Saudi press crisis

Can newspapers survive without a government bailout?

A former Saudi minister has called for shutting down all local newspapers as they no longer serve any useful purpose, renewing debate in the kingdom about the fate of legacy print news organisations as the internet disrupted their old business models and brought them to the verge of bankruptcy.

Abdulaziz Khoja, who served as Minister of Information between 2009 and 2014, said earlier this month that Saudi newspapers had fulfilled their role over the last 50 years and now it is time for them to die. “These companies must be declared dead, mourn them, and move on,” he said in a television interview aired earlier this month. “This is my opinion: Newspaper companies should not remain. It’s over. The companies are now begging the government [to bail them out]. How is this acceptable?”

The minister’s words did not sit well with the old guard of Saudi newspapers, and they were particularly stinging because they came from a man who knew them and was once in charge of overseeing them as information minister.

Khalid al-Malik, editor-in-chief of Riyadh-based daily al-Jazirah (not to be confused with Qatar-owned Al Jazeera television) responded to Khoja’s comments with a strongly-worded editorial last week, describing his call to shut down newspapers as “strange” and “not realistic”. The editor also took issue with Khoja’s use of the word “begging”, saying it was unbefitting of a former senior official (and a poet) to resort to such language to describe their request for support from the government.

“Dr Khoja should know that America, European states and all countries around the world provide support by governments to their newspapers, as they are among the platforms and voices that serve local affairs and defend national gains, as I explained,” Malik wrote. “That is why I don’t see it as a problem when newspaper companies together ask for support, even if his His Excellency call it begging. Neither journalists nor the companies deserve to be called that, and it is not right for this opinion to be held by a former information minister, one of the most successful among his peers.”

Malik’s response is long and meandering, but the argument that he and other veteran editors have been pushing can be boiled down to a few major points:

  • The newspapers are seeking financial support from the government not to save their print products but rather to help them achieve “digital transformation”

  • The government has provided extensive support to private sector companies during the coronavirus crisis, so why not do the same with newspapers?

  • There is historical precedents of the Saudi government backing and bailing out local newspapers and other sectors like sports

  • Newspapers are part of Saudi Arabia’s soft power tools and keeping them alive is a matter of national security because they defend the government’s decisions and promote its policies

Obviously, these arguments are weak and flawed. The internet was introduced to the Saudi public in 1999. Local newspapers have had plenty of time to prepare for the digital transformation, but they were complacent and comfortable, taking advantage of a healthy advertising market thanks to the growing and young affluent population to line the pocket of their owners with outsized profits for the first decade of the new millennium. But before getting into the weeds of the current debate, let’s take a quick look at the history of the Saudi press and how we got here.

The first Saudi newspapers began publishing in the 1930s shortly after the kingdom was founded, and in the following decades enterprising men established dozens of newspapers and magazines across the country. That growth period lasted until the late 1950s and would become known as the “individuals’ press” phase. What brought it to an end was a government decision to regulate the developing media market after coming to the conclusion that the number of existing publications, around 40 at the time (plus 100 pending applications), was too high for a country where illiteracy was still common. The government suspended issuing licenses to individuals and King Faisal proposed mergers between newspapers published in the same city.

In 1964, the government passed the “Institutional Press Law” which effectively banned individuals from obtaining publishing licenses and limited them to companies that must first obtain approval from the prime minister, ie the king, before they can be launched. The law also stipulated that any newspaper company is required to seek approval from the minister of information before they can appoint or sack its editor-in-chief. It wasn’t exactly a nationalisation of the press, but it did give the government ample control over the newspapers. The law was amended in 2001 but these conditions have remained in place.

In addition to the power to green-light or block senior appointments, the Ministry of Information —recently rebranded as the Ministry of Media— is tasked with monitoring and censoring the press. But most of the censorship is self-imposed within the newspapers where top editors practically act as gatekeepers. The editors have a vested interest in not crossing any red lines because the ministry’s consent is required for their appointment and they could easily lose their job if they are not performing their gatekeeping mission properly.

Despite these restrictions, the Saudi press has enjoyed prolific growth after the 1960s on the back a booming economy, higher literacy rates and the rapid modernisation taking place in the kingdom. The press has remained generally within the sometimes fuzzy bounds outlined to them by the government, but there have been some occasional exceptions. Al-Watan daily, launched in 2000 in the southwestern city of Abha and edited twice by the late Jamal Khashoggi, have attempted to push the envelope in its early years by publishing provocative op-eds and running hard-hitting stories that gradually moved the public sentiments against the religious police. English-language daily Arab News used to do some notable reporting on human rights issues in the past before the latest incarnation of the newspaper turned it into a full-on cheerleader for the government.

