There are essentially two systems for putting out a publication in Egypt. You can have a local license, which is obtained either by applying to the higher press council or by starting a legal political party, which has an automatic license for its organs. These papers with local licenses do not have to go through censorship. However, they are influenced through self-censorship (people have a good sense of what the red lines are), informants and pressure from state security, and finally the confiscation of the issues from newstands or mysterious delays at the printing press (several if not all of the good-quality printing press are owned by the public newspaper groups, such as Al Ahram's partly USAID-funded printing press, the most modern in Egypt -- American taxpayers, you financed the Egyptian Pravda!)
The thing is, it's extremely difficult to either start a political party or get a local license. Both are controlled by the Shura Council, the Upper House of parliament, which is run by NDP loyalists. If you wanted to start a daily, for instance, the Higher Press Council would simply delay giving an answer for years and years, during which time the money you will have put in an escrow account to prove that you have the means to run the paper and pay your printing debts (a legal requirement) will not be earning any interest for you. Therefore from the start as a financial proposition it's risky. Papers can be declined a license for political reasons, too. When the firebrand former editor of Al Destour was going to head the weekly tabloid Sawt Al Umma in 2000 (a newspaper put out by the same publisher as Al Destour) security officials made it clear that the paper would not get started with Eissa on its masthead. He was eventually replaced with Adel Hammouda, and the project went ahead.
So most Egyptian papers fall into what's called the "Cyprus press." That label heralds back to the day where many publications would be licensed and print in Cyprus, although that's now no longer the case. (Cairo, for instance, is licensed in London and the Cairo Times, after being originally licensed in Cyprus, was licensed in Delaware.) Common places include the US (Delaware is an obvious choice for tax reasons), the UK and its tax-free islands, Beirut, other Arab countries, and elsewhere, including the usual tax havens. This licensing is essentially a piece of paper -- a legal myth -- as for all intent and purposed the company only operates in Egypt. Typically, this foreign licensee is teamed with a local company which handles staffing, management, marketing etc...
Cyprus publications, these days, are mostly either printed in Lebanon -- which has higher quality presses for glossy magazines than are available locally -- or in the Free Zone in the neighborhood of Nasr City in Cairo. Two or three printers run a cartel there, which means prices are rather high compared to what you could get on the local market. The choice of paper is limited, and sometimes it's difficult to get a printing slot. This is not an ideal situation for the publishers, but they're pretty much stuck with it.
Once the magazine is printed, it goes through the same censorship office any foreign publication goes through. In other words, in theory the same standards apply to Cairo, The Economist and Playboy. The latter would not be approved because it contains nudity, which is illegal. The Economist sometimes get delayed, and at least once banned entirely. Cairo and similar magazines often have ongoing problems -- even the normally apolitical Egypt Today ran into trouble a few months ago. Of course, foreign-licensed magazines that are intended for an Egyptian audience would get a closer look than purely foreign one, and some foreign magazines that are illegal for moral reasons get through: a remember seeing a stack of Attitude, the gay lifestyle magazine, next to bodybuilding and fitness mags at the Ezbekiya book market once.
But even that is only theory. In practice, things don't get banned -- they get delayed. In the case of a weekly magazine, any delay of four days or more effectively has the same effect as a ban, since at best the magazine will have a shelf life of 2-3 days. The other thing is that unless the publisher has decent contacts with state security or the censors, there is no information on what got the magazine delayed anyway. (This is the case currently with Cairo.) So there cannot be any serious negotiation or even attempt to remedy the situation if the publisher would prefer to modify his publication's content so that the issue gets out and he doesn't lose money (something Cairo would in any case not consider.) Delay has considerable financial impact on the publication: it wastes the costly staff and printing bills for that issue, scares off advertisers, and angers subscribers.
On another note, it has to be stressed that the media landscape has changed considerably in the past year. The "red lines" have been pushed back on the president and his family and the security services (the army seems to stay untouchable, though) and more quality newspapers are being published. This will be the subject of an in-depth article in a forthcoming issue of Cairo, and I'll keep you posted when it comes out. The other thing is that there has been a persistent rumor for about two weeks that the heads of all three big state-owned dailies -- what's referred to as the "national press" were about to be replaced. If this happens, it will be a very big deal indeed, but I'll explain why in another post.