Remember Al Jazeera, the network that was supposed to be an Arab CNN, offering a counterweight to Western cable news? That plan appears to have been scaled back as the Qatari government-controlled network makes deep cuts in its English-language news-gathering operations and shifts its focus to sports. The gas-rich emirate’s English news channel has cut or relocated at least 200 staffers as it tightens its budget and centralizes editorial control in Qatar’s capital of Doha, current and former employees say. Plans for a Swahili-language news channel to serve East Africa have also been dropped, according to two current employees who are not authorized to discuss company operations.
The reformulated Al Jazeera is building up its presence in a more lucrative corner of the media world: European soccer. Al Jazeera has set up a new sports network, BeIN Sport, as the emirate prepares to host the World Cup in 2022. It’s buying exclusive rights to broadcast popular games in the U.S. and France, which could help drive up programming costs for sports broadcasters such as Vivendi’s (VIV) Canal Plus and News Corp.’s (NWS) Fox Entertainment Group.
The news retrenchment hit as much as 80 percent of Al Jazeera staff in Kuala Lumpur, its former broadcast center for Asia, and about half in Washington, D.C., say four former employees who declined to be identified because they were not authorized to discuss personnel matters. About 25 employees left the Washington bureau in a wave around April, two former employees say.
The moves suggest that Qatar, controlled by the Al Thani royal family, is putting a tighter leash on spending at Al Jazeera, which had startup costs in the hundreds of millions of dollars, according to a source formerly involved in the budgetary process. The network’s staff swelled by more than 1,000 between 2005 and 2008. “There is a little more money-consciousness now,” says Philip Seib, a journalism professor at the University of Southern California and author of The Al Jazeera Effect, a 2008 book on the network. “The royal family was tired of every problem getting money thrown at it.” A spokesman for Al Jazeera says it remains committed to English-language news and overall staff numbers remain steady.
Al Jazeera’s English news channel has struggled to gain acceptance in the U.S., where it’s available in only a few markets, including New York City and Burlington, Vt. The network was heavily criticized by the George W. Bush administration for its reporting on the war in Iraq. Now focused on less-controversial content, Al Jazeera this summer secured distribution deals with Comcast (CMCSA), DirecTV (DTV), and DISH Network (DISH) for English- and Spanish-language channels for BeIN Sport, which holds rights for Italian, French, and Spanish soccer games.
Al Jazeera has spent nearly half a billion dollars on soccer rights in France so far, plus an undisclosed amount to broadcast in other markets. More deals may be on the way. England’s Premier League, home to popular teams like Manchester United, last week began taking bids for the U.S. rights to broadcast its games, and analysts expect Al Jazeera to bid. “The Qataris believe investing heavily in sports will give them a return on their global image,” says Frank Dunne, the editor of TV Sports Markets.
BeIN Sport is led by Nasser Ghanim Al-Khelaïfi, also president of the French soccer team Qatar bought last year, Paris Saint-Germain. In the last post-season, the club spent €140 million ($180.2 million) on talent, more than any other club in the world, acquiring players such as Zlatan Ibrahimovic, Ezequiel Lavezzi, and Thiago Silva.
Though Paris Saint-Germain hasn’t won a French championship since 1994, Al Jazeera already has rattled the French sporting world by agreeing to pay as much as €350 million ($454 million) annually for broadcast rights to the Union of European Football Associations’ Champions League in France, as well as games by La Liga, Budesliga, and other leagues, according to Natixis. The brokerage estimates Al Jazeera could lose as much as €1.36 billion by 2016 due to pay-TV subscription fees they believe won’t cover the network’s fast-growing bill for sports rights. For example, the €61 million Al Jazeera is paying to broadcast three seasons of Champions League matches is double what Canal Plus shelled out for the previous three-year deal. “I think they’ve been quite aggressive to start with, and we’ll have to see what it means for the future cycles,” says Guy-Laurent Epstein, who was in charge of the Champions League rights sales for UEFA.
For years, the news side of Al Jazeera stood out for a similarly spendthrift approach. When Al Jazeera created its English-language channel in 2006, there were no budgetary limits and no mechanism for even collecting payments from advertising sales, according to two former employees. It was only after the financial crisis of 2008 that Qatar placed nominal constraints on what news executives could spend, they say. “Al Jazeera was never launched as a profit center,” says Abdallah Schleifer, a scholar at the Middle East Institute in Washington. “It was launched as a prestige center to put Qatar on the map, which it did.”
The bottom line: Al Jazeera, originally conceived as a 24-hour news service, has spent about $450 million on soccer rights. More sports spending lies ahead.
