Netanyahu Behind Measures That Buoyed a TV Channel Owned by His Associates

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PM Benjamin Netanyahu, wife Sara, and son Yair with actress Kate Hudson and producer Arnon Milchan in 2014.
PM Benjamin Netanyahu, wife Sara, and son Yair with actress Kate Hudson and producer Arnon Milchan in 2014.Credit: Avi Ohayon/GPO

“You’re all emissaries of Noni Mozes, you do whatever he wants,” Prime Minister Benjamin Netanyahu complained at his meetings at the Channel 2 and Channel 10 news outfits. Last week it emerged that at the time Netanyahu was actually in contact with the publisher of mass-circulation daily Yedioth Ahronoth, Arnon Mozes. The prime minister was making deals with Mozes while accusing the TV news executives of being in the media tycoon’s thrall.

Actually, in a certain sense, Netanyahu was right. Mozes controlled Channel 2 News for years, through his holdings in the Channel 2 franchisee Reshet, until he was forced to sell in 2005. But Netanyahu directed most of his fire against another commercial station, Channel 10, due to the investigative reports by journalist Raviv Drucker and the revelation of the Bibi Tours corruption affair.

Still, during the years it was fighting for survival, Channel 10 received plenty of special exemptions from the Knesset and the Second Authority for Television and Radio. And during those years Netanyahu was a prime minister deeply involved in media issues. Two of his closest friends, billionaires Ronald Lauder and Arnon Milchan, basically controlled Channel 10. They didn’t appear to have much control over content, but their stakes in the station helped them increase their influence.

Although Channel 10’s controlling shareholder was businessman Yossi Maiman, he stopped financing the channel in 2009 and basically gave it up. Lauder became the most dominant shareholder at 24 percent, injecting over half a billion shekels ($130 billion) all told.

Lauder is among those who have been asked to give testimony regarding the various corruption allegations against Netanyahu. Meanwhile, Milchan is suspected of giving gifts to Netanyahu like expensive cigars.

In any case, media mogul Rupert Murdoch also bought a stake in Channel 10. According to email correspondence revealed by Drucker, Netanyahu was the person who got these two billionaires on board. He did this in the early 2000s when he was a private citizen after losing to Ehud Barak in the 1999 election.

Channel 10, Milchan and Netanyahu did not respond for this article.

Channel 10 has always had to fight for its survival and hasn’t been able to stabilize its finances. The station has received exemptions to the tune of hundreds of millions of shekels regarding the regulatory obligations imposed on it to invest in highbrow programming.

But still its survival has always been in doubt. The channel has typically been dependent on whether the political leaders would sentence it to life or death. Decisions on its future are characterized by inconsistency, pressure from all directions and especially unexpected last-minute moves.

Already in 2009 Channel 10 found itself in a crisis that seemed insurmountable. After it ran up a debt of tens of millions of shekels, the station’s franchise was canceled by the Second Authority and new bids were invited. But several months later, the Knesset Economic Affairs Committee made the opposite decision. Two days before losing its franchise, the channel received a two-year extension.

The exemptions then 10 continued. In 2011 the Knesset instituted legislative procedures for franchise laws. The legislation was designed to change the framework in which Israeli TV channels operate and increase competition by significantly reducing content obligations.

Some media people believe that this decision was designed largely to reduce Channel 2’s power, but in any case the move would surely help Channel 10 fight Channel 2.

Bibi gets hostile

The emergence of the Bibi-Tours investigation in 2011 was the watershed between Netanyahu and Channel 10. The investigations revealed Netanyahu’s unorthodox methods for funding his travels around the world. Since then, Netanyahu has been hostile to the channel; he allegedly tried to have it closed. Still, it was Netanyahu’s government that continually provided a lifeline for Channel 10.

The channel encountered another existential crisis at the end of 2011 as it failed to repay its debts and it was impossible to extend its franchise. At the Knesset Economic Affairs Committee, CEO Yossi Varshavsky accused the MKs of “behaving like Stalin’s regime.”

