Permanent hiatus for Ch. 10?
Today is the day that Channel 10's fate will be sealed. If a last-minute arrangement was not made in the wee hours of this morning, the Second Authority Council will publish a new tender for operating the channel. The current franchisee, Israel 10, is expected to close its doors and cease broadcasting within a few weeks, because its owners have lost NIS 1.3 billion in the eight years it has oeprated. The pessimistic assessment - although many will say it is also a realistic one - is that this will be the end of the country's second commercial television channel and another will not arise in its stead.
A summary of events to date includes a TV station founded a little less than eight years ago, which was intended to offer a quality alternative to Channel 2. From the day it came on the air, and ever since, the channel has suffered from low viewer ratings and legal obligations to invest a lot of money in expensive productions. This combination, accompanied by numerous managerial errors, created a difficult reality for a channel never managed to make a profit. Channel 10 accumulated debts because it never spent the funds it had committed to investing in content, and this is now preventing extension of its franchise for two more years. To this can be added declarations by the major shareholder, Yossi Maimon, that he will not continue to pour money from his pocket into the channel.
The outcome is a channel currently teetering a centimeter away from a solution and the same distance away from the abyss. However, beyond the loss of income for the employees, closure of Channel 10 will have dramatic and resounding consequences. It will significantly change television in Israel as it is known today. The ripple effect that could very well start with the publication of a new tender for the channel will affect thousands of people whose work is connected to the channel in various indirect and widening circles. The consequences will be manifested in the broadcasting industry in general and also in other media such as newspapers, radio and Internet. The world of advertising can also be expected to undergo a shakeup and, likewise, peoples' viewing habits.
What will happen to the 400 salaried employee at Channel 10? Thus far, no television channel in Israel has ever closed down, although there was one franchisee that disappeared: Channel 2's Telad (one of three franchisees at the time), which was eliminated after the second tender for that channel, had 250 employees. Though it was obliged to continue to broadcast for eight months after the tender, nearly all its workers were fired except for a few employees. Telad kept them on its payroll after it stopped being a franchisee and had become an organization that broadcasts via niche cable and satellite channels. What happened to the Telad workers subsequently can offer a clue as to what will happen to Channel 10's people.
"The Telad case is different because Telad had existed since 1973 and was the largest employer in its field in the Jerusalem area," says Uzi Peled, former CEO of Telad. "Its employees had no alternative and when Telad took the blow, the workers, who were no longer young, had nowhere to go. Telad was also a production house, like Channel 10, which has its own studios and editing rooms. We had good people - set-builders, technicians, sound people and cameramen, along with the creative side: scriptwriters, researchers, directors."
And what happened to those employees?
Peled: "Many talents and programs were bought by the franchisees that remained at Channel 2, but the ones who suffered and are continuing to suffer are the workers at the bottom of the list. To my regret, anyone who was talented and wanted to continue to work in the field left the city; others simply changed their careers and are now working in other fields."
"When you go off the air, you fire most of your employees," confirms Dorit Inbar, who was the CEO of Telad when it lost the tender. "All the top people at Telad - apart from Ilan Toviyahu (now deputy CEO for marketing at the Reshet franchisee of Channel 2) - were not able to find themselves in the television industry. The employees who remained are operating the Telad channels on cable and satellite television, but there was simply no justification for continuing to employ everyone."
"At Telad more than 200 employees were fired in a single day," recalls a senior source at Channel 2. "Maybe 10 percent of them subsequently found jobs elsewhere in television. I would estimate that the figures at Channel 10 won't exceed those, because not only are the franchises fully staffed, they are also cutting back and firing workers."
This is apparently one of the biggest problems if Channel 10 actually closes down. As in other industries, here have not been many openings for job-seekers in the realm of TV recently. The addition of several hundred more unemployed workers to the market is also liable to have a negative effect on other employees, who will have to compete with others in the industry even at the cost of taking salary cuts.
Furthermore, as in the case of Telad, the future of the executives at the channel is not at all clear. At the two Channel 2 franchisees, Keshet and Reshet, the top positions are staffed by experienced people who have been identified with the industry for many years. Therefore, if Channel 10 shuts down, there is no knowing what its senior content executives, including the news company management, will do.
