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News Corp. (NWS) has reached an agreement to buy a 9.1% stake in Saudi billionaire Prince Alwaleed bin Talal’s Rotana Media Group for $70 million. News Corp. has an option to raise its holding to 18.2% in the 18 months following completion of the current deal, the Saudi-based entertainment firm said in an emailed statement Tuesday.

News Corp. owns Dow Jones & Co., publisher of this newswire and The Wall Street Journal.

News Corp. is increasingly seeking out new markets as advertising revenue in the U.S. and Europe come under further pressure from the economic downturn. A stake in Rotana will help expand News Corp.’s presence to the more than 300 million people in the Arab world.

Rotana, which hosts Fox channels in Saudi Arabia, the Arab world’s largest economy, via its television network, owns rights to more than 2,000 Arabic movies and the world’s largest Arabic language music library, according to Zawya.com data. According to Ipsos MediaCT, Rotana ranks amongst the top-five channels for advertising revenue in the kingdom, the Gulf’s most populous Arab nation.

According to its Web site, the company has some of the Arab world’s most popular artists on its books, including Egyptian pop star Amr Diab and Lebanese divas Elissa and Haifa Wehbe.

Prince Alwaleed through Kingdom Holding is one of largest single investors in Citigroup and as of last year said it holds a 5.7% stake in News Corp. It has long established business links with the Murdoch family.

Prince Alwaleed’s investments on Wall Street and around the world have plummeted since the onset of the economic crisis. Kingdom has a 5% stake in Citi, as well as shares in Apple Inc., Time Warner Inc., and eBay Inc. (WSJ)

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