Maariv
The Ma'ariv headquarters in Tel Aviv. Photo by David Bachar
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Matters came to a head at more than one IDB group company over the weekend, as board members at Discount Investments agreed to give struggling daily Maariv backing for a NIS 15 million bank loan, but ruled that the paper would stop printing on weekdays.

Nochi Dankner's IDB group controls Maariv through Discount. This came the same weekend that Danker's IDB Holdings published financial reports with a going-concern warning attached, indicating that its auditors believe the company may not be able to pay off its debts.

Maariv announced that Dankner is looking for a new investor for the paper, and that initial discussions are being held with several potential partners. Sources at the company stated that he had approached several people in Israel and abroad over the past few weeks. Maariv lost NIS 244 million in the second quarter, primarily due to a one-time write down of asset value, which came out to NIS 169 million. The newspaper, which has been subject to a going concern warning, thus found itself with negative share capital for the first time, with a share capital deficit of NIS 188 million.

The newspaper's revenues contracted by 10% versus the parallel quarter in 2011, to NIS 60 million. In comparison, its losses for all of last year amounted to NIS 96 million.

Maariv's management said that carrying out the new business plan at the newspaper, which includes focusing on the digital edition, would necessitate an investment of at least NIS 100 million.

What went wrong?

Maariv has been in bad shape for years, well before Dankner bought control of the paper last year. The losses on its balance sheet total NIS 1 billion. It suffered under the poor management of Ofer Nimrodi and due to its lack of distinction in the newspaper scene as a whole.

It's not that something suddenly tipped it over the edge, either - the paper had annual operating profits of NIS 70 million to NIS 100 million five years ago. Well before free daily Israel Hayom took a chunk out of its readership, Maariv already had no firm business model and was reliant on loans and investments.

Dankner has taken criticism for choosing to invest in Maariv, in any case. Far from being a business decision, he apparently bought into the ailing paper due to the power and prestige owning a newspaper would give his group. While the IDB group already held considerable sway over the country's main daily, Yedioth Ahronoth, due to its advertising shekels, apparently this was not enough.

Even though Maariv looked like a bad investment from the get-go, it drew no opposition from Discount Investment's board of directors, who at the time answered to Dankner, the boss.

Dankner has very little of his own money invested in IDB, and he didn't put a single shekel of his own cash into the Maariv investment. His group is structured as a leveraged pyramid, which means the vast majority of its money belongs to the public - via pension funds, provident funds and bank loans. The investing public lost about NIS 300 million on Dankner's Maariv investment over the past year. (Eytan Avriel )