Issue No. 1
Fall 1998
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CNE in Egypt:
Some Light at the End of an Arduous Tunnel

By Joe S. Foote

During the 1990s, the Middle East has experienced an explosion of growth in new media services, especially those delivered by satellite. The Middle East Broadcasting Centre (MBC), Orbit, Arab Radio and Television (ART), Emirates Dubai TV, and Egypt’s Spacenet have all become well-known entities in the region (Bulloch 1995). Most of the attention generated by these media deal with their increased penetration and potential success.

While there is a clear hunger for additional media outlets in the Middle East, not all initiatives have been successful. This paper examines the case of a private, encrypted television channel in Egypt that, despite optimistic forecasts, has had limited success in its quest to be a viable enterprise in the highly populated Cairo market. Cable Network Egypt (CNE), formerly called Cable News Egypt, is the country’s first private television channel and only UHF subscription channel. This paper describes the founding of CNE, its initial success as a free channel, problems associated with its beginnings as a pay channel, its limited subscription base, the expansion of CNE as a network offering additional channels, and the subsequent investment by South Africans in an effort to revive and expand the service.

Background of CNE
Until recently television has been the sole province of the state, which has operated three channels since 1960. One mass channel offered entertainment and news. A second channel was aimed at more sophisticated urban viewers, while a third served the foreign community in French and English (Amin 1995).

The impetus for bringing CNN to Egypt as the country’s first private channel came from a small group of entrepreneurs who began to court CNN International executives in the summer of 1988. CNN International’s response was positive, and one of the group was retained by the then CNN International Vice President Robert W. Ross to lobby the Egyptian government on behalf of CNN and to prepare pre-feasibility studies that would argue the case for CNN. Ted Turner was interested in expanding the service into the Arab world. But given the near absence of dishes in the region at this time, the idea of a retransmission UHF facility that would secure Egyptian government approval (and if necessary, for the sake of that permission, Egyptian government participation) for CNN in Egypt was quite attractive. CNE would be the test case or door opener for expansion throughout the region, via retransmission by UHF, MMDS (“wireless cable”) or cable and allow CNN to establish viewer loyalty before any eventual rivals in the field of international television journalism began satellite transmission for a global audience.

The project appeared feasible because of demand for the service from the expatriate and tourist community and because Egypt’s state-run broadcasting system had spare channel capacity that could be used to send CNN over the air using a scrambled signal. Egypt was to become the first nation in the Arab world to have access to CNN 24 hours a day.

CNE backers at first discussed providing CNN to hotels only, but found that the Egyptian government was not as opposed to consumer distribution as they had thought. In October 1989, after several months of negotiations, CNE’s private sector partners reached an agreement with the Egyptian Radio and Television Union (ERTU) to support the distribution of CNN. Under the preliminary agreement, Cable News Egypt (CNE) would be granted a license to receive and distribute the news service in Cairo.

The ERTU preliminary decision was but one of many that would have to be made in a highly centralized Egyptian bureaucracy not known for receptiveness to controversial new ideas. The entire process would take nearly three years and moved, according to one journalist, at the pace of a “dyslexic pharaonic scribe” (Mishinski 1990).

Many of the arguments for bringing CNN to Egypt appealed to the pride Egyptians had in a broadcasting system they believed far surpassed any in the Arab states and which frequently trained broadcasters from other countries. Government officials reasoned that if a significant technological innovation were to be made, Egypt was the country destined to begin it.

Another important reason for having CNN in Egypt was to promote tourism. Egypt knew that American tourists could receive CNN in hotels in virtually every major tourist destination except Egypt. They saw the presence of CNN as a selling point to promote the country’s chief industry. CNN backers sweetened the deal by promising four minutes of free advertising on CNN to the Egyptian Ministry of Tourism, a move that could enhance tourism in the country (Nessim 1990).

While the tourism argument carried great weight, it was not without critics. Hamdi Kandil, former director of UNESCO's division of free flow of information and communication policies, disputed the notion that having CNN in hotels would enhance tourism, saying that tourists do not come to Egypt to sit in hotel rooms and watch television and that no tourist would make a decision on whether to visit Egypt based on the availability of CNN (Mishinski 1990). A third argument for having CNN was that the financial incentive to the CNE majority stockholder, the ERTU. Subscription royalties would be a much-needed antidote for the ERTU's emerging financial problems. If Egyptian television journalism was to be competitive with Western news sources, it would have to have a comparable budget, and there was little other place to find new revenue sources than the CNN project.

While momentum from these arguments propelled the CNE proposal through the bureaucracy, many in the government thought the last thing Egypt needed was a Western cultural intrusion to stir up its people and threaten the status quo. Others in Egyptian broadcasting were not enthusiastic about their work being compared to a global news network. Some thought too much effort and money were being wasted on a service that would serve only the needs of foreigners and an Egyptian elite.

In the end, CNN was probably the least offensive signal the Egyptians could import. Certainly, MTV and other entertainment programming laced with American-made sex and violence posed a greater threat than a global news channel already seen in more than one hundred countries. In fact, a conference on the Arab Media and Direct Broadcasting held in Cairo in 1990 had awarded CNN the distinction of being the "least offensive" of potential offerings (Brindle 1991).

If the Egyptian government allowed an alien signal into the country, it wanted to ensure some control and share in the profits. Egyptian investment laws stipulated that any foreign enterprise should be a joint venture with an Egyptian company. With ERTU being the majority stockholder in CNE, the government felt reasonably sure of its ability to retain control over its operations.

CNE Structure and Operations
In October 1990 the Egyptian government formally approved the establishment of Cable News Egypt as a corporation for a period of 25 years. The estimated capital for CNE was LE 1.608 million to be paid in both local and hard currency, later increased to LE 25 million (CNE 1992). CNE also used the Video Link System to scramble its signal (CNE 1992). The initial capacity of the system was 100,000 subscribers. Subscription fees were set as follows (CNE 1992):

  • 360 Egyptian pounds annually for Egyptians at their individual homes
  • US $120 annually for foreigners at their individual homes
  • US $250 annually for embassies, banks, international organizations, language schools and foreign institutes
  • US $3500 annually for newspapers
  • 8 US cents per room for five-star hotels
  • 7 US cents per room for four-star hotels

While the Egyptian individual subscription fee was heavily subsidized, all except the most wealthy Egyptians were priced out of the market, in effect limiting the service primarily to expatriates, foreign business people, news organizations, and tourists in luxury hotels (Brindle 1991). The hotel rate included a standard discount to allow for less than full occupancy (Mishinski 1990). continued

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Copyright 1998 Transnational Broadcasting Studies
TBS is published by the Adham Center for Television Journalism, the American University in Cairo