How did Maariv get into enough trouble to bring it to the brink of closure?

Maariv’s financial situation has been going downhill for many years, and accumulated losses on its balance sheet have now reached NIS 1 billion. Unlike Yedioth Ahronoth, Maariv wasn't particularly profitable even as far back as the late 1990’s. Over the past decade it suffered heavy losses under Ofer Nimrodi's poor management and due to not claiming any particularly substantial niche in the news industry.

What brought on Maariv’s severe decline over the past few months? Perhaps it was Israel Hayom's appearance on the scene?

In fact, it wasn't due to anything in particular. Maariv already began suffering annual operating losses of NIS 70 million to NIS 100 million five years ago. Well before Israel Hayom became the leading player in the newspaper market, Maariv was already operating without a solid business model, dependent on fundraising and loans for its survival.

Didn't Nochi Dankner, chairman of IDB Holding Corp, understand this when he bought it in June of last year?

Dankner wasn't interested in the paper's business model. He just wanted to buy power and influence. His implicit influence over Yedioth Ahronoth – from the advertising budgets of IDB Holding Corp. companies – apparently didn’t satisfy him. He wanted the entire economy, especially the regulators, government, and press, to know he owns a newspaper and can thereby influence their fate.

Perhaps he also believed what he read in the media about himself and his managerial talents, thinking he could make something of Maariv where Nimrodi and others had failed.

What about the directors of Discount Investment Corporation, IDB Holding Corp’s principal investment arm? Did they also believe a newspaper losing money for seven straight years could turn into an enticing investment?

That question wasn't relevant in 2011, when Dankner bought Maariv. Until just several months ago, most directors and top managers at the IDB Holding Corp weren't much more than pawns, to be moved around when the big boss wanted something.

History shows that nobody dared challenge Dankner's decisions, precisely because of his enormous power over the economy and the press, along with his ability to wield carrots and sticks, using the NIS 200 billion of the public's money under his control.

How much did Dankner lose in the Maariv escapade?

Dankner has very little capital invested in the IDB Holding Corp, and he didn't spend a shekel of his own money to buy or finance Maariv. The group is structured as a leveraged pyramid, so the vast majority of capital equity and funds invested in it belong to the public – through provident and pension funds and managers' insurance plans, and from the banks which loaned him billions.

Meanwhile, the public lost about NIS 300 million over the last year, through funding Dankner's plaything. In addition, it seems that the public stands to lose tens of millions of shekels more – regardless of which option is chosen.

If that's so, why doesn't Dankner shut down the newspaper?

Dankner is in a race for survival. Considering IDB Holding Corp’s mismanagement, the astronomic yields on its bonds in the stock market, the downgrades, and the warning that read “going concern” attached to its latest financial reports, it's just a matter of time before one of the lenders or investors demands he be replaced at the top of the pyramid.

Dankner doesn't want to give up control, and at this time the collapse of Maariv would further damage his image, so he'll try to prevent it at all costs.

What is he counting on? What can he do?

We can only guess. Perhaps he thinks the newspapers supporting him in recent years will generate public pressure, and in turn, calls to inject public funds to rescue the IDB Holding Corp or Maariv, similar to the calls to rescue Channel 10.

Or maybe he hopes to reach a debt settlement – which would obviously include a trim of billions of shekels from the public's savings invested in IDB bonds – and still retain control.

Perhaps he hopes to bring investors into the group or into Ganden Holdings, his private company, which sits atop the pyramid, and survive another day.

Other newspapers? Why would Arnon (Noni) Mozes, managing editor of Yedioth Ahronoth help Dankner? Aren't they competing with Maariv?

Mozes had an alliance with Dankner for years which had it ups and downs, and dwindled when Mozes saw that Dankner's star was starting to fade. But Dankner's purchase of Maariv very likely had the blessing of Mozes, who hadn't considered Maariv a serious rival to Yedioth Ahronoth for many years.

However, Mozes would welcome anything that could weaken Israel Hayom, and it would suit him that the head-on public battle with Sheldon Adelson and Israel Hayom be led by someone else.

What about Haaretz Group, which also owns TheMarker?

Haaretz would also indirectly benefit from the efforts of Dankner and others to resuscitate Maariv. If Maariv were to be shut down, Adelson could buy its printing press for peanuts, and would no longer need to use Haaretz facilities to printing hundreds of thousands of copies of Israel Hayom every day.

