Text size

Commercial television: For years the three companies running Channel 2 insisted they compete. With each other, that is. That sounded rather silly, it must be said - after all they shared Channel 2 and each had a monopoly over its own time slot. But they insisted that viewers and advertisers could choose what day to watch, or to advertise.

As for their astounding profits, sometimes a 20-40 percent return on capital, the three companies attributed it to their excellent management.

This week, when Reshet and Telad announced their financial results for 2003, we got another perspective on their phenomenal management capacities.

However feeble, disappointing and rating-devoid Channel 10 was since its inauguration, it managed to almost completely abolish the profits of the talented triumvirate. For years Telad had been netting NIS 11-22 million a year; for 2003 it presented a net of NIS 3 million. As for Reshet, it had to settle for NIS 1.8 million.

And remember that Channel 10 spent half of 2003 operating under court protection from bankruptcy. Its broadcast schedule was a pale, pared down thing. Hands constantly trembled in readiness to pull its plug.

But Channel 10 posed competition, as piteous as it was. Competition over viewers, competition over advertisers, competition over suppliers, competition over content. And competition is another game entirely, a game that Channel 2's franchisees are just starting to learn.

Cellular: Partner Communications CEO Amikam Cohen shocked the market to its core two weeks ago, announcing the acquisition of a controlling interest in Matav Cable Systems, as a stepping-stone to conquering the entire Israeli cable industry.

Goodness. Just a couple of years ago detractors were braying that Israel had no room for a third cellular company, and loudly wondered whether Partner would ever be able to pay off its liabilities. And here Partner is, taking the cable television industry by storm and investing more than half a billion shekels just as a start.

We figure that when the first quarter 2004 financial statements are published, it will become clear, again, why the cellular companies are so confident and why Partner is so eager to embark on new adventures.

Partner, Cellcom and this year, Pelephone Communications too will be raking it in this year. Granted, cellular isn't going to grow much, and major income from third-generation service lies in the hazy future. The main thing is that the era of tooth-and-nail competition is apparently over.

"Competition in cellular is a thing of the past," one of Cellcom's shareholders confided last week. "Now competition is confined to new customers and advanced services. It is very hard to compare the rates of the carriers because they offer so many options, but in general the differences aren't major any more."

The banks: Today the big banks will be presenting their 2003 results. Heavy provisioning for the imprudent credit will be the last reminder of the recession that pervaded the marketplace in the last three years. All the rest of their financial statement parameters will show business as usual. Revenue from financing, before provision for doubtful debt, will climb due to wide margins. Operating income will rise, wage costs will surge and bonuses to management will too.

How can that be? Simple. In the absence of real competition, middle class households are stuck with their banks over decades . In most cases they don't even know what fees they pay, or how much these fees amount to.

Insurance: You read the annual report from your life insurance provider and discovered that its yield is far below that of the competition. You asked experts and learned that the terms of your policy are inferior, because of a large, expensive risk component. What can you do about it?

Nothing, my friend, chances are you're stuck. It is hard, sometimes impossible, to transfer money between life insurance policies, and forget rerouting the money to an alternative savings vehicle. If your policy is young, you stand to be hit with a heavy fine for exiting. The most you can do is stop depositing money in the policy, but the money you already put in will stay there for many years to come, during which time the company will continue charging fat management fees. Wake up, dear reader! This is competition in Israel.