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How did Haim Saban make his money?

Simple. He sold dear and bought cheap.

When Saban and Rupert Murdoch met with Disney chief executive Michael Eisner in late 2001, they knew he was desperate. He needed a splashy acquisition to prove to the world that he was still The Man.

Eisner asked them for a final figure they'd accept for Fox Family, and they decided to stick him with the cartoonish figure of $5.3 billion. What a hoot.

But Eisner bit, and today, Wall Street analysts figure he paid maybe one to two billion dollars too much.

Saban got his magic mountain of cash from Disney just as the capital market, telecoms and media world were at the height of their woes. It was a brilliant time for a liquid entrepreneur to look for bargains.

The Egyptian-born former Israeli billionaire spent a year negotiating to buy the German television network Pro7 Sat from the banks to which the German media empire Kirch owed money. Finally he got the company his favorite way - cheap. A year later its market value has doubled.

So it was little surprise to read that leak this week from the Saban-Apax group, which is contending to buy the government's controlling interest in Bezeq, that the phone company's real value is 20 to 30 percent below its present market capitalization.

They hate its price

The main obstacle hindering the Saban-Apax group from buying Bezeq at the kind of price Saban likes, namely a low one, was rescinded a month ago. Nochi Dankner, his main competition, quit the race in umbrage at the terms the Antitrust Commissioner set. Dankner had been touted as the most eager to make the deal, a person who might well up the ante in the 90th minute.

But all those billionaires - Saban, Apax, Benny Alagem and David Azrieli - face another obstacle, an ever higher one than Nochi Dankner. Namely, Bezeq's market cap.

Bezeq has been publicly listed on the Tel Aviv Stock Exchange for more than a decade. The capital market knows the company inside and out, and knows its financials. Not a few analysts cover the stock, and its market capitalization is considered a solid basis for its real value.

The leak about "an internal appraisal" valuing the company at $2.17 billion to $2.48 billion was designed to serve four related purposes.

1. It was meant to signal the other contenders, Alagem and Azrieli, not to bid too high.

2. It was meant to signal the finance minister and Government Companies Authority not to expect a price near the market capitalization.

3. They hoped to reduce the share price on the TASE.

4. They wanted to prepare public opinion for the possibility of Bezeq being sold for less than the TASE thinks it's worth, lest the public raise a ruckus and hold back the company's privatization.

But there could be a somewhat less convoluted explanation for the leak. Maybe they really are deterred by Bezeq's high market capitalization. Saban and his partners, Apax and local multi-millionaire Mori Arkin, look at that $3.2 billion market capitalization, after Bezeq's 25 percent leap in the last year, and get queasy.

Is Bezeq really expensive relative to the other huge concerns listed on the TASE? Bezeq, which operates in a problematic industry beset by regulatory uncertainty?

That is far from obvious. It's quite the custom to slur Bezeq and its labor committee, and to dismiss its rapid technological progress, and to sigh at its massive investment in Yes satellite television, however, in practice, Bezeq is one of Israel's most productive cash cows. Even Yes could start producing cash while that other subsidiary, Pelephone, belongs to the Club of Three, namely the three cellular carriers that share an enormously profitable growth market.

The problem is something else altogether. It isn't Bezeq; it's that prices on the Tel Aviv Stock Exchange have long been quite high. The stampede for securities in recent months, even at offerings by junky companies that had been roundly scorned a year or two ago, was spurred by a surplus of money in the system, low interest rates, and generally, the orgy of liquidity in the world financial markets.

The problem that Saban, Arkin, and the rest of the contenders face is timing. This is the time for people like them to sell shares, to issue bonds, and to bring the public into their assets.

Yet while all their friends are merrily selling securities to the public, they find themselves - how exasperating! - on the buyer's side. And it's the state over there trying to sell; the one that's supposed to sell cheap!

And that is why Finance Minister Benjamin Netanyahu and Government Companies Authority chief Eyal Gabbai are straining to wrap up the Bezeq privatization on time, and to make sure all the contestants reach the finish line. They want to take advantage of the backwind from the market.