Debrief: Elias El Murr, CEO, Group Murr 25-03-2018

H.E. Elias El Murr, CEO of Lebanese conglomerate Group Murr, tells Bloomberg Businessweek Middle East editor Roger Field why he is going against the grain to invest in news media in Lebanon and the wider region.

Group Murr is well established as one of Lebanon’s biggest real estate development and construction maintenance companies. But more recently the company has been involved in media after re-launching Al Joumhouria newspaper in Lebanon in 2011. How did you enter the media industry and why?

I originally bought Al Joumhouria newspaper in 1986. The paper was launched in 1924 and was famous in Lebanon, but was practically bankrupt when we acquired it. We intended to re-launch it then, but unfortunately the civil war continued so we waited until 2011.

Before re-launching I put in a new team and worked on studies which told us we were going to compete with many daily newspapers in Lebanon and the Middle East and that the venture would be very hard, especially with online starting to make strong waves in the market. “It is a very risky project and you will never get a good ranking” was one of the main messages we received. But I was persuaded at the time that if we bet on the new generation, recruited new journalists and took the risk to train them and create new blood, we could make a difference. I recruited around 300 people including 140 journalists and 160 technicians who worked in marketing, distribution, printing and everything else associated with running a newspaper. We launched in 2011 and started from scratch, so it was really a big adventure taking the operation from virtual bankruptcy. It was a complete re-launch. All we kept, aside from the name Al Joumhouria, was the bank debt.

In 2017 after seven years on the market, IPSOS ranked Al Joumhouria the number one newspaper for readership in Lebanon. How did you achieve this?

When we began working I was aware of the risks, and I knew we had to find a niche and a new way of producing a newspaper. As a new newspaper we approached the industry with a different mindset. We launched with a tabloid format. We hired new journalists and ensured they worked on new stories and investigations. More than anything, we knew that credibility was vital to the success of the paper.

We had a research and marketing division and I went to see the French newspaper Le Figaro, who we have a copyright agreement with. First, I saw the importance they were putting on subscriptions rather than just relying on the outside point of sales. I realised that the future of the press will be bringing the newspaper to the reader’s house. This is one of our goals, to have a huge readership.

Second, I saw the online business and applications and technology coming on, so I decided we would launch the latest type of digital applications in addition to having the print edition. So we made sure that all of the online aspects of the publication would be ahead of any shift in the market. We have invested about $50 million in Al Joumhouria to date.

What makes you believe in print, when most research indicates long-term decline?

I’m sure that the people who will read newspapers will still read the paper version and the generation who want it on a tablet or smartphone will access it digitally. But I have observed that at a certain time, when you pass a certain age, you will come back to paper because it reflects a certain personality, a certain way of life. I have seen over the past seven or eight years that when people pass 40 to 45 they come back to print.

We are also avoiding the mistakes others have made with print. I have seen the online and digital media business coming and it’s clear that people don’t want to read breaking news in a newspaper anymore, as in that arena, print cannot compete with digital. In newspapers people want to read articles, features, opinions, surveys and investigations, so let’s focus on this. So we have made a concerted effort to avoid running news with a limited shelf-life in the print edition.

At the same time we aim to have half of the newspaper’s content focused on things other than politics, so out of 32 daily pages about 50% will be focused on regional and international politics and the second half is focused on social life, health, medicine, cars and technology. So the second half of the paper is similar to a lifestyle magazine and covers a variety of subjects that women and younger people will be interested in.

I also attribute the IPSOS rating to the fact that we focus our investment in the goals of the newspaper, and especially credibility. Towards the end of the first three years we had negative cash flow. But after the second three year period, we were at break even and by 2017 we had positive cash flow. This is a huge step ahead for a newspaper that has free opinions and is not being financed by any political party or country. This is one of the main goals of this newspaper. It is owned by El Murr Group and is now self-financed by advertising without losing a penny.

The next project from Group Murr’s media group is to launch a pan-Arab publication in print and digital. What’s the rationale behind this, and how are preparations going for the launch?

Concerning the future of newspapers, the Lebanese advertising market is worth between $150 million and $160 million dollars maximum. The Arab world’s newspaper and magazine business is worth around $2 billion, according to our last survey in 2016-2017.

Now in 2018 my goal is to launch a digital and print newspaper for the Arab World with a focus on countries which have a good advertising business like UAE, Saudi Arabia, Kuwait, Egypt and some other North African countries. Our goal is to create a pan-Arab newspaper covering the whole region. We will operate from our main office in Beirut and also have offices in other countries including the UAE, Saudi Arabia, Egypt and all of the countries that are still interested in daily newspapers and media and where you can find advertising hubs. We have been preparing this for 24 months now and we are preparing to launch in 2018.

Regarding the rationale for print media, the digital and online business in advertising is still worth only 2% of the market, so when you sell a full page colour advertisement in a newspaper you sell it for 100 times the value you sell online advertising, so we need to have both until we see how digital advertising develops in the next few years. I remember very well 10 years ago people were saying newspapers will disappear and that the online and digital market will eat the newspaper business. Now we see that in the US, Europe and the Arab countries all of the digital business couldn’t take more than 17% of the readership in the market. Meanwhile, much of the social media business still has a question mark over it. The main advertising budget is still for newspapers, magazines and television, so we still need to have this business to secure a part of the market and then we will see how things pan out.

Will the pan-Arab publication be tailored for each country?

It will be practically the same in each of the countries, except for the local news which will be focused on each country. We’ll most likely keep four pages for special coverage for each country but the other 28 pages will be the same.

How are preparations going? How many people are you hiring?