What has TheMarker written about Maariv over the years?

That it's a lousy business, that it's hard to imagine how it could be nursed back to health, and that all its managers' forecasts over the years turned out to be balderdash.

So why did Bank Hapoalim extend tens of millions of shekels in loans to Maariv three years ago?

That's an excellent question to which Bank Hapoalim CEO Zion Keinan, the director of corporate banking dealing with Maariv when the decision was made to extend it more credit, still hasn't replied.

It is known, however, that the chairman of Bank Hapoalim at the time, Danny Dankner, and his cousin Nochi Dankner who exercised weighty influence over his major decisions, were close friends with Ofer Nimrodi.

What’s happening with Nimrodi nowadays?

Nimrodi is the big winner. He knew very well that Maariv couldn't be turned around, but managed to convince first Zaki Rakib and then Dankner that they could amass power and prestige by buying it. He saved himself from being there when the paper is shut down, and having to face its employees and creditors with the bad news.

Why will the newspaper shut down? After all, we all read that its board decided to transfer it to the Internet, the new news medium.

The move could possibly save Maariv, but chances are slim. No newspaper of Maariv's stature could move to the Internet without becoming a shadow of its former self. Maariv generates about NIS 250 million a year in printing revenues, while Internet revenues total less than NIS 10 million.

Moreover, the website would need to be based on the newspaper's editorial staff and reporters, so the moment it goes out of print and reduces staff accordingly, it won't be capable of maintaining any kind of significant journalistic presence. It will have a very hard time competing in the tiny and ruthless Internet news market.

So perhaps it could merge with another newspaper? Channel 2 reported something over the weekend about a possible merger with Haaretz.

These seem to be tendentious leaks. Stories on a merger with Haaretz are mainly just for amusement. Although Haaretz is much better off than Maariv, combining it, or any other newspaper, with a loss dynamo like Maariv would quickly end up sinking the entire joint venture.

The heads of Maariv and Haaretz have met many times over the past few months, but there are very few synergies between the two organizations. Also, Maariv's losses are so great that no other newspaper or publisher would really want to close a deal. The readerships are different, the culture is different, and it doesn't make any economic or business sense.

So why are they meeting? And why is it being leaked?

The meetings offer some credibility, which Discount Investment Corp. directors could use to to justify continuing to resuscitate it with more of the public's funds. Dankner needs a story featuring a light at the end of the tunnel, and reports on talks over merging with Haaretz or any other media outlet fit the bill.

What about freedom of the press? Won't this be compromised by shutting down one of Israel's handful of newspapers?

Freedom of the press can't be based on newspapers suffering enormous losses and financed by people unfit to be publishers who own them merely to wield influence. Nimrodi, twice convicted for criminal activities, wasn't fit for Maariv. Dankner, who controls a pyramid of monopolies and financial institutions, certainly isn't fit to run a newspaper. Their basic motivations are almost diametrically opposed to the concept of “freedom of the press.” Anyone who buys a newspaper to acquire influence ensures that the paper won't grant its journalists their required freedom.

What about Israel Hayom, "Bibi's newspaper?" Is there freedom of the press there?

Without a doubt, Israel Hayom is a newspaper with a clear agenda to support Benjamin Netanyahu, and offers heavily reduced prices for printed newspaper ads. But at least Israel Hayom's agenda is out in the open and known to every reader, while the agendas of other media outlets are often hidden from view.

So who is fit to publish a newspaper?

That's a tough question. To represent “freedom of the press,” a publisher needs to declare a motivation, a set of values, and sport a staff of completely independent editors who are only guided by what they perceive as the public interest.

The publisher needs to be someone who doesn’t meddle in the journalistic process or involve it in improper considerations. A publisher needs to be transparent. A publisher can't be a shadowy figure who inserts and extracts news from the paper without readers knowing what interests lay behind such decisions.

Are the current owners of newspapers transparent figures whose involvement is clear to all the editors and readers?

This is an excellent question, but one that's hard to answer within this framework. The hundreds of journalists who have been busy the last few months with trying to rescue the press should give this some thought. This is the main issue that should trouble those truly concerned about the state of journalism and democracy.