Israel Broadcasting Authority to Be Shut Down and Replaced

Public money 'disappeared in a black hole' of overtime, unrealistic labor agreements and a disintegrating archive, says communications minister.

Israelis will no longer be forced to pay the universally despised television licensing fee: This was the good news announced Thursday morning by Communications Minister Gilad Erdan and Finance Minister Yair Lapid at a joint press conference at which they presented the recommendations of the Landes Committee that examined the future of the Israel Broadcasting Authority.

The committee recommended canceling the license fees and replacing it with a combination of advertising revenues and the existing radio license fee, which is paid as part of vehicle licenses. In addition, the new broadcasting agency would receive support directly from the state budget - for the first time - of about 200 million shekels ($57.4 million) a year. “The bottom line is on March 31, 2015 the license fee will be abolished,” said Erdan.

“Payment of the license fee has become a symbol - it is seen as a fee without anything in return. We are not willing for [the fees] to be collected in dubious ways to finance spending and waste of a failed organization,” said Erdan. “It cannot continue. The money is swallowed up and has disappeared in a black hole of overtime, unrealistic labor agreements and a disintegrating archive.  We have even invented Waze, so how can it be that public broadcasting looks like a neglected backyard. We will close the IBA and open a new and high-quality body,” he added.

What other changes are afoot?

The cancelation of the license fee and finding new sources of funding are just one part of the Landes Committee’s conclusions. The committee also recommended closing down the entire existing structure of the IBA and Educational Television - and firing all the present employees. A special group will be established to be responsible for the closure process, while alongside it a new unit will be established to start building the future broadcasting authority, separate from the existing IBA that will be closed down.

As part of the closure, all employees will be laid off, though some of them may be rehired by the new agency based on its needs. Out of the present 1,600 workers at the IBA, only a few hundred are expected to be rehired. The authority will have some 600 employees.

The cost of laying off some 1,600 people will be over 800 million shekels, which is to be paid for by the sale of the IBA’s large property assets, mostly in Jerusalem, Haifa and Tel Aviv. These are expected to be able to cover the costs, but it is possible the treasury may have to put up funds if the sales revenues fall short, or as bridging financing until the property sales are completed.

“Israel needs high-quality public broadcasting with innovation and independence,” Erdan said. “Broadcasting that includes everyone and provides an answer to the failures of the commercial stations that are motivated by ratings.” The IBA has excellent employees who are not to blame because their employer has lost its direction, said Erdan, promising to make sure they all received fair severance conditions.

The new broadcasting body will include all the existing eight radio stations of Israel Radio, Channel 1 television, a children’s channel based on today’s Educational Television, and Channel 33 in Arabic.

The new authority will also produce its own sports and news programs. A new news operation will be built that will operate for both the television and radio stations - and will include new media such as Internet, though each channel will have its own reporters. The estimated cost of the new news operation is about 160 million shekels a year.

The new authority will buy productions from independent producers for most of its content, at an estimated cost of 200 to 250 million shekels a year. Today the IBA produces most of its own content, at an approximate cost in 2013 of 75 million shekels. This means a tripling of production budgets for original materials - though this amount is still less than the 400 million shekels the Channel 2 franchisees spend on such content every year.

This translates into an annual budget of 650 million to 720 million shekels a year, including radio and Educational Television. The Landes Committee wants wage costs to be only 25% to 30% of this amount, compared to 50% of IBA spending today.

The Landes Committee was preceded by 14 other committees that studied the problems at the IBA, but this is the first one to recommend closing it down completely.  Ram Landes, who headed the committee, played a role in setting up both the Channel Two and Channel 10 news operations. Besides Landes, who is the principal in the production company Koda Communications, the committee’s other members include Karni Ziv, who was head of dramatic and comedy programming at the Channel 2 franchisee Keshet; Yair Aloni, a former IBA director-general; Zvika Goldberg, a former editor on the Channel One’s Mabat news show; and journalist Jackie Levy.

How will it be funded?

Until now, the license fees brought in some 450 million shekels for the IBA, along with another 300 million shekels from the radio license fees, and an additional 80 million shekels from advertising and sponsorships. The new budget will continue with the vehicle licensing fees, including expectations this amount will rise to 350 million shekels because of the increasing number of cars on the roads. Advertising revenues are expected to rise by at least 50% if the business is managed properly, said the committee.

For months the committee was leaning towards keeping the television licensing fee, but reducing it and changing the way it was collected. The surprising decision to cancel it completely  - which matches Erdan’s  long-declared  position - came after the treasury agreed to put up state funds to cover the difference.

To prevent the new authority from being dependent on politicians and losing its independence because of its need for funds directly from the state budget, the committee recommended establishing a mechanism for setting the authority’s budget - such as linking it to the levels of funding for other bodies, for example, the National Insurance Institute. But no finally mechanism has been decided on  yet.

What will happen to Educational Television and Israel Radio?

The operations of Educational Television, which is now under the auspices of the Education Ministry, will be part of the new authority. Its budget is 120 million shekels today, of which 90 million came from the state budget. It is considered extremely inefficient and has some 200 employees.

A special subcommittee dealt with Educational Television, and recommended including it in the new broadcasting authority with a production budget of 40 million shekels a year - which should be enough to significantly expand its children’s programming, while saving the state some 50 million shekels a year.

The committee recommended not changing the number of radio stations and the existing eight will continue to broadcast. But Israel Radio will see its budget cut sharply, after the committee found a large surplus of manpower and great inefficiency. The committee said the present NIS 300 million budget can be cut to just 110 million.

Who will appoint the management of the new Broadcasting Authority?

The various committees over the years have determined that one of the IBA’s biggest problems stemmed form the fact that its senior management, including the director general and its board, were appointed directly by the government. This turned IBA employees and management into representatives of the politicians.

The Landes committee recommended cutting these political ties by having the new seven-person board appointed by an independent search committee, appointed by the appropriate minister and headed by a retired judge. The cabinet will appoint the authority’s chairman, based on recommendations from the search committee. The board will appoint the director general - without any involvement of politicians - as opposed to the situation today.

Other senior appointments will be filled by professional staff, with independent search committees making the recommendations.

What else did the committee discover?

The committee spent a large amount of time trying to understand how the IBA worked - and what caused its collapse. Committee members were shocked to learn that no one in the IBA could tell them exactly how many employees it had, and its culture was so divided and problematic there was no way to rehabilitate or reform it.

Previous reforms, whether implemented or just proposed, including investments of huge sums in the IBA. The most recent proposal, rejected by Erdan, required a NIS 700 million investment. But the committee said it would not save the IBA. Rather, it predicted, the IBA would be back in a few years asking for more money since it was running a chronic deficit - and would not have cut manpower in the numbers promised.

When will it all happen?

The process of closing down the IBA and opening a new agency requires significant legislative changes to the IBA Law. The committee has already prepared a draft version of the required amendments as part of its work and it will soon be presented to the Knesset. Erdan is expected to participate in all the meetings of the Knesset Economic Affairs Committee, which will prepare the new law, and will try to ensure no changes are made to the government’s version.

Even before the legal changes, a new administration with two heads is to be established - one for closing the IBA and the second for establishing the new one.

The legislative process and establishment of the new body is expected to take at least a year, and even then it will probably take quite a bit longer before the new Channel 1 operates up to expectations.

Daniel Bar-On
Daniel Bar-On