, with $30,000 spent on advertising and live entertainment. At the end of Ramadan, Farhat estimated the revenues of Fishawi at $133,000.

Although hotel and resort ventures have proven successful –Saade admitted that the Phoenicia tent has been packed since it’s opening in 2001 and Farhat said that 2003 profits from Fishawi increased by 10% from 2002 – independents like Tabbara were not so lucky. “I spent $300,000 on my third tent,” said Tabbara, “and I lost 33% of my profits [because of the Future TV deal fallout].” For the first nine days of the holy month, out of the 1,500 seats available, only about 200 to 300 were filled each night – which was catastrophic considering the $80,000 monthly rental fee of the BCD lot. Tabbara also faced backlash from religious clerics, who associated him with tents that featured dancing, although he did not permit such activity at his establishment. “I was very strict about dancing because I knew people would talk about it. But the Mufti sent a representative to talk to me because they [the clergy] did not know any other tent owners.”

Respecting religious customs is very important to most established tents. Almost none serve alcohol or feature racy entertainers like belly dancers. “This is something we can’t joke about; we respect tradition,” said Farhat. It is a notion firmly upheld by the Phoenicia, said Saade. “We respect this month and keep it in high value.”

As for the man who started it all, what is his opinion about the Ramadan tents of today? “I liked the Phoenicia tent; it was very nice,” said Tabbara. “But the problem with tents today is the loud music – you can’t talk to anybody. It would be better if they just lowered the volume.”