Ahead of the summer season, a man who owns a few log cabins for tourists - zimmers - in the north decided to expand. He borrowed from the bank and built a few more cabins and a swimming pool. He was to have started repaying his loan on August 1.
But after losing a whole month of income because of the war, he couldn't make the payment. The bank froze his account and is bouncing his checks.
The zimmer owner will receive some compensation from the state, but probably not enough to make a material difference. One formula for compensation relates to the zimmer sector's revenues in the summer of 2005, but our man had meant to make far more this year.
An alternative formula addresses only costs, and pays businessmen in the north 132% of their wage costs (minus the employer's share). Compensation for lost income is partial, and heavy costs of financing are not included in the formula at all.
Our holiday resort owner is not the only one bearing a heavy personal price that may well cost him his business entirely. Travel agents and airlines are reeling from a tidal wave of cancellations by tourists who'd meant to come to Israel, and Israelis who'd meant to fly abroad. They are wailing too: IsrAir claims that its passenger traffic is down by 25% to 30%, for instance. That's about the rate of cancellations that travel agents are reporting, and they threaten that unless they're compensated, they'll force people to pay cancellation fees, even if their excuse is that they've been drafted into reserves duty.
Many victims, limited wallet
Clearly, the circle of economic casualties of the war is very broad. Pressure on the government is mounting to increase compensation. People are demanding compensation for lost income, not only refund of costs; they want more areas to be included in the "compensation footprint", not only the northern border towns.
When the dust settles, the government will have to carefully check the extent of the damage done, and check how generous it can afford to be with compensation. The considerations will be macroeconomic in part, and will ultimately govern the fate of our zimmer-owner: survival, or not.
But one party exempt from the tensions of the government's deliberations is the Channel 2 concessionaires.
Not quite your usual casualty
These distinguished people do not live in the north. They are not hunkered down in bunkers waiting out Katyusha attacks, like our zimmer owner. Their situation is better than his: they are not in danger or losing their lives and livelihoods. Among the shareholders of Keshet and Reshet are the billionaire Haim Saban (who owns Bezeq), the heavy millionaires Mozi Wertheim (Coca Cola Israel), Oudi Recanati (sundry businesses), Zadik Bino (he owns the First International Bank and Paz fuel company), and that little bitty business body, Bank Leumi (TASE: LUMI).
In other words, even if a Katyusha were to land right on Channel 2 studios, the businesses of these tycoons would not be so much as scratched, nor would Channel 2 itself.
The network's revenues came to NIS 700 million in 2005. The only monkey on their backs is the heavy financing costs incurred because of the huge sum they paid for licenses. Those costs are believed to have reduced the Channel 2 companies to a loss in the first quarter of 2006, and that had nothing whatsoever to do with the war.
They had bad business judgment, that's all: they agreed to pay too much for the franchise. As a result this handful of millionaires and billionaires has been campaigning frantically for a year now to get the government to rescue them from their folly. In short, they want a discount on the franchise cost.
The war is a golden opportunity for them. It hurt their income because corporate Israel hesitated to advertise while missiles whine and shriek through northern skies. The war cost them NIS 7 million or NIS 10 million in lost income? The war led them to produce costly news shows that lasted hours? It did. Do they therefore deserve compensation?
Nice regulator, nice regulator
Certainly, especially given their nice regulators, such as the chairman of the Council for Cable and Satellite Broadcasting, Nurit Dabush. She already folded under their pressure once and sweetened the terms of their franchises. The war gave her a perfect excuse to bend again, and exempt them from paying royalties to the state for their franchise during the term of the war. She removed limitations on the duration of ad breaks during prime time, and even agreed to participate in the cost of producing the hours-long news programs, through the public budget of the Second Broadcast Authority Council.
She did all that using our money, taxpayer money. We'd probably have chosen to give it to the unhappy owner of the zimmer, not to the billionaires of Channel 2, if we'd been asked.
But Nurit Dabush is not asking us. She is wielding her authority to give the billionaires of Channel 2 a thing that nobody else in Israel, not the zimmer owner or any other small businessman crumbling under the rain of missiles in the north, is getting: full compensation for income lost because of the war.
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