Ben-Tzvi’s Plan to Save Israeli Daily Maariv: Merge It With Makor Rishon

Weekday print edition to disappear, will be published in digital format only; distribution and printing to be outsourced.

The Maariv newspaper group that Shlomo Ben-Tzvi bought from the IDB group has been in trouble for years. It turns out that as early as November 2012, when obtaining court approval to buy Maariv, Ben-Tzv already had an extensive business plan to revive the failing business. That plan is to amalgamate it with his newspaper Makor Rishon, outsource printing and distribution – and abolish the weekday print version, leaving Maariv-Makor Rishon as a wholly digital edition.

This plan, obtained by TheMarker, was apparently designed to attract investors who could provide cash flow for the paper. The synergy between the two papers will be instituted not only at the administrative but at the editorial level as well.

The new Maariv brand will in short consist of digital editions midweek and a printed paper on weekends. The Makor Rishon brand, which currently publishes a paper daily, will also publish a paper only on weekends.

The various magazines published by both papers have been saved. Maariv will continue to publish “Horim” (parents), “At” (You), magazines for children and teens, and others. Makor Rishon will still publish its magazines “Sgula”, “Otiot” and “Nashim” (Women).

Ben-Tzvi's business plan presents the old Maariv as a losing proposition, and indeed its last two owners –Nochi Dankner's IDB group and before it, Ofer Nimrodi hard. Maariv has been losing money heavily for years. But Ben-Tzvi projects that under the new structure, Maariv will reach the black, turning an operating loss of NIS 153 million in the 12 months prior to November 2012 into an annual operating profit of at least NIS 11 million.

Two drastic changes are outsourcing the print and distribution operations. These are projected to save NIS 38 million and NIS 87 million a year, respectively and in fact these changes have already commenced.

Ben-Tzvi has agreed to continue employing Maariv's 900 distribution workers, if a suitable agreement can be reached. The current workers may form a private company to facilitate the outsourcing.

Outsourcing the printing portion is trickier. Ben-Tzvi committed to employing 110 of the current 180 employees involved in printing operations.

The administrative and editorial sections will end up with 357 employees, as opposed to 652 now.

Meanwhile, the subscription price will increase by 43%, from NIS 80-100 to NIS 136 for monthly subscribers of the printed editions.

The paper projects that 35% of current subscribers will stay on board for the daily digital editions (which cease to be free) and weekend print. This will cost NIS 85 a month. Some 20% will only subscribe to the weekend edition, for NIS 65 a month (a 20% increase).

Ben-Tzvi is optimistic, and foresees positive cash as soon as February. This will dip into negative territory later this year after finalizing payment for Maariv, but will reach positive territory again by 2014, reaching NIS 22 million by 2015. He is looking for an investor to carry him over negative territory this year.

In addition, full implementation of his plan has not yet happened, contrary to initial forecasting. Full amalgamation and outsourcing are not operational yet, although synergy between the two papers in terms of content is already functioning.

So far, the plan is lagging behind and will require a boost in financing to bridge the current year.

Businessman Conrad Morris, Ben-Tzvi’s father- in- law, may be interested, although how much he might invest is unclear. In addition, Maariv journalists, who form a strong union, will want to have a say in the amalgamation.

Ofer Vaknin
Moti Kimche