Writer: Nicolas Shammas / Photographer: Cedric Ghoussoub
H.R.H Prince Alwaleed is more than an ideas man, he’s someone who’s willing to stake everything on what he defines as “well-calculated, well-studied high-risks”. In a climate of uncertainty, Bespoke’s Ultimate Visionary is anything but ambiguous.
H.R.H Prince Alwaleed bin Talal bin Abdulaziz Al Saud needs little introduction. As probably the world’s most famous Arab, he is known to most people on the planet. Away from the glitz and glare of multi-million dollar deals, he’s actually very personable and blessed with a razor-sharp mind. Well versed when it comes to interviews, you don’t in any way feel as though his answers are scripted. Quite the contrary. He’s comfortable opening up, sharing his views and discussing everything in his distinctive, articulate manner.
This is Bespoke’s second meeting with the prince. Having established a deep rapport the first time around, this time we were privileged to be able to enjoy his company and his time, with few constraints.
The interview, in honour of this award, focused on two remarkable and significant projects he has recently undertaken. The first is the Kingdom Tower in Jeddah, due to be the world’s tallest building at over 1,000 metres in height. The second is the upcoming launch of Alarab, an Arabic cable news channel in partnership with Bloomberg TV, that’s set to air towards the latter part of 2012. The scale of both ventures is extraordinary given we’re still in the midst of a global recession. But after all, Bespoke’s 2012 Ultimate Visionary is known for his ambition.
Something I clearly remember you saying during our last interview was that “if everyone else is buying then I sell, and if everyone else is selling then I buy.” Given that we’re still in a period of global belt tightening, is this perhaps the principal reason why you’re venturing into two such costly and ambitious businesses as these?
This rule would apply to the high-rise tower but not the channel.
So let’s start with the tower. Why now and why Jeddah?
This is an opportune time to build such a tower. Firstly, the ingredients for that building, whether it’s cement, steel or other elements, are all down in monetary value. Secondly, let me be frank, Jeddah is a stagnant city. It desperately needs this sort of transformational project in order to attract more business. I mean nothing has happened in Jeddah for over two decades. Actually there are some developments in the suburbs such as KAEC [King Abdullah Economic City] in Rabigh, and KAUST [King Abdullah University of Science and Technology] in Thuwal, but these two projects are not in the city itself, whereas our project will be the new downtown of Jeddah.
So this tower is part of a much bigger plan?
Yes, the tower will take around 100,000 square metres from land that is as big as 5.3 million square metres, so you can imagine its scale. The high-rise tower is a landmark and essentially the catalyst that will enhance the rest of the land.
Why is it important that the tower be the world’s tallest?
It is not. But clearly a tower of over 1,000-metre is something to be reckoned with, no doubt about that. The highest tower in the world right now is the Burj Khalifa in Dubai and it is 823 metres. So to surpass that, by let’s say 200 metres, is significant. And by the way, the actual height will not be announced until the final year of construction.
Was this tower not supposed to be the Mile High Tower, meaning 1,600 metres?
It was never a mile-high tower. We always said it’s a 1,000-metre-plus tower. Some media outlets coined that term but we were never considering such a figure.
Saudi Arabia is such a vast country with so much space to expand laterally. Why build vertically?
Saudi Arabia is a big country but the anchor cities are few. There is Riyadh, Jeddah and to a lesser extent Dammam and Khobar. Sure you can build horizontally but building vertically makes a landmark and an attraction to people, companies and entities.
You recently signed with a contractor did you not?
After initially inviting ten companies to tender the project we narrowed it down to one, the Binladin Group, and work will begin on January 1st, 2012. Also you should be aware of the fact that our contractor became our partner on this project.
Yes, I wanted to ask you about this. Was it a precondition in the tendering phase?
Not at all. It was not a deciding factor for our choice of contractor but ertainly it was a supporting factor.
Was it a lump sum contract?
For sure. With projects like this I only ever do lump sum. The amount was 4.6 billion riyals [1.23 billion USD].
But surely allowing your contractor to be a partner means you cannot include such things as penalty clauses for delays?
