High Hopes for Israel's Arabic TV Channel Collapse in Debt

A fifth of all Israelis are Arabs, but they have access to 1,000 channels via satellite TV, leaving Hala TV trapped in a vicious circle of low ratings and inferior content

Hala TV's control room.
Hala TV's control room. Panorama

Over the Ramadan month, viewers of Hala TV – Israel’s first and only commercial Arabic television broadcaster – were treated to an unusual series of interviews. Host Fadi Jabber quizzed Knesset members, mayors, cultural figures and others as he raced his sports car down dirt roads.

Jabber and his hosts were swinging from side to side and holding tight to anything that seemed stable as the dust flew up around them. Jabber certainly didn’t mean anything more than creating a new and original format during a peak viewing month in the Muslim world. But the show could just as easily served as a metaphor for the TV station that employs him.

Hala TV looks on a collision course no less than Jabber’s sports car: It has run up 60 million shekels ($17 million) in debt in the five years since it was launched, the debt keeps growing and it has no way to repay it. Moreover, Israel’s Cable and Satellite TV Council is slated to hold discussions in the next few weeks about whether Hala TV is meeting the terms of its license.

When it first aired in 2012, in a festive launch at a fashionable Jaffa restaurant, its prospects looked bright. Eight partners had agreed to back it, and they were confident they could create original and attractive programming for Israel’s Arabs – who make up some 20% of the population.

They included the two Channel 2 television franchisees (Reshet and Keshet); Bassam Jaber, who controls the biggest Arab-language news site in Israel and the weekly newspaper Panorama; and the partners in Sectors, Israel’s largest Arabic ad agency.

But there was a critical flaw in the business plan. Nearly all Israeli Arabs have private satellite dishes that connect them to about 1,000 Arabic language channels from around the world for a one-time cost of as little as 500 shekels. Not surprisingly, 90% don’t bother with Israeli cable or satellite, and its monthly fees.

It didn’t take long for Hala TV to start accumulating debt and to cut back on content in face of low viewership. Infighting among the partners made things worse.

Hala TV is in a vicious circle of little advertising and low ratings. It says its infinitesimal ratings don’t reflect its true viewership because Israeli Arabs are underrepresented in representative audience samples. No matter, big advertisers won’t buy time because without ratings it’s hard to price ad rates. And without advertising, Hala TV can’t afford to create and buy programming that would attract more viewers.

After two years and an investment of some 30 million shekels, the partners had had enough and were ready to abandon the channel. Jaber, however, agreed to buy it at a valuation of 2 million shekels, and today he controls more than 95% of the shares.

“We’re giving the Arab public the content it wants, but not as a favor,” he said. “We’re not a political channel either, but a broadcaster that want to talk to our community as equals, modestly and transparently. In the end, however, we’re a business.”

Jaber told TheMarker that the broadcaster is currently breaking even with revenues of about 2.5 million shekels annually and 20 employees. It saves a lot of costs by sharing news with his Panet website.

Part of the broadcaster’s problem is the local-content requirements it needs to meet as part of its license terms. That amounted to 4 million shekels in its first year, rising to 11.5 million in its fourth, and from there it is supposed to grow 10% a year. Hala TV has never met the minimum and it still amassed a huge debt.

Today, Hala TV relies on foreign content. Its local content is mostly studio shows and about 90 minutes of current affairs. That leaves the Cable and Satellite TV Council with a dilemma – to shut down Hala TV for violating its license or not.

Hala TV’s woes aren’t unique. All four niche channels, including Channel 20 for religious Jews and a Russian-language channel, have also failed to meet the local-content requirement, said Yifat Ben-Hai Segev, the council’s chairwoman. She wants to change the content requirement for niche channels, she said.

“The regulation is bankrupt and I said we need to change it,” she said, “but I was told it has to be done through legislation and we’re waiting now for the legislation,” adding that having an Arabic-language channel “was a top national interest.”