Hollywood Is Paying a High Price for the Khashoggi Affair

U.S. film industry's hopes of building a lucrative Saudi film market may now be dashed, following stories about murder of Saudi dissident in Istanbul

An activist dressed as Saudi Crown Prince Mohammad bin Salman protesting outside the White House in Washington, October 19, 2018.
LEAH MILLIS/REUTERS

Just a year ago, there was a hint of a revolution in the air in Saudi Arabia. Some 35 years after the kingdom had closed its cinemas, a public screening finally took place in the capital, Riyadh.

The first film to be shown at the new movie theater – a converted concert hall – was the Hollywood blockbuster “Black Panther,” and men and women were permitted to sit together for it. (Although there are mixed screenings, there are also men-only screenings and “family” sections reserved for women and their male relatives.) Government ministers, foreign diplomats and celebrities flocked to the showing, amid smiles and hope for a better future.

Half a world away in Hollywood, U.S. film industry executives expressed hope that the opening up of the wealthy Saudi kingdom as a film market would allow them to reap millions.

But the news from Turkey this month concerning the alleged murder of Saudi dissident Jamal Khashoggi, at the Saudi consulate in Istanbul on October 2, has raised serious questions over the prospect of business ties between Hollywood and the Saudi market.

Khashoggi was a columnist for the Washington Post and although the Saudis have confirmed the journalist’s death, they say he died when a fistfight broke out during his visit to the consulate. The Saudi foreign minister said Sunday that the death was the result of a “rogue operation” in which “individuals ended up exceeding the authorities and responsibilities they had.” The Turks, meanwhile, say 18 Saudis were involved in Khashoggi’s death during a whistle-stop visit to Istanbul and that his death was planned in advance.

Saudi men buying soft drinks at Saudi Arabia's first commercial movie theater in Riyadh, April 18, 2018.
\ Faisal Nasser/ REUTERS

Now, American firms that just months earlier had eagerly signed what they thought would be lucrative contracts with the Saudis are reconsidering their options over concern that such a relationship could actually do them more harm than good.

The New York Times reported over the weekend that the Saudi government was hiring social media experts to improve the kingdom’s image. Hundreds of people employed at a so-called troll farm in Riyadh were being dispatched to attack anyone criticizing the kingdom online as a result of the Khashoggi case, the Times reported. These included an engineer who had been fired by Twitter but still had access to Twitter users’ personal details.

Saudi Crown Prince Mohammed bin Salman has been the driving force between economic reforms and changes on the entertainment front in the kingdom. In addition to economic steps, at the beginning of the year he announced plans to open about 350 movie theaters, boasting some 2,500 movie screens, by 2030, with the hope that movie ticket sales among Saudi Arabia’s 32 million inhabitants would jump to about $1 billion yearly. (By comparison, Germany’s total box office in 2017 was $1.2 billion from a population of over 80 million.)

Crown Prince Mohammed predicted that the movie theaters would lead to increased spending in Saudi households on entertainment, which in turn would create jobs and help spur further economic development in the kingdom.

The figures generated excitement among Hollywood executives, who, following the decline in Chinese investment in the U.S. entertainment industry, hoped that Saudi Arabia would fill the breach.

A number of senior media figures were quick to offer the crown prince a warm welcome when he came to the United States following the announcement of the reforms. Apple CEO Tim Cook, Microsoft’s Bill Gates and media mogul Rupert Murdoch were among those to greet MBS (as he is commonly known) during his mainly business visit to the United States last spring.

Cooling ties

Film distribution companies and movie theater firms, including AMC and IMAX, began business operations in Saudi Arabia, and industry giants such as Disney have also invested there. But after news of Khashoggi’s death surfaced this month, industry enthusiasm for business ties to the kingdom quickly cooled, according to reports.

Saudis attending the opening of a cinema in Riyadh, Saudi Arabia, April 30, 2018.
Faisal Nasser/REUTERS

American companies are concerned that if it is confirmed that Khashoggi was killed on behalf of the Saudi authorities, the glittering image of a reformist Saudi Arabia will be shattered and supplanted by the kingdom’s standing reputation as a place where civil rights are regularly trampled upon.

According to the Deadline Hollywood website, Virgin Group founder Richard Branson recently suspended a $1 billion investment that he had planned to make in Saudi Arabia. Meanwhile, J.P. Morgan, Uber and Ford have all reportedly retracted their agreements to sponsor a business conference in Riyadh. The actor Gerard Butler also canceled a trip to Saudi Arabia that was timed for the launch of his new film, “Hunter Killer” – a thriller about an American submarine crew on a mission to rescue the kidnapped Russian president and avert World War III.

Sense of betrayal

Speaking to Deadline Hollywood last week, one senior Hollywood executive who maintains close ties in Saudi Arabia said: “I’m extremely sad and disappointed by this situation,” adding: “We thought the country was turning over a new leaf and heading in a different direction. MBS was inspirational. People now feel betrayed.”

London-based Vue International, the largest movie exhibitor outside of the United States, had planned to open dozens of movie theaters in Saudi Arabia in the coming years. However, it is now reportedly reexamining that decision. According to the Los Angeles Times, officials at Endeavor – parent company of the William Morris talent agency and mixed martial arts promotion company UFC – are now considering passing on a deal that would have seen some $400 million in Saudi funds invested in the company.

The Wrap website reported that the Penske Media Corporation, which owns Deadline Hollywood and the Variety trade magazine, was declining for the time being to say whether it would retract acceptance of a $200 million investment from Saudi Arabia that it received from a Saudi investment fund last February. And Vice is reportedly reviewing its contract with Saudi Arabian publishing group SRMG to produce a series of mini-documentaries aimed at promoting Saudi Arabia.

If the constantly developing coverage of the Khashoggi case makes it clear beyond any doubt that the Saudi journalist was murdered at the behest of the regime in Riyadh – and on Tuesday, President Donald Trump stated that while he did not believe Saudi King Salman knew of any plan to kill Khashoggi, Crown Prince Mohammed is “running things,” so if anybody would know “it would be him” – Hollywood will apparently be looking elsewhere for its next source of hope and cash.