Actually our relationship with Binladin is with two entities. The contractor is Saudi Binladin but the investor is another arm of the Binladin Group. Of course we do not expect any delays but if there are any then we will have to impose whatever the contract dictates, and I would do this even if my son were building the project [laughs]. You’d better believe it!
Your other partners are Abrar International Holding and Abdurrahman Sharbatly. How were they chosen?
It was their land to begin with and it has been so for decades. We chose to base the project here firstly because of its proximity to the heart of the city but also due to its relatively good price because it’s crucial that we have a good project IRR [internal rate of return]. We proposed the project to them, showed them the feasibility and they duly accepted to be our partners.
How far into the future do you envision a return on your investment?
The project IRR is ten years. Obviously it will go longer than this as there is some kind of annuity as well as recurring revenues but for this decade we are expecting 25 to 30 per cent for the project in its entirety.
Is it true you’re building the tower for 270 million USD less than it cost to build Burj Khalifa, even though it’ll be 20 per cent taller?
Yes, per square metre this project is cheaper than Burj Khalifa. Why? Because the learning curve took place in Dubai, which is next door. And that’s important, as you cannot apply the rules of a tower that was built in Asia for example. Likewise Emaar, which built the Burj Khalifa, worked with us as consultants. And one of the two architects of the Burj Khalifa, Gordon Gill, is the designer of this tower. So we have learned from their experience in Dubai. We took all their pluses and we examined their minuses and did our best to eliminate them.
Speaking of your architects, AS+GG (Adrian Smith and Gordon Gill) of Chicago, is the fact they worked on Burj Khalifa the reason they were chosen?
It played a role but they were chosen predominantly because their design had a good constructability, meaning it was cheaper to build, plus it was beautiful and lastly for their experience and knowledge. Notice the order, for there were some designs that were incredibly beautiful but they were around 50 per cent more expensive to build and that would have meant a lower IRR.
With Burj Khalifa still struggling to get tenants, how will the Kingdom Tower be approaching the issue of occupancy differently?
First let us be clear, from an investment perspective Burj Khalifa has been sold entirely and the developers made their money. So it’s the new owners who have not been able to get tenants. Also the [Armani] hotel is doing very well there. So the problem is that Dubai was hit with its own crisis of oversupply. Add to that the crisis of 2008 in the international banking sectors, add to that a new multiplier of the economic crisis facing sovereign countries around the world, whether Greece, Italy and so on. All of these factors burdened the real estate market in Dubai. So yes we do acknowledge their issues but in our case we are different, there is no supply in Jeddah, let alone oversupply. The expectation is that we will have huge demand from within Saudi Arabia as well as internationally. And at the end of the day, with all respect to Dubai, Abu Dhabi, Qatar, Bahrain and Kuwait, these are all city-states with populations of between 1 to 3 million people. Saudi Arabia on the other hand is a veritable whale, with 20 million people and 7 million expatriates, which means we have more expatriates than the entire population of the rest of the Gulf region. Saudi Arabia is where the real economic power, strength, depth and knowledge is, so what we have here cannot be compared to Dubai.
What sort of political depth is there in building such a tower in Saudi?
First and foremost, we are doing this project because it has an excellent IRR - we are businessmen after all. But on a local level, a project like this in Saudi Arabia, in the downtown of the country’s second biggest city, spearheaded by not just a member of the royal family but also three members of the local Jeddah community is certainly a patriotic enterprise. Globally, it puts Saudi Arabia on the international map in a very aggressive and prominent manner.
Would you say that it demonstrates to the world that Saudi Arabia is this whale you were referring to earlier?
For sure. This project helps and enhances the position of Saudi Arabia. When you have a country with 25.5 per cent of all proven oil reserves and oil is still a critical factor in the economic growth of the world, then you have to pay due attention to that country. There’s no doubt about that.
If we could move on to the news channel now: you have been involved in the entertainment side of television for many years through the Rotana label but why the decision to get involved in the news media market with your upcoming channel Alarab?
The Rotana Group has 11 television channels consisting of the Rotana channels, LBC and three Fox channels. It also has its own advertising agency called RMS, and a record label, in addition to Rotana cafés and magazine although these are ancillary. Apart from that, I have a progressive religious channel called Alresalah. I’m the second biggest shareholder of News Corp and we hold a 29.9 per cent share in the Saudi Research & Marketing Group (SRMG), the largest publishing company in the Middle East. So given all these scattered media companies, our objective is to IPO eventually and when we did our studies we determined there was a big opening within this media entity for a news channel.
