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The editors in chief of Maariv, Doron Galezer and Ruth Yuval, have resigned, parent company Maariv Holdings notified the Tel Aviv Stock Exchange yesterday. The two had been just a year and a half on the job.

When Galezer and Yuval joined Maariv in 2007 it was hoped that the two would manage to extricate the daily newspaper from its financial travails and declining circulation. Maariv owner Ofer Nimrodi described their enrollment a seminal event in the newspaper's life.

But the idyll lasted just a year and a half. In its announcement to the TASE, Maariv Holdings wrote that the editors had resigned over budget-related disagreements with the firm's board of directors, "which prevent them from fulfilling their duties in accordance with their professional outlooks and as they envision the newspaper's development."

Nimrodi expressed regret over the decision.

"Ruth and Doron have done an excellent job at the paper. I wish them all success in their future endeavors," he stated.

Galezer and Yuval were unavailable for comment.

Unnamed sources close to Maariv say that the two resigned after refusing to implement further budget cuts. One source said that the issue was not additional cuts, but rather the implementation of an existing streamlining program approved in mid-2008 that aims to cut monthly costs by NIS 4 million-NIS 5 million.

The two editors in chief had not met the financial targets set by Maariv, the source said. Both Maariv and Galezer declined to confirm or deny the report.

The paper's financial condition continued to deteriorate after Galezer and Yuval were brought on board, and the firm continued to suffer from chronic losses.

Maariv Holdings reported a NIS 56.8 million loss for the fourth quarter of 2008, compared to a loss of NIS 36.2 million in the same quarter the year before. Revenues fell 20% in the last quarter of 2008, to NIS 89 million.

The company attributed falling revenues to a decline in demand for advertising.

And in spite of its efficiency plan, Maariv chalked up a gross loss of NIS 2.8 million in the fourth quarter of 2008, after a gross profit of NIS 17.4 million in the same period in 2007 due, among other factors, to a NIS 7.6 million increase in severance expenses related to employee dismissals. Its operational losses ballooned by 90% compared to the same period in 2007, to NIS 50 million.

Maariv is also affected by falling circulation. According to a survey conducted by TGI, circulation dropped 8.6% in the second half of 2008 compared to the first six months of the year, continuing the 2007 trend, when circulation dropped by 26% in the second half of the year compared to the first six months.

The rise of Yisrael Hayom, the free daily newspaper owned by Jewish billionaire Sheldon Adelson, has been mainly at the expense of Maariv's circulation. Maariv controlled 13.8% of the Israeli daily newspaper market in the second half of 2008, with Yedioth Ahronoth accounting for 35.9% of that market.

In February Maariv received a NIS 50 million loan in February 2009 from Bank Hapoalim. The loan carries an interest of prime + 2.5% - relatively low for a high-risk company like Maariv Holdings. The Maalot rating company slashed its rating for the firm's bonds by 10 levels, from BBB to CC in December of last year. Maalot explained that the company would not be able to maintain its current capital structure in the next few months.

Bank Hapoalim currently owns a 27% stake in Maariv Holdings, shares that used to belong to Vladimir Gusinsky. In November Hapoalim agreed to accept Gusinsky's shares in exchange for his debt to the bank. The shares are being held in trust by attorneys Ram Caspi and Pini Rubin.