International television production company Endemol signed a deal last week to acquire one-third of Channel 2 franchisee Reshet.
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The media giant, which developed the Big Brother reality show format broadcast in Israel by Channel 2's other franchisee Keshet, will inject 100 million shekels ($28.4 million) into the local company. The deal could take a month to complete and is subject to approval by the Second Television and Radio Authority.
Part of the 100 million shekels will go toward purchasing shares in Reshet and part will be provided as an owner’s loan. Reshet shareholders have tried in the past to sell their stakes in the company for a token 1 shekel because of its heavy debt burden, currently estimated at tens of millions of shekels.
Reshet’s current ownership includes the Ofer family and Ehud Angel, who hold a 51% stake together, alongside the Strauss family, Polar Communications, and Aviv Giladi. The shares of all current owners will be diluted by an equal proportion to accommodate Endemol’s new stake.
The cash injection will provide Reshet a strong boost for vying with rival Keshet over licensing at the end of 2015, when each one begins broadcasting on a separate channel.
Endemol gained a foothold in Israel earlier this year when it acquired a stake in Kuperman Productions which operates closely with Keshet. Endemol apparently views Israel as an attractive place to invest thanks to local creativity, which has on multiple occasions in recent years led to local formats being adapted for broadcast overseas.
As of press time, Endemol did not respond to a request for comment, while Reshet declined to comment on the report.