Who are Alarab’s main competitors?
We have four major Arabic news channels here in the Middle East. Two are indigenous - Al Jazeera and Al Arabiya - and two non indigenous - BBC and Al Hurra. The rest are weak and with a low percentage of viewers. BBC and Al Hurra have not made a big impact. Al Arabiya is a force to be reckoned with but it came about as a result of Al Jazeera, therefore Al Jazeera is clearly the dominant company. If you break down the two major channels further, you could say that Al Arabiya is the channel of the governments and Al Jazeera is the channel of the people. So there’s no one offering real facts with a balanced perspective. Take, for example, Al Arabiya during the onset of the revolutions here in the Middle East. They were dragged into reporting them appropriately, and it took them time. Al Jazeera took the opposite path by being pro-revolution. They instigated, they triggered and they pushed the revolutions. So we have two polarised entities and the middle was vacant. The Arab world needs a more centrist, more pragmatic, more balanced view, and at a lower cost because if there’s one fact about Kingdom Holding, it’s that, though we do a lot of things, we never throw money away. Therefore we will make a cost-efficient product that will break even within five years.
Who are the investors behind this?
For now, I am undertaking Alarab alone. It’s a very calculated, high-risk investment and that’s why I will not invite investors. I’ll take the risk personally but when the risk is proven to be verifiable, quantifiable and good, then I might potentially invite others in. That being said, Bloomberg who will support the channel, has an option to own a future stake of between 5 to 10 per cent.
Have you limited the amount of money you will spend on this venture?
Good question. The answer is that I have not limited it, I have capped it. I cannot tell you the exact figure but of course I don’t want to create a bottomless pit. Heads will roll if we go beyond that number.
Who do you see as your viewership?
My viewership is people that are fed up with the two polarised views currently being offered. It is therefore those who would prefer to have a third path.
Will Alarab not be seen to be a mouthpiece of the Saudi ruling establishment?
Never, because I am not! I have established the fact that I am not a puppet of any government, even Saudi Arabia. And if my channel is perceived as such then I will shut it down, for I believe that is one of Al Arabiya’s weaknesses. Alarab is a Saudi-owned channel, you bet, but it cannot be a Saudi-controlled channel.
Will the channel have a political platform or will it be purely centrist?
I can’t be centrist all the time, I will need to take a position on certain issues. If you remain rooted in the middle then you have no principles. For example, I know Bashar Al Assad personally and I am unafraid to state that what is happening in Syria is unequivocally wrong. Likewise, when Saudi Arabia is on the right track, I defend it but when it does something wrong, I say so. For example, when the decision was taken to give ten lashes to the woman who decided to drive I went crazy, and everyone went crazy and we vocally, aggressively and clearly said we have to stop that. I am for steady evolution to prevent violent revolutions.
Did you need to get the permission of the King to do such a venture?
I take permission from no one. No King and no Queen. This is my hard-earned money, nobody gave it to me. I do what I think is right for my country, my society and of course myself and I do so with full responsibility.
But surely if Alarab is headquartered in Saudi Arabia then you must abide by Saudi rules.
That is why it won’t be. It will be headquartered in a country where you have complete freedom of press. Saudi Arabia does not have that. We are heading in that direction because the internet and social networks have forced us to do so. Actually, I sent a letter recently to the Minister of Information to ask him to stop banning programs for he had stopped a short movie called ‘Monopoly’, which was subsequently put on the internet and a million Saudis watched it in two weeks. So in this day and age it is silly, if not naïve, to try to control this and that. Those days are over, they’re finished.
Where will the headquarters be?
The option is between Abu Dhabi, Dubai, Manama and Doha. One has been ruled out. A second is on the verge of being ruled out. So we are down to two and the final decision will be taken within the next few weeks. There is fierce competition between these places because all four want it.
What will the main focus be for Alarab?