"The channel employs between one-third and 40 percent of [all the industry's] talents and journalists," says economist Yuval Zilberstein, an expert on the media market from the accounting firm Gazit Singer Even. "This will have a dramatic effect on the level of earnings in the entire television and media market. I don't believe the number of positions at Channel 2 will increase, and Channel 1 is supposed to be firing hundreds. I estimate that only a small percentage of the workers will find work elsewhere [in the industry]."
Salaried workers are just the first circle. Most of the programs that local stations broadcast are purchased from external production companies, and this is also the case with Channel 10. Though its management has stated it will cover all its debts in the forseeable future, the question is what will happen afterward and how producers who are not employees of the channel will be affected by the addition of more competition - and, at the same time, reduced employment possibilities.
"The moment Channel 10 shuts down, an entire industry will shut down," says Sharon Lemberger, an executive at Ananey Communications, which produces programs for the channel.
"The moment there is a Channel 10, there is an industry around it and Channel 2 needs to make an effort to create an industry around itself. The moment that stops, Channel 2 will have less motivation; there won't be daily wars over viewers. The niche channels use in-house producers and therefore don't need external ones or additional employees. What is true," he adds, "is that also at Channel 2, they will be able to use the tool of an implicit threat on the lower-level employees, on the grounds that there are now lots of people in the market who are looking for work and will take it at any price."
The concern here is not only about income. The closure of Channel 10, say creative people and others involved in program, will have repercussions for the future of Channel 2 and commercial television as a whole.
"I am worried about what will happen in the future," says one senior television producer. "Producers' room for maneuver will shrink and those that remain, Keshet and Reshet, will be able to take content and budgets away from us in a big way."
How will this affect programming?
The producer: "The supply of productions will be very large relative to such a small demand. This is worrying not only at the level of competition, but also of course with respect to the ability and desire to innovate and take risks. At Channel 10 it has been possible to try to produce 'risky' contents. The willingness for trial and error at Channel 10 has been greater, out of a desire to find the next big thing and to demonstrate originality. This affects the whole market - Channel 2 as well. What will happen now? Channel 2, and rightly from its perspective, will prefer to go for 'safe' contents. The offerings to viewers on the commercial channel will become banal."
"Channel 2 will have the possibility of applying a lot more pressure to the Second Channel Authority about content commitments. What can it do - shut them down?" says another source in the media.
Along those lines, someone who works in the television predicts: "Several more years will go by until we see a documentary worthy of its name and a proper, professional channel."
However, all this is still a partial picture: The chain reaction triggered by the channel going off the air will also have greater economic and even legal ramifications, and could alter viewing habits as well. For example, what will be the result of the possible disappearance of advertising on Channel 10?
"In the market, there could be two possible scenarios," says a top person at Channel 2. "The first is that Channel 2 will have increased power and advertisers will transfer the money they have been investing in Channel 10 to it, and then Channel 2's franchisees will be save from the economic crisis they are in. The other scenario is that Channel 10 will shut down and the advertisers will not redirect the money they have been investing in it to Channel 2, but rather will reduce their budgets or transfer this money to newspapers or billboards."
The second scenario was described in a worried voice by Talma Biro, head of the Advertisers Association of Israel, at a meeting of the Knesset Economics Committee last Monday. She said that judging by the case of Telad, funds that advertisers are investing in the channel will not be directed instead to other media. The upshot will therefore be a blow to the advertising market as well.
"Channel 10 is a significant slice of the advertising market and it is quite clear that if it doesn't exist, Channel 2 will benefit from that," explains Zilberstein. "But the supply at Channel 2 is limited; there is a given number of advertising minutes in prime time. Channel 2 will raise the price because of the reduction in supply. and the small advertisers will be eliminated from television."
At the time of the writing of these lines, it is not yet clear whether Channel 10 will go dark or whether a solution, which the sides have been deliberating for about a year now, will be found at the last minute. In either case, developments at the channel will lead to significant changes in the way television in Israel works and the way it is consumed by the viewers.