Orbit and Showtime to merge

Chris Forrester

Two of the Mid East’s pay-TV players are to merge. Marc-Antoine d’Halluin, currently running Showtime, is the new company’s CEO.

The losses over the years have been astronomical, but Bahrain-based Orbit and Dubai HQ’d Showtime Arabia are burying their differences and letting common-sense drive a merger between the two rival pay-TV businesses. The deal was announced in Dubai and Bahrain on July 12.

The new company is an “equal partnership” between Orbit, up until now a wholly-owned subsidiary of the Saudi Arabia-based Mawarid Group, and Showtime Arabia/Gulf-DTH which was owned by Kuwait’s KIPCO and Viacom.

Orbit started transmitting in 1994, and was the first company in the world to use an MPEG-compliant digital system. Showtime went live in 1995.

The new business will offer new packages to viewers on August 1, and will include HDTV in their offering.

Commenting on the merger Mr Faisal Al Ayyar, KIPCO’s Vice Chairman, said the merger was good news for customers, staff and the industry: “This deal brings together two great brands into one company to offer customers the very best in Western and Arabic entertainment. “Showtime and Orbit were pioneers of the region’s pay-TV market and we’ve both been calling for consolidation of the market for some time. Joining forces in this way is good news for customers, staff and the regional television industry.”

Mr. Samir Abdulhadi, President and CEO of Orbit Group, commented: “This unprecedented merger is great news for the industry and customers alike, because it consolidates two leading pay-TV platforms, brings together the best channel line-up under one operator and combines all customer service and distribution networks into a single point of call.”

Orbit’s long-term losses are legendary, and Showtime pulled a long-planned IPO some two years ago citing market conditions. However, both companies were well-backed financially by wealthy patrons.

Marc-Antoine d’Halluin CEO of the new company said: “This merger creates MENA’s largest pay-TV operator offering the very best premium channels in the region as well as truly innovative services to our customers including HD channels, Video on Demand and other interactive services. The new company will continue to run its core operations and corporate functions from Bahrain and Dubai, bringing together experienced and talented employees who are tasked with extracting significant synergies and delivering the best value from this merger for all our stakeholders and customers. We look forward to updating the market on this exciting merger and future plans.”

Credit Suisse acted as exclusive financial advisor on the merger. Weil Gotshal & Manges acted for Showtime Arabia and KIPCO. Linklaters LLP acted for the Orbit Group. Financial terms were not revealed.

Noorsat, a virtual satellite operation using surplus capacity from Eutelsat, and owned by Mawarid, is not part of the new scheme, neither is Media Gates or Orbit Data Systems. These businesses will continue to be managed by their respective management teams independent of the new company. Media Gates, Orbit’s Arabic production company, will continue to distribute the Arabic channel line up exclusively through the newly-created platform.

There are many questions still unanswered, not least whether the companies will dual-illuminate their signals onto two transmission platforms. Part of the consolidation has been underway for some months given that Orbit selected Irdeto’s Conditional Access some months ago. There is as yet no word on operational job losses and the other ramifications of the merger.

One aspect of the merger, however, includes HDTV in the line-up and the scheme is thought to be a pre-emptive move against an EchoStar-backed plan to launch an HDTV pay-TV platform with the support locally of some of the region’s best-known free-to-air channels.

There will also be – yet another – pay-operator in the region in the shape of ART, also transmitting a bouquet of (mostly) Arabic channels to the Middle East.