Channel 10 Debt May Be Deferred if Billionaire Ron Lauder Pays Off NIS 120m

The station, facing a debt of NIS 65 million, would also be required to put up NIS 167 million in collateral for the renewal of its broadcast license for next year.

Nati Toker
Nati Tucker
Nati Toker
Nati Tucker

A state panel is expected to recommend today that Channel 10's overdue debt to the government be spread out, but only on condition that shareholder Ronald Lauder pay off at least NIS 120 million of it immediately. The station would also be required to put up NIS 167 million in collateral for the renewal of its broadcast license for next year.

After a delay of nearly two weeks, the committee will be meeting today with the station's management and representatives of its shareholders. Panel members will present Channel 10 with a set of principles, including the payment by Lauder, that it says the station must accept if the state is to defer the outstanding debt. Lauder, the cosmetics empire heir who is also president of the World Jewish Congress, is the most active member of the station's shareholder group, and the committee is also expected to require him to post guarantees of nearly NIS 300 million until the station qualifies for a license to continue operating next year.

The committee was convened at the beginning of September after the Second Authority for Television and Radio, which regulates commercial broadcasting, threatened to call in guarantees of NIS 65 million and also to collect NIS 24 million in debt owed by Reshet, one of Channel 2's franchisees. The panel is expected to offer Reshet and another Channel 2 franchisee, Keshet, a break on their payment obligations to the state similar to what Channel 10 would get.

Channel 10's NIS 65 million debt is for state royalties and license fees that accumulated through 2006. The panel discovered an additional sum of about NIS 45 million that it says includes interest in royalty fees, license fees and other charges, which would bring the station's debt up to NIS 110 million.

Regarding the new NIS 45 million, the committee is insisting upon immediate payment before an arrangement is implemented on the remaining NIS 65 million.

The panel members include Harel Locker, director-general of the Prime Minister's Office; Gal Hershkovitz, Finance Ministry budget director; and M Gal Hershkovitz; and Michal Abadi Boiangiu, the treasury's accountant general. Sources at Channel 10 said recently that a resolution of Channel 10's debt stalled after Finance Minister Yuval Steinitz intervened, but other sources close to the panel deny that there has been any political interference in its work.

According to a source close to the committee, the panel expects Channel 10 to finish 2012 with a deficit of tens of millions of shekels even without debt repayment, and it will continue to operate as a loss next year. The committee's most optimistic scenario sees the station's finances stabilizing by 2014, the source said, adding: "There's a big question mark regarding Channel 10 and its ability to repay its debt." While acknowledging the importance of the continued existence of such a commercial station, the source said it should not be dependent upon the state for financial support.

The panel is demanding that Channel 10's shareholders inject additional funds to enable it to deal with its deficit. In the past Lauder had committed to giving the station another NIS 60 million, but the source said he would have to provide an immediate infusion of at least NIS 120 million. The state would also require that the station streamline its operations and cut salaries, as Channel 10's management had proposed. The Finance Ministry has agreed to forgo royalty fees altogether from both Channel 2 and Channel 10 next year.

The station would also have to provide NIS 167 million in collateral to renew its broadcast license into next year.

At the same time, however, the panel is expected to ask the Second Authority for Television and Radio to reduce future license fees, which the committee views as an unnecessary impediment to access to the broadcast market.

Ron LauderCredit: Ofer Vaknin



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