Al-Waleed bin Talal, the Saudi business tycoon best known for his investments in ailing European and American blue chips, has discovered a new passion closer to home: Arabic entertainment.

For the past 15 months the prince has been collecting the building blocks of what he hopes will become the Middle East's first entertainment giant.

Though Saudi Arabia's religious authorities consider music a sin–the religious police at times raid restaurants playing music–they have not lessened the ambitions of this prominent member of the Saudi royal family.

The centrepiece of the prince's strategy is Rotana, the biggest producer and distributor of Arabic songs. He bought the company which has signed up 80 per cent of Arab artists from Cairo-based Arab Radio and Television (ART) in 2003.

Under the deal, the prince, a nephew of King Fahd, sold his 25 per cent stake in ART in return for its lucrative music library and television station. He then converted ART's music channel into the 24-hour Rotana channel.

Since then, he has launched two other music channels and one movie channel. Several others are planned, including stations dedicated to news and religion.

The prince has also acquired Funoun, the Cairo-based group owned by Gulf and Egyptian businessmen, which had promised to become the dominant music and film company in the Middle East before running into financial trouble. Its most valuable asset was its ownership of the rights to 60 per cent of all Arab films.

“I'm known for brand names but in the Middle East there aren't many blue chips so you build from scratch,” says Prince al-Waleed. “Eventually I'll have the number one entertainment company in the Middle East and we would go public.”

The prince says no one knows the size of the entertainment industry but dozens of satellite television stations are vying for attention from the 50m satellite dishes in the Arab world.

Among his main competitors in satellite television are Orbit, which offers 24 pay television channels, and ART, with seven channels. Both companies are owned by wealthy Saudis.

Clad in a traditional Arab white robe, the prince was speaking at his personal desert resort, a 15-minute drive from the Riyadh headquarters of his Kingdom Holdings.

In this vast swath of land on which he has built a palace, a palm tree farm, even a zoo, he relaxes on floor cushions in front of a fire and watches Rotana channels on two giant outdoor screens.

At prayer time, the swinging bodies of Rotana's pop stars fade away, replaced by a still image and a sombre religious message. Breaking for prayers, says the prince, is his “insurance policy” a way of keeping the religious authorities at least partly satisfied.

Though no doubt attracted by the glamour of the entertainment business, the 44-year-old prince appears keenly interested in the socio-political message of a channel such as Rotana.

While new religious stations have been launched in recent years, highlighting a growing Islamisation of society, the equally vibrant proliferation of music channels–six were launched after Rotana–suggests that young Arabs are also desperate for less spiritual entertainment.

“Sixty per cent of the population is youth. That's my niche,” says the prince. The entertainment industry particularly the satellite television market has long captured the interest of Arab businessmen. But few have been able to turn the potential into financial success.

People involved in the industry say it is plagued by chronic problems that will also haunt the Saudi billionaire. They include a lack of enforcement of intellectual property rights, a weak retail distribution network for music and film, and too small an advertising market, barely reaching $2.5bn (€1.94bn, £1.32bn) for the whole region. This compares with a UK advertising market of about $18bn.

“On the satellite television side, it's also a very fragmented industry, with every sheikh wanting his own television station,” says one Arab businessmen. “So you fight on two fronts, you fight a price war on advertising and you fight just to maintain your market share.”

Rotana's critics argue the prince's attraction to the business is perhaps, above all, a public relations effort that helps promote his other businesses. Prince al-Waleed, however, dismisses the suggestion, insisting he has found a winning business formula. Rotana, he says, broke even in its first year, but he does not disclose figures.

Unlike other companies such as ART, Rotana is free-to-air. But it signs up the most popular artists and wins exclusive rights to broadcast their video clips. It makes part of its revenues from the 20,000 daily mobile telephone text messages that viewers exchange on screen.

The text messages offer a hugely popular opportunity for romance in deeply conservative Gulf societies. Some young Arabs send love notes, others are more flirty, telling viewers they are looking for a boyfriend. The financial returns are split between Rotana and telephone operators.

“Pay TV hasn't succeeded yet in the Arab world. I'm betting on free-to-air,” says Prince al-Waleed. “My business model is, you make money by getting exclusive artists, that's my fuel, and you make money through advertising and SMS.”

In a recent survey by Arab Advisers Group, a Jordan-based research firm, 18 per cent of satellite television viewers in Egypt and nearly 38 per cent of viewers in Jordan said Rotana was one of their five favourite channels. However, his critics agree that the prince has one crucial advantage deep pockets.

“My average clip costs $50,000,” he says. “Other music channels are not on the radar screen because they don't have class A artists and because they don't spend money.”

Get alerts on Media when a new story is published

Copyright The Financial Times Limited 2019. All rights reserved.

Comments have not been enabled for this article.

Follow the topics in this article