Business standoff raises alert over media sustainability in Egypt

Omar Halawa, Sunday 2 Aug 2015

A business dispute between Al-Masry Al-Youm newspaper and Promo Media advertising leaves the latter in financial crisis and calls into question the viability of advertising revenue driven media

Egyptian newspapers (Photo: Ahram)

Egypt's media scene is witnessing a signifcant clash between one of the leading advertising companies responsible for selling ads to many private TV channels and news outlets, and an independent daily newspaper  a conflict that casts a shadow over the advertising market in Egypt and raises concerns over the sustainability of media outlets. 

Earlier last week, Al-Masry Al-Youm (AMAY), a leading independent Egyptian daily newspaper, announced that it had terminated its contract with Promo Media, one of the biggest advertising agencies, as the latter "abstained from paying dues to the newspaper."

"We informed the advertising agency that we decided to cancel the contract with them as they did not pay us our money from the previous seven months," AMAY said in a statement last week.

Established in 2006, Promo Media has the concession of getting ads to six private satellite channels, including ONTV, ONTV Live, Ten TV network, Al-Hayat TV network, Al-Ahly TV and Set El-Beit TV, beside other four printed and digital private news outlets, including Al-Shorouk, Al-Watan, Youm 7 and Veto Gate.

The crisis takes place amid an Egyptian media atmosphere of woe as many private media outlets cut their expenditures and lay off journalists while administrations say that they can't afford to pay salaries due to the instability of the advertising market, considered the main income for the majority of media organisations in Egypt.

Ahram Online spoke to both AMAY and Promo Media representatives. Each blames the other for not sticking to the conditions of their contract, which was sealed in January 2015 and activated in February. AMAY stressed that the advertising company's CEO, Ehab Talaat, is the main driver behind the crisis.

However, Gohar Nabil, press and digital sales director at Promo Media, rejects AMAY's accusations.

"What is our company's role? Our role is to sign deals with media outlets in order have their concessions and get them ads. First of all, we agree on an annual amount of money that the newspaper expects as ad revenues, and we pay them this amount over the 12 months of the year. In return, we as a company go sell ads from advertisers." Nabil explained.

"So besides selling the ads, we collect the revenues, which is considered the toughest job that any newspaper administration can do without having a professional sales team," he added.

"But what happened with AMAY was not completely clear to the public. Our contract stipulated that in order that we can pay them their money, they need to have a clear marketing campaign, decent traffic on their websites and a fair number of print copies in distribution, while also dedicating their team to do special issues on real estate, cars and banks, for instance, in order to attract advertisers, in addition to sponsoring events so the newspaper could be always there," he added.  

Nabil said that although all print media is facing hurdles due to digital services and websites taking their place, his company still services newspapers.

"AMAY said that there is also an ongoing crisis with the two independent dailies Al-Watan and Youm 7, which is not true," Nabil said.

In the same context, Youm 7 issued a statement last Sunday denying AMAY's claims and describing its relationship with AMAY as "fixed and stable".

"If we were not a reputable organisation, why did Al-Shorouk independent daily newspaper and Al-Hayat renew their contracts with us?" Nabil wondered. "For your information, we paid AMAY one month deducted from our annual contract last January as a loan for the sake of content development," he added.

"We dealt with AMAY for the past eight years and we believe that we were partners in their success. But recently our relationship started to reach deadlock and we agreed with its owners on terminating the contract quietly, so we are really angry with this media escalation, which aims at propaganda," Nabil explained.

Fathy Abu Hateb, AMAY's general manager, rejected Nabil's claims.

"First of all, our contract stipulated that Promo Media should pay us a two-month amount as a down payment for our new contract, but they only paid one month, and it's not a loan as Nabil said," Abu Hateb told Ahram Online.

"They are the sole agency that has the right to sell us ads, so they are considered our main income source. And after they stopped paying us, a financial crisis took place at our organisation and we were not able to pay salaries on fixed terms.

"We had very good ties with Promo Media until Ehab Talaat became its CEO," Abu Hateb explained. "I can easily identify him as a shady character as he used to have lots of financial and legal troubles with media institutions and banks."

Talaat fled to London in 2009 after being accused of offering media institutions bad checks. He returned to Egypt in February 2014.

Abu Hateb refused to say how much money AMAY is owed by Promo Media, but some local media reported that it is around LE37 million. 

Talaat issued a televised statement Tuesday denying all accusations against him.

"AMAY did not execute our contract in the past seven months although we sent twice sent a notification to implement what we agreed on the marketing campaign they should have launched," he said.

"Also, I'm done with 99.5 percent the lawsuits against me. Either I paid the people their money or we reached reconciliation," he added.

Talaat's main trouble was with Al-Ahram Organisation. He fled to London on fear of being arrested and stayed there for seven years. Before returning to Egypt, Talaat reconciled with Al-Ahram and paid them LE61 million.

However, Al-Ahram filed a lawsuit against Talaat in May accusing him of squandering LE15 million of its money after rechecking his records with the organisation.

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