Channel 10 Rescue Plan Unraveling Over Debt

Prospective investor unwilling to assume NIS 15-20 million debt.

Yafit Greenberg, the ubiquitous television pitchwoman known in Israel as Gimmel Yafit, is apparently not buying a major stake in financially troubled Channel 10 after all — due to debts the station has that Greenberg says she is unwilling to assume. Failure of the deal could put the station’s existence in jeopardy.

Over the weekend, news had surfaced that she had struck a deal with Ronald Lauder, the president of the World Jewish Congress who is also heir to the Estee Lauder cosmetics empire, to buy his 30% stake in the broadcaster. Now, however, it appears that the deal is off, although the parties have not commented.

The unraveling of the sale of Lauder’s interest in the station would pose an immediate threat to the station’s future because Lauder, who has invested half a million shekels into the station over the last few years and has been its dominant shareholder, said recently that he will not inject further money into Channel 10’s daily operations. This year alone he has funneled NIS 140 million to the station. Lauder has also expressed unwillingness to be the sole guarantor of its application for a broadcast license from 2015 onward.

Although Greenberg signed documentation to acquire Lauder’s stake about two weeks ago, as the transaction proceeded it became apparent that the station has tens of millions of shekels in television production debts to outside producers. As a result, she demanded that Lauder provide NIS 15 million to NIS 20 million to cover the debts in addition to guaranteeing other debts that surface in the future. Lauder said that he would immediately inject several million shekels, but nothing beyond that. Over the course of this week, the parties tried unsuccessfully to bridge their differences.

The parties to the deal have also not yet submitted a request for approval by the Second Television and Radio Authority, the agency that regulates commercial television here, for the sale of Lauder’s stake to Greenberg. On Sunday a meeting of the station’s board of directors was convened at the offices of controlling shareholder Yossi Maiman, where the difficulties encountered in the deal were discussed.

Without the injection of about NIS 10 million per month, the station would be unable to meet its current expenses, including even its payroll. If the deal between Lauder and Greenberg falls through, it would have longer-range consequences as well. The extension of the station’s license into 2015 and beyond requires a guarantee of NIS 160 million that is to be submitted by the end of the year- that’s just over a month away. And the other major Channel 10 shareholders, Maiman and Hollywood producer Arnon Milchan, are unwilling or unable to provide the guarantees themselves. The station says the request for the license will be submitted on time.

Milchan has also refused to approve the license extension, claiming that Lauder had promised to cover his losses from investment in the station. Lauder’s representatives have said there was no such agreement.

The audience ratings at Channel 10 have been significantly smaller than its commercial television rival Channel 2. If the station cannot provide firm evidence that it will be in operation long term, it would be difficult for it to attract the new investors that it needs in its efforts to resolve its current financial crisis.

Alon Ron
Ron Lauder
Ofer Vaknin