Lucia Moses
Mohammed Al Turki, the CEO of Red Sea International Film Festival, and Sharon Stone attend the Women in Cinema red carpet during the 2022 fest. Daniele Venturelli/Getty Images for The Red Sea International Film Festival
The Israel-Hamas war could derail the Middle East's media and entertainment ambition and investments.
Some deals are moving forward, but some Hollywood stakeholders are shying away from the region.
A wider war could slow the flow of money to Hollywood at a time when funding is hard to come by.
At last year's Red Sea Film Festival in Saudi Arabia, American producers, filmmakers, and stars made a robust showing. If the celebrities in attendance were mostly of the aging variety, and if some of them reportedly were paid to attend, so be it — the second annual fest in Jeddah nonetheless signaled the Saudi kingdom's huge investment in its local film industry and its ambitions to become a global player in entertainment.
Critics tagged the event as a kind of arts-washing, a bid to glow up the reputation of a regime whose recent social reforms haven't begun to erase its poor human rights record and role in the 2018 murder of Washington Post columnist Jamal Khashoggi. Still, the US presence highlighted the deepening ties between Hollywood and the region, as Western media, entertainment, and sports entities have seen major investment in recent years from Saudi, Qatar, and the UAE.
For this year's third Red Sea fest, however, some observers wonder if fewer Western stars and stakeholders will walk the red carpet. The festival November 6 announced this year's theme, "Your Story, Your Festival," and that it will spotlight 11 films from the region while championing "the most creative and daring artistic voices."
Israel's assault on Gaza in retaliation for Hamas' October 7 attacks has roiled Hollywood internally, exposing an ideological divide in a community that was long thought of as aligned with Israeli interests, if not with all of the country's policies. But the war also has many in the industry nervous about working with the Mideast's oil-rich nations — and closely parsing those governments' responses to the conflict.
Saudi Arabia had been moving toward normalizing relations with Israel, but it initially appeared to some business leaders to blame Israel for the October 7 attacks. The UAE, which normalized relations with Israel in 2020, called for an immediate ceasefire October 7 and condemned the Hamas attacks a day later. And Qatar, a close US ally in the region, has taken a role in getting hostages out. But it's also been criticized for calling Israel "solely responsible" for the escalation of violence and for sheltering Hamas leaders.
"I would think that some people will look twice at whether they are going to travel into that region for festivals, et cetera, over the next weeks and months," Christian Knaebel, founder of the Germany-based consultancy Global Media Consult, told Insider in an email.
Even before October 7, US entities that were receiving investment from the Middle East were reluctant to speak publicly about those relationships. Now, some are pressing pause, while others are continuing or even accelerating efforts — short-term, Knaebel predicted some Mideast investors could move quickly to seal deals with Western companies before continued hostilities make such moves politically untenable.
Insider spoke with investors, producers, and other media and entertainment stakeholders about what's next for Hollywood's relationships with Mideast backers. For at least one media investor, the landscape seems risky enough that they called off a recent trip to Saudi Arabia on behalf of a client.
"I just don't think it was a good look," the investor told Insider. "Some people are digging their heels in and treating it as business as usual, but I would be pretty nervous right now."
Mideast funding has been hard to resist
Some deals between US media and entertainment companies and the Mideast have proceeded apace in recent weeks, to the surprise of some industry insiders. With interest rates rising and other sources of funding drying up, funding from the region has been hard to resist.
"They're still proceeding with investments; no one's canceled meetings, to my surprise," said a second investor with direct knowledge of Mideast deals. "They're all competing to get the prize assets."
Saudi Arabia's Film AlUla, the agency leading efforts to lure international productions to the desert, just announced on October 24 a $350 million partnership with Greg Silverman's independent production company Stampede Ventures to bring 10 productions to the region. Before launching Stampede in 2017, Silverman was a longtime Warner Bros. film executive who was behind "Harry Potter" and Chris Nolan's "Batman" series.
Private-equity firm Silver Lake is seeking to take US sports and entertainment company Endeavor private with help from Abu Dhabi's Mubadala sovereign fund. Endeavor's CEO, Ari Emanuel, has been vocal in condemning the attack and calling for the eradication of Hamas; he notably returned a $400 million investment to Saudi Arabia after Khashoggi's murder.
Qatar hasn't seen any recent major deals but earlier this year, Peter Chernin and Providence Equity's production roll-up The North Road received $150 million from the Qatar Investment Authority.
UAE-backed RedBird IMI (led by former CNN boss Jeff Zucker) in October invested in sports-industry news outlet Front Office Sports.
LIV Golf, backed by Saudi Arabia's $620 billion Public Investment Fund, is moving to merge with the PGA, though some observers have speculated that Israel's war could freeze the deal.
Knaebel suggested that if the crisis is resolved quickly, deal and production activity in the region could continue. "If it lasts longer," he continued, "there will be an impact on local productions in that region."
But it's not just a question of how long the conflict lasts; if hostilities spread in the region beyond Israel and Gaza, these countries' positions may evolve and become lightning rods for controversy.
"The political nature gets more complicated," an industry insider observer said, noting how countries like Qatar are grabbing headlines for their role in the situation. "It's clear who sits where, way more now."
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