News Corp has agreed to pay US$70 million (Dh257.1m) for a 9.09 per cent stake of newly issued shares in Rotana Media Group, the Saudi media conglomerate, with an option to increase its stake to 18.18 per cent in the 18 months following completion. The deal represents a cash injection for Rotana, which is owned by Saudi Prince Alwaleed bin Talal bin Abdulaziz Al Saud, and is the largest investment in the Middle East to date by News Corp, Rupert Murdoch's global media empire.
"A stake in Rotana expands our presence in a region with a young and growing population, where GDP growth is set to outstrip that of more developed economies in the years ahead," said James Murdoch, the chairman and chief executive of News Corp for Europe and Asia. "Rotana is a leading player in the Middle East and we look forward to working together." Rotana is the world's largest producer of Arabic music and a major distributor of Arabic movies, with a library of more than 1,500 films. It also owns radio stations, a chain of cafes, a magazine, a digital media group and a bouquet of free-to-air television channels including LBC Sat, Cinema, Khalijiyah and Musica.
The deal will strengthen the ties between the two media conglomerates. Prince Alwaleed, Saudi Arabia's richest man, owns 5.7 per cent of News Corp, making him the largest shareholder outside of the Murdoch family. Fox, a subsidiary of News Corp, also has its own branded channels on Rotana's free-to-air television platform. The two companies have been in talks on the deal since last autumn, when Variety reported that News Corp was considering a 20 per cent stake, and the price would be between $250m and $350m. A person close to the deal, who could not be named, said those prices were simply part of the negotiating process.
"I don't think there was any real substance to those initial numbers," he said. "News Corp wouldn't be investing in a deal that wouldn't make sense." The fact that the deal is in newly issued shares reflects Rotana's potential as a growing company in a fast-growing region. "Rotana still has got a high growth profile ahead of it, so it's to help the cash going into the business," he said. Nomura advised News Corp on the deal, while Citigroup advised Rotana. Prince Alwaleed is the largest individual investor in Citigroup, based in New York.