September 27, 2007 3:04 am
Earlier this year Abu Dhabi rolled out the red carpet for actor Jamie Foxx, reportedly regaling the Hollywood star with security guards, paramedics and even a food taster when he was in the Middle Eastern city filming The Kingdom, a big-budget action thriller about the war on terror.
This week, the United Arab Emirates’ capital extended its welcome to Warner Brothers, one of Hollywood’s largest studios, signing a wide-ranging partnership that includes local film and video game financing, a theme park, hotel and cinemas. “Hollywood – it’s a dream,” said Ahmed Ali Al Sayegh, chairman of Aldar, the local real estate group that will become Warner’s partner.
“It doesn’t matter your income level: in a refugee camp in Palestine, or a big villa in Dubai, [Hollywood] is part of our culture every day.”
For Warner, the immediate pay-off from the deal will come from an undisclosed licensing fee for the theme park and hotel complex. It will also benefit from a $500m deal with Abu Dhabi to co-finance a number of films.
That new source of capital should be welcome at a time when some of the hedge fund and private equity investors who surged into the film business appear to be having second thoughts.
Whether Warner can establish a meaningful market for its films and television programmes – and all the associated merchandise – in a region that barely registers for the entertainment industry is a question yet to be answered.
“One of the things that is always foremost in our thought process is looking at long term rather than the short term,” said Barry Meyer, Warner’s chief executive.
Media companies are increasingly focused on the international market at a time when many of their traditional businesses are maturing in the US and Europe, and much-discussed digital projects remain a matter of promise more than bottom-line profits.
Against that backdrop, film and television exports have made for an appealing growth story.
Last year, foreign box office sales rose to $16.3bn – nearly double the $9.4bn domestic figure. “The international box office is still growing faster than ever,” Rupert Murdoch, chief executive of News Corp, told investors last week. “Russia has suddenly become one of our top 10 markets.”
Warner has long been a leader in terms of international distribution and investing in local film production. But not all of its foreign excursions have been happy ones.
The company last year sold its interest in a China joint venture aimed at building new, state-of-the art theatres, selling low-priced DVDs to compete with pirated versions, and producing local-language films.
In spite of early excitement, the venture foundered after the Chinese government tightened its regulation of the sector.
Mr Al Sayegh suggested that Abu Dhabi would be much more hospitable to Hollywood.
The authorities, he said, did not place limits on the number of films the studio could release, and would only censor films for explicit sexual content.
“How can you censor in the new media age?” he asked. “I can’t even decide what my children have in their Facebook profile.”
Please don't cut articles from FT.com and redistribute by email or post to the web.