Newspapers did not appear to perceive the introduction of the internet as a threat, and many of them raced to establish their presence on the web before many other businesses and government departments in the country. Al-Jazirah newspaper even dabbled with becoming an internet service provider (ISP) under the brand name Suhuf.net. Some entrepreneurs saw the potential for online-only news outlets. The most prominent among those is Sabq, which was launched in 2007. It made a name for itself by cultivating sources at the interior ministry and breaking news on crime and terrorist attacks. Unlike newspaper, the website had low overhead and introduced a popular news-via-SMS service to diversify its revenue streams.

Even as the internet began to cannibalise the traditional local advertising market in the last decade, the appetite for publishing newspapers did not dissipate. Two newspapers were launched in 2011 and 2014, respectively. But as social media began to dominate the Saudi public’s attention in the Arab Spring years, advertisers followed them there and it quickly became clear that many newspapers may not survive for much longer.

Malik, who also leads the Saudi Journalists Association, began sensing the looming crisis and in November 2016 wrote a series of articles where he acknowledged the steep decline in advertising revenue across the local press. “The problem is that the decrease in print advertising size did not see any encouraging increase in advertising on newspapers’ websites or their other electronic products,” he wrote. “Instead, there is an inexplicable absence of ads from both print and online newspapers, which is strange and should prompt companies to study the crisis and find a solution.”

What is revealing about Malik’s words is that he seemed unaware of how Google and the rise of social media disrupted the advertising markets everywhere. Instead, he blames Saudi Airlines for charging more to ship newspapers and the Ministry of Commerce for no longer forcing publicly listed companies to buy ad space to publish their quarterly results.

Saud Kateb, a former undersecretary of public diplomacy at the Ministry of Foreign Affairs, wrote earlier this month that Malik was still downplaying the risk to the newspapers’ business model as recently as seven years ago. “He mentioned that he doesn’t believe that digital media pose a risk to the printed press. He described the latest digital developments as an illusion and a bubble that will quickly disappear and there is no danger from it,” he wrote. 

Considering the fact that newspapers have not been allowed to exist without explicit approval from the highest levels of government, it is no wonder that top editors and owners —often businessmen with close connections to the royal family— feel they qualify for financial support. After all, they have always been and seen themselves as loyal servants who used their reach and influence to advance the government’s agenda and heeded their calls at every turn. When Saddam Hussein invaded Kuwait in 1990, the government imposed a blackout on newspapers and they were not allowed to report the invasion during the first week. Newspaper pages, particularly arts and culture sections, offered a relatively safe haven for liberal writers after the rise of Sahwa (Islamic awakening) in the two decades after 1979. With Sahwa becoming a sworn enemy of the state in the current Saudi era, newspapers now feel entitled to some reward for their services.

Malik, who has been in his job as al-Jazirah’s top editor since 1972, has appeared desperate to show his usefulness after the Gulf crisis broke out three and a half years ago. The veteran editor penned more than 100 articles attacking Qatar between June 5th and September 7th 2017, and much more followed until a resolution was reached earlier this month. It is unclear though if his efforts were being appreciated by a new, modern royal court where the communication strategy is centred on dominating Twitter and other social media platforms. As Crown Prince Mohammed bin Salman pushes an ambitious economic and social liberalisation programme, saving newspaper companies does not appear to be high on the list of government priorities.

Dammam-based al-Sharq quietly died in 2017, barely six years into existence. Pan-Arab daily al-Hayat, founded in Lebanon in 1964 and acquired by Saudi Prince Khalid bin Sultan in 1986, stopped printing in June 2018. Watania, the company that handles distribution for most Saudi publishers, said in June 2019 that it would cease delivering newspapers to smaller towns and provinces due to high costs and low returns. “Our numbers are 70% down since 2012”, a senior official at the company said.

Saudi Arabia’s newest newspaper, Makkah, does not appear to be in a better financial shape than other legacy publications even though it was only launched in 2014. Editor-in-chief Muwafag al-Nowaisir wrote earlier this week that the government should bail out newspapers as they had done with football clubs who faced threats of legal action by Fifa before the crown prince ordered allocating $340m to pay out their debt. Making that comparison is an implicit admission that the newspapers have been mismanaged, but Nowaisir says he does not understand the sensitivity around the topic, adding that the Ministry of Media is at least partly responsible for the crisis.

“Doesn’t he [Khoja] believe that accusing only newspaper companies of failing is a desperate attempt to avoid blaming former media ministry officials for any responsibility for where these companies are today?” Nowaisir asked. “Isn’t the ministry their regulator who put the [press] law? Didn’t the ministry pick their senior officials? Didn’t they allow them to stay in their positions for decades without any accountability? Did it update the law to take the financial boom into account? Did it push companies towards new media trends or was it surprised by the digital boom just like they were?”

