Can Al Jazeera Capitalize on Its Newfound Popularity?

Al Jazeera is receiving kudos from around the world for its coverage of the turmoil in the Middle East. Whether the Doha-based news service will be able to leverage that popularity into profit, however, is another question.

Founded in 1996, Al-Jazeera received a $147 million loan from the Emir of Qatar, where the channel is based, to fund its startup. It has struggled financially ever since. Al Jazeera began its English-language channel in 2006, hoping to establish an international rival to CNN and the BBC -- but that plan has yet to come to fruition.

Costly Coverage of the Middle East Crisis

"Despite the fact that it enjoys an estimated annual budget of around $100 million, subsidized largely by the gas-rich Emir Sheikh Hamad bin Khalifa Al-Thani of Qatar, Al Jazeera wants to win audience share and it wants to sell advertising," wrote British journalist Hugh Miles in a 2006 Foreign Policy article. "The network has consistently lost money since its launch, which is unsurprising, as no Arab channel makes a profit."

And since Miles wrote that, the channel's finances probably haven't improved much. Few, if any, advertisements appear on Al Jazeera English's website, which according to The New York Times has seen a 2,500% increase in traffic since last Friday. That dramatic increase is likely putting a strain on Al Jazeera's computer network, and therefore its finances.

And the network's costs will no doubt rise even further as it scrambles to provide up-to-the-minute coverage of the region's volatile political situation. Another financial strain is Al Jazeera's decision to provide access to its video feed to outside news services for free. Al Jazeera officials declined comment for this story.

More Attention Turning to the Region

Other news services are also seeing a surge in interest from people clamoring for news from the Middle East. The BBC reports a significant spike in the number of people visiting its Arabic-language website -- as does Al Hurra, the U.S.-sponsored, Arabic-language TV news channel. According to Deirdre Kline, a spokeswoman for the Middle East Broadcasting Networks -- which operates Alhurra -- daily visits to increased 540% between Jan. 23 and Jan. 30.

At the same time, BBC Arabic reported 1.3 million unique page views in the week starting Jan. 24. "This is the highest weekly reach ever measured, more than twice as high as the average week in December, despite the fact that the majority of our audience in Egypt, our biggest market, cannot reach the website because of the Internet restrictions introduced by the Egyptian government," says BBC spokeswoman Laura Brander in an email.

Fox News (NWS) says it saw a 44% increase for the World Content on its website between Jan. 25 and Feb. 1. Video views are up 30%. CNN couldn't be immediately reached.

Whatever financial strains Al Jazeera may be under, network officials haven't been afraid to open their checkbooks. The service, which has 3,000 staff members across the world including more than 400 journalists from more than 60 countries, has scored some big-name hires -- including Sir David Frost, the U.K. TV broadcaster whose interviews with U.S. President Richard Nixon were immortalized in the movie, Frost/Nixon.

Mostly Absent From U.S. Cable Lineups

Al Jazeera executives, quoted by The New York Times, say they want to have a bigger footprint in the U.S. But that desire is hardly surprising, given the size and influence of the American audience -- and the fact the network gets about 10% of its Web traffic from North America, according to the marketing research company comScore.

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More people in the U.S. are visiting the website as the crisis unfolds, but Al Jazeera's TV channel can currently be seen only on cable systems in Washington, D.C., Vermont and Ohio. That may be by choice. Al Jazeera for several years hasn't asked some cable companies to carry its signal, according to a source familiar with the matter.

Perhaps Al Jazeera has been shy to do so, due to American accusations that the network was in cahoots with terrorists such as 9/11 mastermind Osama Bin Laden, who has used it to communicate with the outside world. Middle East experts have repeatedly argued that such claims are unfair. Still, the network's relationship with the U.S. government is filled with tensions. One Al Jazeera correspondent is being held -- unjustly, his backers say -- at the U.S. prison in Guantanamo Bay, Cuba. Another was killed by the U.S. military in Iraq.

In an email, Comcast (CMCSA) spokeswoman Alana Davis declined to say whether the nation's largest cable operator was considering adding Al Jazeera to its lineup. "We can't speculate; however, we regularly examine our channel lineups and talk with a wide range of programmers to ensure that we are bringing the content that our customers want the most," she says. Her comments were echoed by Time Warner Cable (TWC). A spokesperson for the Dish Network couldn't be reached.

Backing a Channel With Many Critics

Qatar, whose sovereign wealth fund reportedly has as much as $100 billion in assets under management, is hardly losing sleep over the profitability of the Al Jazeera. Zubair Iqbal, of the Middle East Institute, tells DailyFinance that Al Jazeera is funded "essentially for strategic reasons. Qatar has ambitions to become a major player in the region. . . . I don't think they are interested in making money [on the network]."

But one way to gain a more global audience, Iqbal says, is for Qatar to back a channel that has many critics in Arab capitals -- to underscore the differences between Qatar's more liberal society versus its rivals in Saudi Arabia and elsewhere. The strategy appears to be working, now that Al Jazeera is more popular than ever.

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