Market Insight

BeIn Media continues its push into entertainment with Warner Bros deal

October 20, 2016  | Subscribers Only

Constantinos Papavassilopoulos Constantinos Papavassilopoulos Principal Research Analyst, Service Providers & Platforms

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Continuing its move into non-sports programming, BeIn Media Group has agreed a multi-year deal with Warner Bros. International Television. According to the deal, the Qatar-based group will immediately be able to offer its subscribers in the Middle East and North Africa (MENA) access to TV series including Arrow, Gotham and The Originals and will also have second window pay TV rights for Warner Bros movies for the region. However, from 1 January 2019 BeIn Media will have first window pay TV rights for all Warner Bros content. BMG will also have catch-up TV rights for Warner Bros content as well as access to the US company’s library content.

The current owner of Warner Bros first window pay TV rights for the whole MENA region is OSN. The Dubai-based operator has partly compensated for the loss of the Warner Bros rights with the extension of its agreement with 21st Century Fox Television Distribution. The deal includes access to the latest Fox movies in the first pay TV window. OSN will also keep the online and catch-up rights for the Fox content.

Neither of the MENA companies released any detailed financial terms of the two agreements.

Our analysis

IHS Markit expects BeIn Media Group’s entry into entertainment content at the end of 2015 to have a considerable effect on the pay TV market in MENA. Pay TV in the region has turned into an effective duopoly, between OSN and BeIn Media that does not look to be threatened even by the emerging challenge of subscription video-on-demand (SVoD) players like Netflix and Starz Play Arabia.

The two operators have established long-term relations with key content owners and has successfully fended off challenges from the likes of Abu Dhabi Media and My-HD Media. While BeIn Media has mainly focused on sports, OSN controlled all the first-window rights, for movies and TV series, from all the major Hollywood studios and has essentially established its brand in the whole MENA region as the home of premium entertainment content.

By moving into OSN’s field, the Qataris are following a two-point strategy: first, to appeal to a new, female-skewed, demographic that was out of reach for them when their content offer was exclusively sports-orientated. Second, to offer a lower-cost alternative to OSN. The company is building its content edifice gradually and while it is not planning a frontal assault on OSN for acquiring premium content, its is determined to exploit any opportunity to enrich its content portfolio.

They have already managed to snatch from OSN four Turner Broadcasting channels (CNN, TCM, Cartoon Network & Headline News – all previously shown exclusively on OSN) and the AMC channel. They have also inked a deal with FOX which moved two channels previously available free-to-air in MENA (FOX Movies and FOX HD) onto their platform on an exclusive basis. Exclusivity deals not only compete with OSN but also limit the choices of the free-to-air broadcasters like MBC and Abu Dhabi Media.

The Warner deal should be seen in this light: it is not an immediate threat to OSN but is setting the ground for BeIn Media’s expansionist strategy and its goal to be the number one pay TV operator in MENA. Furthermore, it is sending a very powerful signal to the major content owners that from now on it is not only OSN who is calling the shots as far as premium entertainment content is concerned in the region. It is sending the message that BeIn has what it needs (brand name, knowledge of the market, large customer base and financial prowess) to be a valuable partner in the Middle East for every major content owner.

OSN is not standing idle, as the deal with Fox indicates. OSN’s strategy is to cement its content deals, especially those with the major US content providers, and to extend them as far as possible into the future. It has been reported in local media outlets that some of OSN's deals extend well beyond 2020, creating thus something of a comfort zone for the Dubai-based operator.

The recent launch of Westworld, broadcast at the same time as in the US, further strengthens OSN’s brand as the home of HBO in the region. OSN is also stronger than BeIn when it comes to Arabic content and its Arabic channels are among the most popular. OSN has also invested in the acquisition of Turkish drama TV series, which are very popular especially among women in the Middle East, but BeIn has also strengthened its hand in this area with the acquisition of the largest Turkish pay TV operator, Digiturk.

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