Channel 10 got a new lease of life on Wednesday after the Knesset’s economics and education committees approved a plan to let the beleaguered television broadcaster spend last than half what its rivals do on programming.
- Panic station? Regulators and lawmakers mulling future of Channel 10
- Channel 10 reporter: How we reached the cusp of bankruptcy
Under the plan, which will need Prime Minister Benjamin Netanyahu’s approval, Channel 10 will be required to spend just 130 million shekels (about $30 million) on programming rather than the 280 million shekels ($71 million) its competitors, the Channel 2 franchises Reshet and Keshet, do.
With the lower costs Channel 10 will be able to survive into 2015 and recruit investors who can inject the capital the broadcaster badly needs.
That investor is likely to be Shlomo Nehama, the former chairman of Bank Hapoalim. Sources said on Wednesday that Nehama had reached complete understandings with Channel 10’s existing shareholders and that an agreement will be signed shortly under which he would invest 100 million shekels.
“At the moment Nehama is coming alone,” Yossi Varshavsky, Channel 10’s CEO, told the Knesset committees. However, it is likely he will enlist an investor group. Neither Nehama nor his attorney, Ram Caspi, agreed to comment on the Knesset decision.
Meanwhile, people in Israel’s mass media industry are still trying to fathom what would make Nehama want to invest in commercial television in Israel, which has suffered heavy losses over the last several years.
Nehama’s personal fortune is estimated in the hundreds of millions of shekels. In 2006, he sold his shares in Arison Holdings, the investment vehicle for Hapoalim’s controlling shareholder Shari Arison, for 700 million shekels. Today he is controlling shareholder in energy investor Ellomay Capital with a market capital of about 400 million shekels. Nehama owns 40% of the company.
“Nehama left Bank Hapoalim with a lot of money and invested it wisely,” said a source who has worked with him and spoke on condition of anonymity. “He doesn’t like taking risks, so it seems crazy to me that he would invest in Channel 10, because he certainly understands that he won’t get a return on his investment. So the question is: Who is behind him.”
On the other hand, another source said Nehama likes the public sphere and regards it as important. After he left Hapoalim, Nehama seriously considered a request by Netanyahu to become finance minister.
“He thought seriously about it, especially because it’s important to him to be in a public position,” said the source. “In this context, ownership of Channel 10 would bring him back into the public sphere.”
In the meantime, the easier spending floor set by the Knesset fits well with Varshavsky’s strategy for Channel 10, which aims for a slimmed-down schedule focused on news, drama and documentaries instead of high-cost reality shows.
Thanks to the hundreds of millions of shekels injected into the broadcaster by its original shareholders, including the American billionaire Ronald Lauder, Channel 10 was spending 300 million shekels ($76 million) annually on programming.
Reshet and Keshet have also sought to get breaks on programming budgets. Even though Second Broadcasting Authority is seeking to reduce the number of barriers to entering the television markets, among other ways by easing floors of program spending, neither franchisee has gotten approval. But in the past breaks granted struggling Channel 10 have eventually been given to the Channel 2 franchisees as well.