How Netanyahu Gained Control of Israel’s Communications Sector

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Credit: Illustration by Amos Biderman

Israel’s communications market is used to drama. Its workers, who get up in the morning to do their job and come home in one piece, are accustomed to the dirty political wars being waged over their heads. They no longer seek rational explanations for the events that shake up their workplaces every few months, and are adept at soldiering on without too much fuss. But the events of the last couple of weeks have shaken even the industry’s most battle-hardened veterans.

On May 17, shortly after formally taking on the communications portfolio, Prime Minister Benjamin Netanyahu fired Communications Ministry Director General Avi Berger, by telephone. The same day, just three hours before turning over the reins of the Finance Ministry to Moshe Kahlon, Netanayhu took advantage of his brief term as finance minister to sign off on an order requiring Channel 10 television to pay the government an additional 16.8 million shekels ($4.3 million) to continue broadcasting. In just a few hours, Netanyahu had shuffled the communications sector’s house of cards. Strong controlling shareholders, powerful executives, investors and ordinary workers who generally believe themselves to be in control of their businesses or careers came to understand their error. Israel’s new communications czar, is more political and survival-driven than ever and more aggressive than any of his predecessors.

Anyone who thinks these intrigues only interest news junkies and don’t affect them got a reality check this week. Anyone who watches television, anyone with Internet or telephone service will be affected by Netanyahu’s two rushed decisions. Not only did Channel 10 face an immediate threat to its survival, but Bezeq landline customers will continue to pay hundreds of shekels a year more than they should, since the planned broadband reform will not include Bezeq telephone service, at least not in the short term. It is a rare, concrete example of how the power battles between politicians directly affect your bank account and your living-room television.

Channel 10’s response to Netanyahu’s order to pay 16.8 million shekels to extend its operating license for another three and a half years came faster than expected. Two days later, Len Blavatnik’s RGE announced a halt to negotiations to buy the station. After his meeting with the prime minister the previous week, Blavatnik was sure he had Netanyahu’s blessing for the acquisition. The U.S.-based media mogul saw the additional fees as an attempt to scuttle the deal, or at the very least as a signal that Netanyahu had no intention of making Channel 10’s life easier.

Two weeks later, Blavatnik and his RGE partner Aviv Giladi returned to the negotiating table and bought Channel 10, after recognizing that the High Court of Justice would likely reverse the imposition of new fees.

But the uncertainty that Netanyahu has injected into the local communications sector market doesn’t stop there. Reshet and Keshet, the operators of its stronger rival, competitor, Channel 2, have for some time faced uncertainty, a situation Netanyahu has exacerbated.

Late last year, when Channel 10 signaled that it could not meet its license terms and was unable to raise more funds, then-Communications Minister Gilad Erdan promoted a bill law that would have forced Channel 2 to split in two. He believed that in a market where all the licensees were losing money, requiring ongoing support from shareholders, the right approach wasn’t necessarily another rescue effort for Channel 10 but rather the premature division of Channel 2. In that case, Reshet and Keshet would each get its own, full-time station, rather than continuing to share the weekly broadcast schedule between them.

Erdan’s bill was approved by the Ministerial Committee for Legislation, but blocked by Netanyahu at the last moment. It’s hard to know what was going through the prime minister’s mind at the time, but in the weeks before the decision, he met with Reshet controlling shareholder Udi Angel and Channel 2 News CEO Avi Weiss, who urged him not to advance the draft law.

Killing the messenger?

Now, as communications minister, Netanyahu has changed his mind and is expected to push the bill. Why is it that pre-election Netanyahu didn’t want Channel 2 divided, while post-election Netanyahu does? We’re not mind readers, but it might have to do with the campaign-season reporting of Channel 2 News, which he presumably deemed insufficiently supportive of him.

The threat of the split is a very effective weapon against Reshet and Keshet. Neither is in great financial shape, relying on injections of funds from their owners. The fact that Channel 10 could remain alive rather than dropping off the air, as Erdan had anticipated when he proposed his original legislation, increases the risk from their standpoint even further. Reshet and Keshet and their news company will be prepared to do a lot to convince Netanyahu not to force them to divorce earlier than November 2017, as originally required. For Netanyahu it’s a win-win situation in that either they are forced to split up and in the process are weakened or he might expect to get what for him would be a more convenient, deflated news operation that would be afraid of running afoul of him.

A third step that Netanyahu would be expected to take or at least to threaten to take is allowing the HOT and Yes multichannel television operators to start their own news channels. Both are impatient to do so, and could have them up and running within months. HOT and Yes might not have to compete with Reshet, Keshet and Channel 10 for advertising revenue, but two new news stations could cut into channel 2’s and 10’s ratings. And who said Netanyahu can’t take the next step and allow HOT and Yes to sell commercial airtime?

Allowing HOT and Yes to have their own news operations would give the communications minister even more leverage over them than the minister would normally have over the commercial stations. Bezeq (Yes’ parent company) and HOT are under the close supervision of the ministry. The threat of competition to this duopoly is low when the ministry determines how much power they have. If he wants, the communications minister could reduce competition between them and boost their profits, or increase competitive pressures and push their controlling shareholders into a corner.

The Communications Ministry has always been in the hands of a politician, so it might be argued that nothing fundamental changed when Netanyahu kept the ministry for himself. But Netanyahu is not just another politician. He’s obsessive when it comes to the media and his political survival. He is dependent on the support of Las Vegas casino mogul Sheldon Adelson, who owns the pro-Netanyahu free newspaper Israel Hayom. Above all, he has unprecedented powers that are counterbalanced only by the High Court of Justice. Coalition Knesset members are bound by the coalition agreements to vote for any bill he chooses to promote, and Netanyahu also has the Knesset committees in his pocket.

Netanyahu also intends to exert his power over senior officials through the so-called jobs bill. Berger is a painful example for the employees of government ministries of the cost of defying the new communications czar. There is not a single broadcast media outlet, including the state Israel Broadcasting Authority, that will not be subject to pressure from Netanyahu and his aides. He can settle scores with all of them directly or indirectly.

It should be acknowledged that media consumers, especially television viewers, could benefit considerably from a rise in the number of players. The measures that Netanyahu is expected to take would increase the number of news channels, together with the available expand the range of options and opinions. But Netanyahu is acting not out of a desire to promote democracy or freedom of the press, but rather to exert control and curb the media power of his opponents.

All of the outlets, new and old, will be under a strict regime of quid pro quo, suffering under a complex web of connections and interests between Netanyahu and the owners. Viewers may get more news channels, but they will all be less free to criticize the prime minister.

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