Around 600 people have presented their CV for a job and we have interviewed around 150 till now. We are continuing the process to hire 300 people within the Arab world including journalists, reporters, and investigators covering all kinds of local news for each country. We are bringing in new blood to ensure that our content is relevant. When you hire 20-50 people who are between 25-35 years old you will generate content that attracts the new generation.

How much are you investing in the project?

In this expansion we are starting with $40 million in financing because we already have 80% of the expenses covered in Lebanon, as 70-80% of the material will be treated in Lebanon. This will make us very competitive because the operating costs are around 60-70% lower in Lebanon than in other parts of the world.

We have made a study for print and distribution. Concerning the digital newspaper and website it is easy; it will go out from Lebanon and will be fine-tuned in each country within the rules and regulations. For the print editions, we will work with existing printers and distributors in each country.

How many copies are you planning to print?

It depends. If we’re talking about Saudi Arabia it’s a very big market especially in subscriber distribution, so you can go up to 30-40,000 copies. In the UAE we will be talking about 10,000 copies, including the hotels and resorts. In Egypt it will be around 80-100,000 copies per day. We have carried out very precise research during the past two years with a top consultant to make sure we get the circulation right. We specified the need for a subscription model. In this business there are always surprises and so we will adjust our numbers depending on the market.

In Lebanon we started with a very moderate scope that was just 10% of the current subscribers we have today. The pan-Arab edition will have one major advantage over the Al Joumhouria in Lebanon, and that is less competition. In Lebanon, Al Joumhouria competes with countless other newspapers and websites, but our pan-Arab newspaper will face fewer direct competitors. There are practically only two competitors in the pan-Arab world, so we will begin as the number three player and work to get a better place in the next few years. I think personally that our progress in Lebanon was much more difficult in that we had to get from zero to number one. By comparison in the pan-Arab region we want to go from number three to number two, and hopefully one day to number one.

What do you say to sceptics who will no doubt question even the medium-term future of print?

Seriousness will last, credibility and good content will last. You will always have people of 40 years old and over who want to read the newspaper. The only thing that you have to do is make it land at their door every day, which is a fairly simple logistical issue. But content, seriousness and credibility are the most important aspects of news publishing. People want and need to read articles that have quality and integrity. A newspaper doesn’t need to have breaking news, it’s not 1950 anymore. We are in the age of technology and people will read breaking news as it happens on their smartphones and tablets, but newspapers will still be, in my view, a significant player. That is why I am investing; if I didn’t believe in this I would not be investing in a pan-Arab publication. If you look at the value of the advertising industry alone it is clear that there is a business case.

When you see a market of $2 billion plus of advertising, even if you get just 1% it is worth $20 million; if you have 2% it’s $40 million and if you have 5% it’s more than enough to cover all of your expenses and make a profit.

One of my main goals is also to help create jobs for young graduates. This industry doesn’t have to die because of the online business. The daily newspaper business will stay forever. Even if it went through some turbulence in the past decade, people now realise that it is a real business.

How much of your revenue do you expect to generate from advertising versus subscriptions?

A subscription model will be part of the business in addition to advertising in countries including Saudi Arabia, UAE and Kuwait. When you go to Egypt and other parts of the Arab world, advertising is much more interesting depending on each country’s habits. Egyptians still want to go and buy their newspaper. The Saudi, UAE and Kuwaiti markets are now more aligned with the US and European markets, where people have the newspaper delivered to their home. It depends on the market. We have to be adaptable, which is why in Egypt we will need a bigger staff because we have to penetrate the market in a more traditional way.

How about the digital edition of the publication? Are you investing heavily in this area?

I started investing in websites seven years ago. Al Joumhouria was the first publication to have an application for breaking news available from the Apple and Android stores. Nobody at the time in the newspaper business regionally had an application for breaking news, other than SMS-based alerts. I took the risk of investing in free apps for Apple and Android and now we see this approach is commonplace.

Fortunately we were early into this market and we collected a huge readership within the Arab speaking world and the Arab-speaking diaspora in South America, the US, Canada, Europe and Australia. This gave us a huge advantage in this market.

Where do digital newspapers and publications fit in?

Digital newspapers until now are not as they should have been. The understanding of a digital newspaper is usually just a website, or any newspaper that you download from a website. In my view, a digital newspaper should be an interactive application, using a website and an application that will allow the reader to interact with the content, whether through associated social media pages, videos or podcasts. Digital newspapers also need to be interactive if they are to make money through advertising.

When we launch the pan-Arab publication, we will have 70 people dedicated to our digital platforms, including social media. The team is already mostly in place and we have invested a lot in this side of the media group.

In fact while we were developing the digital side of the business I realised how important data and big data was becoming in the new era. For this reason, we have invested significant time, effort and funds in developing a platform called Smart e-News designed to aggregate the exact information the user wants while minimising the noise of irrelevant information. We will launch the platform globally by the end of March and we will be pitching it at individuals, companies and corporates who need to access data and information across all sectors. I believe the platform will be a revolution in the way people and organisations access news and information on-demand. I have been working on this platform for seven years with a team of 80 engineers and technicians.

How do you intend to monetise the platform?

On the business-to-consumer side of business it will be based on buying the app and then buying the information you need through the app, depending on your requirement. On the business-to-business side, we will be selling a licence to each company.

We anticipate that companies will want the platform for very different needs. For example, if it’s a car manufacturer they might want to know about their competitors and end-user responses to their cars and competitors’ cars.

This engine will be scanning all kinds of information that interests people, taking into consideration the privacy of each individual through international regulations. This is one of the huge projects that Murr Media Group has been working on. We are on the beta version and ready for launch.