MBC’s profit growth driven by core segments: CEO

Sam Barnett, CEO of MBC Group

Sam Barnett, CEO of MBC Group, said the significant growth and margin enhancements are mainly attributed to strong revenues across core business segments.

He told Argaam that the broadcasting & other commercial activities and SHAHID segments recorded revenue growth of 20.4% and 40.8%, respectively.

For more exclusive interviews

The group is set open world-class production facilities at Al Narjis, Riyadh, with the first studio due to open in Q3 2024, Barnett said.

He said that MBC continues to grow its market share in the regional streaming market through SHAHID.

Here are details of the interview:

Q) MBC Group reported a significant increase in net profit, from SAR 51.7 million in H1 2023 to SAR 238 million in H1 2024, a near fivefold increase. Please tell us about this performance.

We are very pleased with the performance in the first half of 2024, with significant growth and margin enhancements across our core business segments. Gross profit was up 55.9% year-on-year (YoY) to SAR 699 million. Net profit increased fivefold YoY to SAR 238 million and net profit margin improved to 10.8% compared to 2.6% in the first half of last year.

Looking at Q2 2024 specifically, net profit was up 66.5% to reach SAR 116.4 million and the group registered a twofold expansion in net profit margin from 6.4% in Q2 2023 to 12.1% in Q2 2024, despite Q1 2024 taking in the majority of the Holy Month of Ramadan. The group also delivered notable enhancement across all segments in net profit, particularly at SHAHID, which saw its bottom-line losses narrow significantly by 84.7% YoY in H1 2024.

Overall, it’s been a strong period for the business as we continue to invest in quality content and engaging platforms, which will attract and retain audiences across our various markets.

Q) H1 2024 group revenues increased 10% YoY to SAR 2.2 billion. Can you break down the performance for us across the different business lines?

Group revenues in the first half of 2024 increased 10% YoY SAR 2.2 billion – this was primarily driven by the Group’s core business segments - the broadcasting & other commercial activities and SHAHID segments, which recorded revenue growth of 20.4% and 40.8%, respectively.

Our broadcasting & other commercial activities, which generated an overall revenue of SAR 1.34 billion in the first half of the year, saw its growth driven by broadcast and technical services, which doubled compared to H1 2023. This was primarily on the back of service agreements with organizations such as SSC and Al Thakafiya. Whilst overall TV revenues, which includes advertising, distribution, and program revenues, grew 5.2% YoY to SAR 751.4 million, it is also important to highlight the solid performance of our advertising segment which registered a 3.5% revenue growth to SAR 697 million - this is a reflection of MBC’s resilience and strong market position.

If we look at SHAHID, the advertising-video-on-demand (AVOD) platform more than doubled its revenue to SAR 116 million. Meanwhile, revenue from our subscription video-on-demand (SVOD) was up 30%, reaching SAR 434 million.

Our third business segment - media & entertainment (M&E) initiatives - successfully delivered on all its ongoing government project initiatives, which enabled it to generate net income of SAR 6.9 million in H1 2024. We continue to witness a modest improvement in blended margins as new projects start including management fees. Furthermore, MBC Studios remained focused on creating high quality content during H1 2024, such as the recent productions of the highly anticipated feature film ‘The Lamb’ and ‘Autumn in my Heart’ series. Likewise, MBC ACADEMY maintained its focus on nurturing and developing Saudi talent in the entertainment industry, and our funded channels – MBC Iraq and MBC 5 – maintained their positions as top ranked channels in their respective markets. To end with, we are building world-class production facilities at Al Narjis, with the first studio due to open in Q3 2024. Over several phases, we will see more studios opening in Q1 2025 and office buildings in Q2 2025.

Q) SHAHID recorded SAR 557 million in revenue during H1 2024, a 40.8% increase YoY. What are the next steps for SHAHID, and how do you plan to sustain this growth to make SHAHID profitable in the near future?

SHAHID’s strong performance was driven by a combination of a rise in advertising revenues and subscribers’ growth. AVOD revenues more than doubled in H1 2024 and our SVOD segment also registered steady and healthy growth.

By the end of June 2024, SHAHID’s subscriber base increased to 4.61 million, with 630,000 net new subscribers in the six-month period. In addition to an average of 18 million active AVOD users each month in the first half of 2024, up from 16.6 million in H1 2023. As of Q1 2024, based on Dataxis market research report, SHAHID leads the MENA region with the highest share of subscribers at 26.7%.

We have successfully positioned SHAHID as an appealing year-round entertainment destination, maintaining its momentum beyond the peak Ramadan period. Our strategy to sustain this growth remains on retaining our subscribers and capturing viewer engagement through compelling content and capitalizing on the growing OTT penetration in MENA to grow subscribers across the region.

Q) How important is content for MBC Group, and what were some of the key highlights this year?

Content is the foundation of our business – our strategy is to deliver premium regional content, complemented by a diverse array of multi-genre series and shows from across Saudi Arabia, the GCC, the Levant, and Egypt.

H1 2024 saw a focus on regional content, especially during for the Holy Month of Ramadan. Titles included Al Atawla, Nema El Avoccato, Khan Al Thahab and Wlad Badee’a. The second quarter saw the launch of three significant titles – ‘Moftaraq Toroq’, ‘Forsan Graih’, and ‘Lo’Bat Hob’, which have been instrumental in maintaining high viewer engagement into the summer.

Q) Do you expect the strong performance to be sustained in the remainder of 2024 and beyond? What are some of the group’s growth priorities?

We are focused on further increasing audience engagement and generating even more value for all our stakeholders by successfully delivering on our growth priorities. These priorities include the delivery and production of high-quality Arabic content – particularly original content; deepening partnerships with our advertisers across our platform; and continuing to grow market share in the regional streaming market through SHAHID.