x Abu Dhabi, UAEMonday 24 July 2017

'Buffett of Arabia' changes channels

Saudi Prince Alwaleed is said to be passionate about the media, which may explain his plan for a new rival for Al Jazeera and Al Arabiya in an already crowded market. But his legendary patient investing style could mean he is an Arab media baron in the making.

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Does Saudi Prince Alwaleed deserve a new nickname? For years, the Saudi billionaire Prince Alwaleed bin Talal bin Abdulaziz Al Saud has been dubbed, sometimes by himself, the "Warren Buffett of Arabia".

His investments in corporate giants such as Citigroup, Time Warner and News Corp, have, arguably, justified that title. But of late the performance of his portfolio looks somewhat shaky in comparison with that of his hero, the "Oracle of Omaha" and American billionaire investor. Prince Alwaleed's net worth stood at US$21.1 billion (Dh77.49bn) in May 2000, but had dropped to $16.6bn by the first quarter of this year, according to Bloomberg Markets. The Forbes Rich List puts a higher estimate of $19.4bn on his fortune.

Over the same 10-year period, the price of shares in Berkshire Hathaway, of which Mr Buffett is chairman, more than doubled to $48.7bn, said Bloomberg Markets magazine. Prince Alwaleed argues he is a long-term investor, and, like many others, his portfolio has been hit by the economic downturn. But some say his latest venture, to launch an Arabic TV news station, is out of character, even for someone who takes an extremely long-term view when making investments.

So if the old nickname is now less appropriate, then "Murdoch of the Middle East" may become a better fit. Earlier this month, Prince Alwaleed revealed further details of his planned 24-hour Arabic-language news channel, supposedly being developed in partnership with the Fox network of Rupert Murdoch's News Corp. This has not been confirmed by News Corp. Few details have been announced, aside from the recruitment of the Saudi journalist Jamal Khashoggi to head the station and the fact that it will compete with the leading Arabic channels, Al Arabiya and Al Jazeera.

To the surprise of some commentators, a week later British Sky Broadcasting, which is partly owned by News Corp, also announced plans for an Arabic-language news station under its Sky News brand, which will be based in Abu Dhabi. The Prince will also have an interest in the station given that he owns a 7 per cent stake in News Corp. Assuming that the two proposed stations go ahead, they will, presumably, be in competition with each other. And given that Prince Alwaleed has a stake in both, how does that fit his "long-term" investment strategy?

One Gulf-based executive, who has met the Prince several times, says the media is the one area in which Prince Alwaleed has a true passion, perhaps at the expense of cold, hard business judgement. "He doesn't usually have much of an emotional attachment to his investments. But this is the first time he has had a genuine personal interest in an investment," said the executive. "The idea of owning a news channel is interesting given he's so controlling of his own image. He scrutinises every word of every article written about himself."

A great deal has been written about Prince Alwaleed. His wealth and investments attract interest from the business press. But then there are his ambitious projects (he plans to build a 1km-tall tower in Jeddah), his wish for greater freedom for women (the many women he employs in Saudi Arabia wear western dress; one pilots his private jet), and his relatively liberal attitudes (he is regarded as following in the footsteps of his father, who in the 1950s pressed, unsuccessfully, for greater democracy in Saudi Arabia).

His intense interest in his own image - he has a video team film every interview he gives to the press - is indicative of a wider interest in the media. In his palaces and desert retreats in Saudi Arabia, he is never far away from a giant TV screen displaying the financial news. Nor is he ever too far away from a phone, fax or internet connection. Those who have met him say he rarely gives you his undivided attention. Even when you are alone in the same room, deep in conversation, Prince Alwaleed is likely to be talking to someone else, somewhere else: finalising a deal in Saudi, inquiring about stocks on the NASDAQ, or planning an ambitious tower with an architecture firm.

Prince Alwaleed's investment career started in 1979, when his father gave him a $30,000 loan and a house, which he mortgaged and invested the proceeds. He claims to have made his first $1bn by 1989, through investments in the property, banking and construction industries. Shortly after the gift from his father, Prince Alwaleed formed his own company, Kingdom Establishment for Commerce and Trade, which in 1996 became Kingdom Holding. It remains his primary investment company and listed on the Saudi Stock Exchange in 2007.

