The future of Israeli daily Maariv is in doubt after family members of publisher Shlomo Ben-Zvi announced Thursday that they intend to withhold further cash transfers to the ailing newspaper in its current form. Maariv CEO Israel Goldstein warned staff in an email that the paper is at a critical point.
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Since Ben-Zvi acquired Maariv in September 2012, his family has transferred some NIS 50 million to the daily. Maariv is jointly owned by Ben-Zvi; his father-in-law, British tycoon Conrad Morris; and his brother-in-law, Hillel Goldblum.
Ben-Zvi’s family are the ones who asked the McKinsey consulting firm to prepare a financial report on Maariv. The report’s conclusions apparently prompted them to announce the cessation of further cash flow to the newspaper in its present format.
This could lead to dramatic cuts and limited activity, as well as to a combination of resources with Makor Rishon, the other paper published by Ben-Zvi. If these steps fail, Ben-Zvi may have no option but to close down Maariv.
Estimates put Maariv’s losses for the first quarter of 2103 at NIS 15 million. This has slowed down in recent months, following the outsourcing of printing operations and the departure of 150 employees. Despite this, the paper desperately needs further cash flow for its operational costs.
Despite the closure of the print division, it seems there are no financial sources to cover ongoing operations. The paper has stopped payments to its suppliers and freelance writers. On two occasions this past week, its Globes Morning supplement did not appear due to lack of funds.
Goldstein’s email to employees stated: “Many steps have been taken in recent months to stabilize the newspaper. Regrettably, these have not been completed yet and the company finds itself at a critical juncture. As of now, no decisions regarding the company’s future have been made, since continued operations depend on several external factors.”
Goldstein also briefed staff on “a planned meeting for next Sunday with employee and trade union representatives. You will be updated and informed of developments.”
His message came in response to a letter addressed to Maariv’s management by attorney Amir Basha - representing the Association of Israeli Journalists – asking whether they intend to shut down the newspaper. While pointing out that changes have been made while disregarding employees, the letter also asked for clarification concerning closure rumors, breaking up into several companies or merging with Makor Rishon.
The workers committee said in response that they intend to sit down with management to try and find solutions that would salvage the paper, on condition that employees would not be the only ones to bear the costs.
There was no response from Ben-Zvi.