With Bloomberg as partners, we do not want to give the impression that this will be a business newsgathering entity. It will be a fully-fledged political channel covering whatever is happening in the world and the Middle East and it’ll also air other matters such as sports and business. We will be utilising Bloomberg’s hundreds of offices across the world, which feeds back to the point I mentioned earlier about cost efficiency, you see we will only need Alarab offices in key places but we will still have a network that covers the globe.
How is your investment in Newscorp related to this endeavour?
It is completely separate. In fact we will be competing with them as Sky News will be teaming up with an Abu Dhabi entity to create an Arabic channel. Interestingly however, through our stake in News Corp, which owns a controlling majority in Sky News, we will have an indirect stake in this new venture.
What lessons has your experience with News Corp taught you that you will be applying to your news channel?
My relationship with News Corp is purely as an investor so I have nothing to do with operations.
Your reformist views have been well documented. As such is this the primary reason why you selected Jamal Khashoggi to head this news channel?
Jamal is a well-educated person, a Saudi, a patriot, a reformer and he has a very similar mentality to mine. Obviously you don’t choose someone you are not in synch with to run such a delicate channel as this but having said that, there’s naturally no such thing as being completely in synch with someone else so even with Jamal, we have our differences. That is healthy and fine, and I always say let the best idea prevail.
He has been dismissed from many of his former jobs so did you have to offer him any guarantees that you would stand by him when the going gets tough?
I have known Jamal for a long time, he is a liberal, a progressive like me. He’s very vocal and also very religious. His firing from Al Watan was timely, for I actually called him two hours after it happened and within one hour of that he agreed to join me. He knows my mentality, he knows my mind and I believe he was fired for the wrong reasons. I did not give him any guarantees but you do not hire someone only to then fire them. Anyway most people who work with me, stay with me. We’re like a family. They are stuck with me and I’m stuck with them.
His appointment sends a clear message on the liberal ideas Alarab will stand for but will the Prince Alwaleed-Jamal Khashoggi combination not perhaps be too hard-hitting?
We will be transparent, honest and we will say the facts. My views are known: I am pro-establishment and I am part of the establishment, but I also want to change what the establishment is doing wrong.
You must already recognise that you will be bringing upon yourself the ire of the conservative groups within the Kingdom. How have you prepared for this?
I disagree because I am very conservative religiously. Sure I am socially liberal but religiously, I am more conservative than them and I will challenge them on this. That is my message: I am pro-Islam. I am for bridging the gap between Islam and Christianity as well as other religions, but I am also for social liberty and that is the way the world is heading now, and it’s moving very fast. You should not judge a man’s religious credentials by the length of his beard or the shortness of his thobe. I am against that. And that is also the message of King Abdullah, for is he not at the vanguard of the interfaith dialogue? All I am doing therefore is standing up for my nation.
But there are many people who are vocally opposed to reform here in Saudi Arabia, are there not?
I would love to antagonise these people. It would be an honour to stand up to the mentally retarded people that are hindering our nation.
What is your hope with Alarab? Where do you hope to be ten years from now?
My objective is to reach the entire Middle East along with the Arabic speakers in the diaspora, and to give them the real voice of the Arab world. Truly the Arab world cannot remain the same anymore. Major changes are happening and they’re happening fast. Those who cannot change quickly enough will be changed, and those who are getting the message are changing rapidly. Take for example the King of Morocco. He got the message, and although he stopped short of a full constitutional monarchy he is no longer an absolute monarch. I met him last week and I feel he is a good role model for kingdoms. Likewise, republics have to change fast. I believe we will be the correct voice of the new Arab world that is currently in its naissance.
It sounds to me that Alarab is very much a product of the Arab Spring. Would you say that’s a fair assessment?
No, this is too extreme. I had the idea in 2010, well before the Arab Spring began. I did recognise that the Arab world needs to change but it’s not as though I anticipated the revolutions, far from it. But I did see things had to change.
But to reach a wider geographic viewership you’d need to launch in other languages such as English would you not?
No. We have a very clear objective and mission: we are an Arabic channel for the Arabic-speaking world. I am against launching in English, at least for the foreseeable future.
What is the launch date of Alarab?
We are trying to make 12/12/12 but we’re not obsessed by that date. It does make a good number though, doesn’t it? Just like 1,000 metres! [laughs].