Time Warner Inc.'s Warner Bros. studio struck a multibillion-dollar joint venture deal Wednesday with two Abu Dhabi companies that would bring such American icons as Bugs Bunny, Roadrunner and Scooby-Doo to the Persian Gulf region.
The partners have agreed to build a theme park, a hotel and multiplex cinemas in Abu Dhabi, the leading power in the United Arab Emirates. They also plan to produce movies and video games as well as undertake Web initiatives as part of the deal, which is arguably the most ambitious gamble yet by a U.S. entertainment giant in a region traditionally wary of Western culture.
Flush with cash from the oil boom, the Persian Gulf monarchies have been in a race to attract foreign investment in real estate, finance, healthcare and technology. Over the last year, Abu Dhabi and its smaller neighbor Dubai have made cross-cultural alliances with Universal Studios and Paramount Pictures in an effort to establish entertainment hubs in the Arab world.
"They know oil won't be their lifeblood forever," said Steve Baker, an Orlando, Fla.-based theme park industry consultant. "They're trying to get their fair share of tourism revenues. That's what this is about."
Bahrain has emerged as a center for consumerism and tourism in the Middle East. Establishing an entertainment beachhead is seen by the emirates as helping to shake its reputation as lacking cultural attractions.
The strategic alliance between Warner Bros.; ALDAR Properties, Abu Dhabi's leading real estate developer; and the newly established Abu Dhabi Media Co. represents the Burbank-based studio's first venture into the region.
"We think it's a region of the world that has great potential and opportunities on many levels," Warner Bros. Chairman and Chief Executive Barry Meyer said. "This is a unique arrangement for us. There's nothing of the size, scope and breadth that encompasses so many of our businesses."
In a conference call with Meyer from Time Warner's corporate headquarters in New York, top executives from ALDAR and Abu Dhabi Media also expressed enthusiasm for the new arrangement.
"We've found the right partner to start building our entertainment and media infrastructure," said Ahmed Ali Al Sayegh, chairman of ALDAR. "In the next five years, we hope to be the leader in the region. To do that, we need to attract world-class names, and Warner Bros. is certainly a very trusted name."
Meyer declined to divulge Warner's total financial commitment to the multibillion-dollar venture other than to confirm that the studio had agreed to jointly finance a $500-million fund for making movies and a similar $500-million fund for developing and publishing video games.
He said the studio would make additional investments, including in the planned construction of movie theaters.
Warner will receive hefty fees for licensing its iconic Looney Tunes and other characters and movie themes from its vast library to a planned theme park and hotel project. Warner will help design the new park, while ALDAR will oversee the construction of the park and hotel project, which is expected to break ground in 2009 and open in 2011.
Meyer said the latest venture would create the largest park Warner Bros. had designed or built in terms of both financial commitment and acreage. Warner Bros. has Movie World theme parks on Australia's Gold Coast, in Madrid and in Bottrop, Germany.
This year, NBC Universal and Paramount announced licensing deals for new theme park ventures in Dubai. In May, a United Arab Emirates developer unveiled plans for a $2.2-billion theme park called Universal City Dubailand. A month later, Viacom Inc. struck a similar pact for a proposed $2.5-billion Paramount Pictures-branded park in the emirate's city of Dubai.
Baker, the theme park consultant, predicted the Warner Bros. theme park would benefit from its proximity to Bahrain and draw about 2 1/2 million visitors a year.
On the theater front, Warner Bros. International Cinemas will develop, design and manage the jointly owned multiplex cinemas across Abu Dhabi that will have themes based on the studio's characters and movie titles. Initial plans call for the construction of four cinemas in An Ruwais, Al Lain City, Yas Island and the Central Market development in Abu Dhabi. One of the cinemas is already under construction and the other three are in advance design stages. They are expected to open by late 2010.
Meyer said Warner, which over the years has built multiplexes in other such under-screened territories as Britain, Italy and Japan, was also in discussions to extend its footprint into regions including Morocco and Tanzania.
The film partnership with Abu Dhabi Media will develop and produce "mutually agreed-upon, broad-appeal" movies to which Warner will retain worldwide distribution rights. Additionally, the partners plan to develop and produce Arabic-language films for local and pan-Arab distribution.
Warner Bros. has embarked on similar ventures to produce indigenous movies in such countries as India, Japan, France, Germany and China.
Hollywood producer Hunt Lowry, who formerly headed Warner's cofinancing venture with Gaylord Films and produced such movies for the studio as "What a Girl Wants" and "A Cinderella Story," will serve as the chief executive of the joint venture's yet-to-be-named film company at Warner's studio lot.
It was Lowry who was the catalyst in bringing together Warner and its Arab partners last fall. A lawyer friend of his lived in Abu Dhabi, prompting him to research the area.
He wrote to ALDAR Chairman Al Sayegh last fall and after receiving a "very immediate response," Hunt said, they met last November. Hunt subsequently brought Warner's brass to the table.
Warner and Abu Dhabi Media will develop and produce video games that will be published and distributed by Warner's interactive entertainment division.
The interactive games will be based on Warner-owned brands and titles as well as third-party offerings.
About a dozen titles are in development under the new deal, the first of which, "Looney Tunes: ACME Arsenal" and "Duck Amuck," will be released in the U.S. on Oct. 9.
Kevin Tsujihara, president of Warner Bros. Home Entertainment Group, said the studio would also help its partners make content available on the Internet to give "the consumer what they want when, where and in the format of their choice."
Riyad Al Mubarak, CEO of Abu Dhabi Media, said his company was aggressively working on establishing a "media zone," which was launched by the emirate's government to promote entertainment and media ventures. "We also want to establish academy schools and universities," he said.
Dubai, one of seven emirates, boasts the best post-production facilities in the Muslim world. Its glitzy annual international film festival is in its fourth year.
Abu Dhabi's first Middle East International Film Festival is set to run Oct. 14-19.
When asked about the mad race that seems to be afoot between Abu Dhabi and Dubai to build a Hollywood-like entertainment juggernaut in the Arab world, Al Mubarak said, "We're not really competing with countries. We will compete with everyone in this business."
Times staff writers Richard Verrier in Los Angeles and Borzou Daragahi in Beirut contributed to this report.