Low oil prices have an undisputed ripple effect throughout the economy, but could the crude price rout be to blame for the recently announced closure of Al Jazeera America?
Just two and a half years after its first broadcast, Al Jazeera America said it would cease all operations by April 30, 2016.
“While Al Jazeera America built a loyal audience across the US and increasingly was recognized as an important new voice in television news, the economic landscape of the media environment has driven its strategic decision to wind down its operations and conclude its service,” the company said.
News of the closure didn’t come as much of a surprise given the channel’s notoriously low ratings and a management shake up that forced former interim CEO Ehab Al Shihabi to leave the network last May.
The network’s woes deepened last year when a former employee filed a lawsuit alleging that he was unlawfully fired by a senior manager, who he also accused of discriminatory behavior.
That claim was followed by another suit filed by a former executive against both the network and Al Shihabi alleging a pattern of sexism and anti-Semitism in the newsroom.
However, Tom Kludt and Brian Stelter at CNN Money have suggested another culprit behind the decision to close the network: low oil prices.
With oil prices touching 12 year lows earlier this week, the two reporters said a source at the company’s headquarters in Qatar told them that the cuts were being made “due to the falling oil prices.”
Al Jazeera America is part of the Al Jazeera Media Group that is owned by the government of petroleum rich Qatar.
Qatar, the smallest member of the Organization of the Petroleum Exporting Countries (OPEC), is highly dependent on oil and gas revenues.
According to OPEC, oil and natural gas account for about 55 percent of the country’s gross domestic product with the country’s exports valued at $131,716 billion.
Qatar is also the largest exporter of liquefied natural gas in the world and had proved natural gas reserves of 871,585 trillion cubic feet as of 2013.
The kingdom’s 2014-2015 budget assumed an oil price of $65 per barrel, well above last year’s average Brent crude price of $52 per barrel, according to the U.S. Energy Information Administration.
Last year’s oil price rout isn’t the first time that energy price volatility has squeezed the coffers of energy dependent Qatar.
A 2012 report published by the QScience Connect, a Qatar Foundation Academic Journal, found that the 2008 financial crisis and ensuing price volatility “created problems for some spending agencies, such as the public works department, which had difficulty in productively absorbing rapidly growing allocations” despite the government’s effort to create a budget based on conservative price forecasts.
With Brent crude prices now expected to average $40 per barrel this year and $50 per barrel in 2017 low crude prices could very well have been the final nail in the troubled network’s coffin.
Despite shuttering its U.S. subsidiary, Al Jazeera said Wednesday that operations at Al Jazeera English and its other subsidiaries will continue and the company plans to “expand its existing international digital services to broaden its multi-platform presence in the United States.”