Saudi Arabia’s deal-making ambitions grow despite backlash – The Hollywood Reporter

Saudi Arabia and its sovereign wealth fund have been quietly – and in some cases not so quietly – gaining a foothold in Hollywood four years after much of the industry cut ties with the country in response to the murder of Washington Post columnist Jamal Khashoggi.

This time around, Saudi Arabia’s Public Investment Fund, overseen by Saudi Crown Prince Mohammed bin Salman, and other Saudi-affiliated companies appear to be betting that live entertainment, rich financial investments and sports could be the gateway to the US market .

In January alone, the PIF-backed LIV Golf scored critical US TV coverage agreement with The CW, while government-owned Middle East broadcasting giant MBC Group shut down an agreement with Vice Media to create content in Arabic. Previously, Saudi football team Al Nassr signed Portuguese superstar Cristiano Ronaldo for $200 million a year. And if the second edition of the Red Sea Film Festival, held in the coastal city of Jeddah in December, was anything to go by, the country’s time in the cold regarding its relations with Hollywood has come to an end. Sharon Stone, Guy Ritchie, Spike Lee, Michelle Rodriguez, Henry Golding, Lucy Hale, Andrew Dominik and Scott Eastwood were among those in attendance, more than enough stars to impress Cannes, while Searchlight’s The Banshees of Inisherin and rich in lightneons Triangle of sadness and MGMs Bones and all screened there.

One film was not shown kandahar, the Gerard Butler actor from director Ric Roman Waugh who in 2021 became the biggest Hollywood feature film to be shot entirely in Saudi Arabia. While the film – about an undercover CIA operative who must fight his way out of Afghanistan – may not sound like typical festival fare, The Hollywood Reporter understands that programmers had hoped to bring the Open Road title to Jeddah to showcase the country’s rapidly rising ambitions in filmmaking, but the dates fell short. (kandahar just got a Memorial Day release date in the US) As a small indication of how the tide has turned, Butler – who produces through his G-Base banner – was one of the first Hollywood names to cancel a trip to Saudi Arabia in the aftermath of Khashoggi’s murder in October 2018.

Another film now in post-production is Anthony Mackie’s starring role Desert warrior with a reported budget north of $120 million, shot mostly in the Neom region (home of the much-hyped $500 billion megacity). kandahar Shot mainly in AlUla, an area of ​​natural beauty now heavily promoted as a film destination.

While Desert warrior and kandahr are the standard bearers of Saudi Arabia’s emergence from cinematic obscurity and hopes – very well funded – to usurp countries like Jordan, Morocco and Abu Dhabi as the de facto shooting destination for any producer in need of a few sand dunes, more big Hollywood projects are practically inevitable.

Or think of the big win for one of the country’s most high-profile US efforts: LIV Golf, the PGA Tour rival funded entirely by the PIF to the tune of billions of dollars. LIV has poached high-profile PGA stars like Phil Mickelson, Dustin Johnson, Brooks Koepka and Bryson DeChambeau, lured by guaranteed eight or nine-figure payouts. The tour only had a YouTube channel available in the US before signing a deal on January 19 with Nexstar-owned CW to broadcast 14 LIV tournaments annually.

It’s a “win-win” for both the network and the tour, says Guggenheim analyst Kerry Baker. LIV should benefit from the national distribution and exposure the deal provides, while Nexstar gets hours of content on what’s considered a revenue-sharing basis. (Nexstar gets live sports based on what’s supposed to be revenue sharing, and hours of content to fill the schedule). While The CW isn’t ESPN, CBS, or NBC, it’s still a national broadcast network and a big improvement to the tour.

Of course, the growing presence of Saudi money in the entertainment industry has also attracted the attention of groups who believe the country has failed to explain the circumstances of Khashoggi’s murder. (Note: SRMG, a publicly traded media company in Saudi Arabia, is a minority investor in THR owner PMC.)

The LIV-CW deal brought those concerns back to the forefront, especially now that Nexstar is firmly in the news business with its local TV stations and cable channel NewsNation.

“We are deeply disappointed that a company that monetizes news like Nexstar would agree to participate in such an embarrassing PR stunt as LIV Golf, which is essentially designed to restore Saudi reputation,” said Jen Judson, president of the National Press Club. “We wonder what Nexstar stands for. You can’t have a brand in the news and act like it… We’re urging Nexstar to do the right thing and cancel their goddamn golf show. And if they don’t drop the program, here’s what we can do: don’t watch; and write to each sponsor asking them not to sponsor.

LIV CEO Greg Norman appeared on NewsNation on Jan. 20 to comment on the controversy. Pressed by anchor Dan Abrams about whether he thought the Saudis had “learned from their mistakes,” Norman replied, “Yes, I do.”

‘I went there to build a golf course in Saudi Arabia. This is long before any of this hoo-ha-ha erupted,” Norman added. “I was there for a reason because they see the value of what golf is as a force for good, and it’s proving that in their country today.”

But LIV is only one small piece of the puzzle being constructed by the PIF. The Sovereign Fund has been named as a potential buyer for the WWE, which is exploring its strategic options (the WWE already hosts a major event every year in Saudi Arabia called Crown Jewel), or as a potential backer, if another buyer (such as, e.g. Endeavor or CAA), were interested.

If the WWE is sold to a private company “in today’s market, I would assume it’s not the best time to be state money raising debt for private equity. [interest] rates,” said a Wall Street observer, adding that the PIF may be more willing to put up with the notoriously difficult partnership with Vince McMahon.

And the PIF has used the public markets to quietly amass significant stakes in a wide variety of companies with Hollywood connections. In addition to holdings in technology giants such as Alphabet, Amazon, Meta Platforms Inc. and Microsoft, the fund owns a nearly $1 billion stake in Live Nation entertainment (about 5.5 percent of the company), making it one of the largest shareholders after Liberty Media.

And video games appear to be an area of ​​interest for the fund, with the PIF selling for more than $1.2 billion in Take-Two Interactive stock, more than $2 billion in Electronic Arts stock, and $2.8 billion in Activision Blizzard. holding shares. And the PIF acquired a majority stake in the virtual reality/augmented reality technology company Magic Leap late last year.

After Khashoggi’s assassination in 2018, many US companies — including those in Hollywood — have backed out of making deals with the PIF and other Saudi entities. In early 2019, Endeavor, the owner of WME and UFC, returned a $400 million investment from the fund.

But while its public presence in Hollywood dwindled after that point, the PIF used the pandemic to dramatically expand its investments in the US, according to a statement of its public holdings filed with the Securities and Exchange Commission. In October 2019, the PIF’s only U.S. public corporate investments were in Tesla and Uber.

A year later, in October 2020, taking advantage of the pandemic-ravaged economy, it had acquired its stake in Live Nation, and in October 2021, it had added its massive video game and technology holdings.

With a film festival attracting Hollywood power players, content deals with US companies and an investment roster featuring some of the most powerful companies in gaming and technology, the country’s persona non grata status seems to be over. As an industry source tells us THRin the past few months, it felt like Hollywood companies that would have worried about a potential PR hit are now suddenly much more open to making deals with Saudi Arabia.

A version of this story first appeared in the January 27 issue of The Hollywood Reporter magazine. Click here to subscribe.