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DUBAI, United Arab Emirates
Rupert Murdoch's News Corp. said Tuesday it will spend $70 million for a slice of Arabic media giant Rotana Group, pushing deeper into the growing Middle East market while strengthening ties to a key Saudi shareholder.
News Corp., the parent of Fox News Channel and distributor of "Avatar," said it will acquire a 9.1 percent stake by buying newly issued shares in Rotana, which is headed by Saudi billionaire Prince Alwaleed bin Talal. The New York-based media company said it has an option to boost its Rotana holding to 18.2 percent within 18 months.
The deal gives News Corp. a firmer toehold in the rapidly developing but fragmented Middle East media market, which has witnessed an explosion in cable and satellite television programming in recent years.
"A stake in Rotana expands our presence in a region with a young and growing population, where (economic) growth is set to outstrip that of more developed economies in the years ahead," James Murdoch, chairman and CEO of News Corp.'s European and Asian operations, said in a statement. "Rotana is a leading player in the Middle East and we look forward to working together."
The deal will also give News Corp. two seats on the Mideast company's board, spokeswoman Alice Macandrew said.
Rotana, which bills itself as the Arab world's largest music producer, boasts many of the region's biggest stars, including Egyptian singer Amr Diab and Lebanese diva Elissa. It also operates a number of music and movie satellite channels and controls a film library of more than 1,500 Arabic movies.
Alwaleed, who also heads Saudi investment firm Kingdom Holding Co., is a longtime investor in News Corp., with a stake of about 7 percent of the company, according to a recent U.S. Securities and Exchange Commission filing. That makes him News Corp.'s biggest shareholder after members of the Murdoch family.
Rotana already distributes Fox films in the Middle East through an earlier deal with News Corp.
In a statement announcing Tuesday's deal, Alwaleed said he hoped the deeper partnership would help build Rotana's presence across the region while "expanding its reach to the Arab diaspora around the world."
Alwaleed, a nephew of the Saudi monarch, was ranked as the world's 22nd-richest person by Forbes magazine last year.
His Kingdom Holding holds big stakes in several major American companies, including Citigroup Inc. and Apple Inc.
The investment company, however, was hurt by the financial crisis and the prince recently transferred 180 million of his own Citigroup shares to Kingdom Holding at no cost in an effort to boost the firm's borrowing power. The deal was valued at about $600 million.
The News Corp.-Rotana deal had been rumored for years and widely anticipated for weeks. Speculation mounted about an imminent deal after Alwaleed met with Rupert Murdoch in New York last month and said he was looking to expand alliances with the media giant.