His early investments included a handful of Saudi banks. But in 1991 he made loud noises in the banking world when he bought a huge chunk of Citicorp, which later became Citigroup, bringing his total investment in the US financial giant to $797 million. While the value of this stock has been considerably reduced since the financial crisis, Prince Alwaleed remains the bank's biggest individual shareholder.

Just how he grew such a fortune out of such a modest sum has long vexed commentators. As one senior fund manager based in Abu Dhabi put it: "If you looked at the cashflow before the Citigroup deal, it just didn't make sense." Still, after the Citicorp deal, Prince Alwaleed went from strength to strength. He made investments in sectors as diverse as hotels and property, to media, retail, health and education. Most of the companies he has targeted are household names: Four Seasons Hotels and Resorts, Fairmont Raffles International, Walt Disney Company, PepsiCo and Motorola. At one time he owned a large stake in Apple, the bulk of which he sold in 2005, just prior to the company's share price rally on the back of the iPod and iPhone frenzy.

Prince Alwaleed's first significant investment in media came in 1997 when he bought a stake in News Corp, which now stands at 7 per cent. He also has a stake in Time Warner and the Riyadh-based Saudi Research and Marketing Group, which publishes 15 daily, weekly and monthly newspapers and magazines. Notably, Prince Alwaleed also owns Rotana Holding, the world's largest producer of Arabic music and a major distributor of Arabic films. Rotana also owns radio stations, a chain of cafes, a magazine, a digital media group and a bouquet of free-to-air TV channels including LBC Sat, Cinema, Khalijia and Mousica. He plans an initial public offering of stock for Rotana within two years; in February, News Corp bought a 9.1 per cent stake in Rotana for $70m.

As for his business style, Prince Alwaleed has the reputation of being a highly targeted investor, especially in the Middle East. He made diverse investments in Lebanon and the occupied Palestinian territories, for example, very early on. He made two investments in Kuwait in the space of a year. And he is very Saudi-centric when it comes to the GCC: he has few dealings in Oman, Qatar or the UAE. But whether that focus can translate to success in the competitive Arabic-language news market remains to be seen. It is already a crowded sector: the two proposed news stations face tough competition from Qatar's Al Jazeera and the Saudi-controlled Al Arabiya, as well as international Arabic news outlets France 24, Rusiya Al Yaum and BBC Arabic.

But Prince Alwaleed will be in it for the long term. Analysts say he is more likely to commit to an investment for 10 years, as he is for three. That does not, in itself, confer Rupert Murdoch status. However, Prince Alwaleed's media ambitions in the Middle East could be given a boost by the coverage of Al Jazeera over its World Cup broadcasts, which were marred by interruptions, bad pictures and blackouts.

Against this backdrop, the launch of the 24-hour news channel "will change everything", says one commentator. As the Gulf-based executive puts it: "This is a sure-fire opportunity for [Prince] Alwaleed to fill the gap." @Email:bflanagan@thenational.ae

Born March 7, 1955 Education Masters in social sciences from Syracuse University in New York in 1985 Title Chairman of Kingdom Holding Wealth The world's 19th richest man with a fortune of US$19.4 billion (Dh71.25bn), according to the Forbes Rich List Parents Father is Talal ibn Abd Al Aziz, the son of the founding King of Saudi Arabia. Mother is Princess Mona Al Solh, the daughter of Lebanon's first prime minister. Family Married to Princess Ameerah Altaweel, 27. Divorced three times and has two adult children from previous marriages. Investments Holds 95 per cent of Kingdom Holding, which has stakes in Citigroup, Apple, AOL and Compaq. Luxuries A jewellery collection worth more than $700 million; an 85-metre yacht; a palace with more than 370 rooms; his own zoo; an A380 'superjumbo' aeroplane, which he takes delivery of in 2012. Diet Eats low-fat food and no meat. He has been a vegetarian for more than 25 years.