Nowaisir said in a previous article that the advertising revenue of Saudi newspapers fell by 58% from SR2.7 bn to SR1.7 bn in 2014, but he did not say in comparison to what previous year. He also said that 30% of that revenue goes to foreign advertising agencies allegedly dominated by Lebanese executives.

Opponents of the bailout say veteran editors have been resting on their laurels for decades and it is about time that they wake up and face the music. “Each of them is living like a minister in his own newspaper: receiving foreign ambassadors and wearing the bisht [ceremonial cloak]. This era is over,” Hani al-Dhahri, a columnist who runs a media services agency in Jeddah, said in a television interview. “We are now in the age of competition. If you don’t have news or journalistic content that sells itself to the reader then you are useless. You mean nothing to the reader.” He added that only a couple of newspapers such as Okaz and Asharq al-Awsat deserve to be bailed out because they deliver “the voice of the state” to Arab audiences.

This sense of self-importance has so far prevented any potential mergers between the local papers even though they are very similar in their editorial lines.

Rather than saving and propping up newspapers now seen as relics from a bygone era, the government resources have shifted to invest in new online outlets that seek to give themselves a sheen of credibility by associating with Western news organisation. Independent Arabia was launched in 2019 after a mysterious Saudi buyer, believed to be a front, acquired a 30% stake in the British newspaper. The Saudi Research and Marketing Group, the kingdom’s largest publisher with longtime links to King Salman’s family, launched a new television channel this year after signing a $90m partnership with Bloomberg to provide content and editorial support.

Based on comments from senior editors, the government does not appear absolutely opposed to bailing the newspapers out and has been engaged in conversations with officials and owners, but there is no agreement yet on the size and format of that bailout. Katib and others say the government is reluctant to extend financial support to the newspapers because the publishers want millions of riyals without any strings attached and can’t be trusted not to spend the money on “wages, debt, ink and paper”. The Ministry of Media is willing to offer some support provided that newspapers appoint “officers of digital transformation” and present detailed plans on how they would be sustainable in the long term, a person familiar with the matter told me.

One might ask: At a time when the government is trying to reform the oil-dependent economy to one driven by the private sector, shouldn’t they let market forces determine whether publishers survive or not? Supporters of the bailout push back by saying these newspapers have always operated in a tightly-regulated space and they are a public good with benefits that go beyond financial profit. Mutlaq al-Mutairi, a professor of political communications at King Saud University in Riyadh, wrote in December 2016:

In the Arab world, especially the Gulf states, the political system is not based on partisan competition but rather on a social dimension that intertwines ethnically with all segments of society. This dimension has produced acceptable formats of public administrations that manage state affairs, and newspapers are part of this reality known as the public order. The leadership in this order is keen to educate citizens about their rights and duties, and citizens work to strengthen the bonds of loyalty to the political system. The primary role of the press is to disseminate information that raise the awareness of citizens and protect the legitimacy of the system. This reality makes newspaper companies national institutions first, and then financially-independent for-profit organisations. Striking a balance between these two dimensions is extremely sensitive and difficult. How can you achieve financial profit without financial support?

First, the work of the press should not be considered an independent professional job that is subject to professional standards, but rather a national work that has a professional quality. This professional quality does not make material gain an absolute priority, rather it should be preceded by national considerations. This would weigh financially on them because there are material expenses that must be provided for the work to continue…

In contrast to the social opening experienced in Saudi Arabia over the last few years, the margin for freedom of expression has been rapidly shrinking. This is reflected in the local press. Rarely subversive or seeking to hold the government accountable in the past, it has increasingly become more docile and obedient. When the crown prince announced plans to build a 170km long city in Neom earlier this month, the story was featured by al-Riyadh on its front page for four days in a row.

The region’s largest broadcasters, MBC and Rotana, have historically followed the Saudi official line but they fell under government control after the Ritz-Carlton anti-corruption campaign in 2017. A bailout to newspapers will effectively end any old notion of semi-independence for the local media. The cabinet amended the press law earlier this month, moving the task of regulating newspapers from the Ministry of Media to the General Commission of Audiovisual Media. The change appears cosmetic is unlikely to mean much for newspapers. Their fate remains on the line.

Veteran editor Malik is still holding hope and he believes that newspapers have a fighting chance.

“It is true that the response from those responsible for the printed press came late, that their interaction with the digital media wave was slow, that none of those overseeing newspapers expected the speed with which all this change took place, and that the majority of it was outside the ability of the press to resist it without sufficient revenues to rely on to cover the acute shortage of their resources due to the decline of advertising”, he said in a lecture he gave in Morocco one year ago. “But its chance to stand firm and resist is not finished yet, especially when it moves to invest in other domains that give financial returns to spend on sustaining printed journalism and keep it to complement digital journalism…”