Israeli Broadcasters Face Struggle for Survival as Channel 2 Splits Up

Three-way competition between Keshet, Reshet and Channel 10 is being made tougher by the decline of reality shows, their traditional cash cow

A scene from the Israeli version of the music competition 'X Factor.'
David Bachar

In the basement events room of the Tel Aviv restaurant Claro, television broadcaster Keshet has hosted groups of 70 advertising executives and media buyers three times a day for the last two weeks.

They are greeted by a giant Keshet logo projected onto the ceiling with a number 12 and treated to a gourmet meal prepared by Chef Ran Shmueli. Then Zvika Lieblich, Keshet’s vice president of marketing, gives his presentation, which includes the network’s star lineup of Guy Pines, Ninet Tayeb, “Master Chef” and “Eretz Aheret” – as well as new offerings, like a reality show that introduces a couple and requires them to decide the same day if they will marry or not.

As head of sales for Israel’s top-rated broadcaster, Lieblich is perhaps the most powerful man in the industry, capable of making a convincing presentation and radiating his passion for television.

These days he has his work cut out for him. Keshet and Reshet will go their separate ways in November and no longer share Channel 2 as they have for years, sharing the top of the ratings and leaving the other contender, Channel 10, far behind. Keshet, which is traditionally the ratings leader, is getting channel 12.

Despite all the enthusiasm radiated by Keshet executives over the past two, they are on tenterhooks like everyone else in Israel’s TV industry. No one knows how the market share for viewers will divide now that the industry has three seven-day-a-week players. And rating have in general been on the decline.

Vanishing viewers
Ratings as % of total population*

Nor does Keshet or Reshet have a business model for how to be profitable when they have to generate twice as much programing each week without generating twice as much income. The working assumption is that the industry will lose money for the first few years – by one estimate 300 million shekels ($85 million) in the first.

Keshet has some new ideas about squeezing more advertising revenue, which Leiblich explains. One is a banner that jumps into the program and puts itself into the content. He hints at “commercial cooperation,” meaning possible marketing pitches inside programming. He urges advertisers to run their old ads from the last two-and-a-half decades to mark Keshet’s 25th anniversary.

And to make matters worse, reality shows are in a long-term decline. For 15 years they have been the mainstay of Israeli television; Master Chef still holds the record for viewers for its 2011 finale when 1.4 million people tuned in. Since then, however, its ratings have plunged 23%.

“The Race to a Million” has suffered the same kind of ratings decline and the current season of “Survivor” has seen an even bigger plunge. In its third season, “X Factor” has seen its viewership fall 20% from the year before. Only “A Star is Born” has held up relatively well, with just an 8% drop off, thanks to a revised format of shorter and fewer shows each season.

Israel’s dwindling infatuation with reality TV follows a worldwide trend and even lags it slightly, but that is no cause for consolation. Not only did the shows draw huge numbers of viewers, but they were among the few offerings that were big enough media events that people felt they needed to see the broadcasts live, not on VOD or Netflix. Even news and sports events no longer enjoy the same urgency they once did, because of the internet.

Lower ratings for reality shows mean little or no profits. Reality shows are expensive to produce at as much as $300,000 per episode. When they were garnering 30% ratings, broadcasters could charge high ad rates and make a profit. Those days are gone and with the split of Channel 2 they will be farther away than ever.

In response, Keshet is putting an end to big-budget reality programing like “Mission: Amazon.” “Master Chef” will stay on the air but in a more modest format. Keshet plans to retain its rating leadership with a wider variety of programming directed at different audiences, for instance the new drama “Tsadikim” about Haredi soldiers.

Reshet, on the other hand, is continuing to bet on reality. “X Factor” is staying on the air as is “Race to a Million.” Others are in the pipeline. But it will also try to save costs by, for instance, running longer episodes and stretching out the number of episodes. To help cut costs, it will run low-budget programming two or three days a week and cede ratings leadership to Keshet and Channel 10.

None of the three will say so publicly, but they know that one of them won’t survive the new era. The battle is over who will go down first.