The accusation was that Netanyahu was trying to close the channel due to the investigations against him. After months of battles, street demonstrations and an on-screen protest against Netanyahu, the station received a one-year extension of the franchise after a deal was sealed for paying its debts.

But the channel failed to pay its debts. In effect, at the end of 2012 it was Lauder, through his assistants Avi Balashnikov and Michal Grayevsky, who ran the station. The two waged a tough battle negotiating with the Finance Ministry until an agreement was reached. Only after a special committee headed by the director general of the Prime Minister’s Office was established was a special agreement for a loan to Channel 10 signed.

As a result, the Knesset once again approved an amendment to the Second Broadcast Authority Law, which extended the franchise by two more years, until the end of 2014.

This battle was led mainly by Lauder, who held a dramatic press conference in Tel Aviv and announced that he would stand behind the channel. But at the end of 2013, in a step that surprised everyone, Lauder announced that he was leaving the station and was unwilling to spend more money.

The backdrop for this decision, it was claimed, was the channel’s losses and the need to infuse tens of millions of shekels per month. Still, the step was surprising; it seemed another motive might have been behind it.

During that period a stormy battle erupted between Lauder and Milchan. The latter demanded that Lauder compensate him for the $50 million he had spent on Channel 10 throughout the years. Lauder refused but agreed to pay about $9 million – which Milchan then paid to Murdoch after Murdoch demanded that he sell back his shares in the channel.

A death sentence halted by Netanyahu

After the 2013 Knesset election, then-Communications Minister Gilad Erdan was the most dominant figure in the media industry. He led an amendment that moved up the splitting of Channel 2 to 2014 from the end of 2017 – a proposal that was approved in the Ministerial Committee for Legislation.

Moving up the splitting of Channel 2 would have triggered the formation of two new channels in Israel – Keshet and Reshet – and might have been a death sentence for Channel 2. Around that time Channel 10 tried to find an investor before the transition to a 15-year franchise, but nobody would invest in Channel 10 when the splitting of Channel 2 was on the agenda.

A few days before Erdan left his job, Netanyahu took an unprecedented step. After no minister agreed to appeal the ministerial committee’s decision to support the splitting of Channel 2, the prime minister submitted the appeal himself and thus prevented the split. This step contradicted all of Netanyahu’s claims that Channel 2’s power should be reduced. Netanyahu move also Channel 10 a chance to survive.

Such strange incidents in the relationship between Netanyahu and Channel 10 continued to the end of 2014. That year, against the backdrop of the March 2015 general election, the channel’s franchise ended. Netanyahu led many of the discussions on the channel’s future – he repeatedly phoned Second Authority Chairwoman Eva Madjiboj and asked about the decisions on its future.

Netanyahu’s inconsistencies reached a height at that time. The Second Authority decided to significantly reduce Channel 10’s content obligations. Channel 10 will thus receive exemptions and be allowed to spend only 130 million shekels on content when it broadcasts on the franchise, instead of 260 million. In internal discussions, Netanyahu objected to this decision, which gave the channel a financial future and therefore the entry of new investors.

But to approve this decision there was a need for a decision by the joint panel of the Knesset economics and education committees. Although it was an election period, Netanyahu helped pressure the MKs to convene the committee and grant Channel 10 the exemptions that would keep it alive. The person who led the contacts against Netanyahu was Varshavsky, and to this day it isn’t clear what arrangement let Netanyahu support the exemptions.

But these exemptions didn’t help Channel 10, since not a single investor entered the picture, and the channel couldn’t receive a franchise due to its debts. Although Netanyahu enabled it to continue to operate, at the end of the year he held meetings where he pressured Madjiboj not to keep the station alive beyond 2015.

In a dramatic meeting with then-Attorney General Yehuda Weinstein, after Weinstein told Netanyahu he would let the channel continue until after the election, Netanyahu accused Weinstein: “Because of you I lost the election.”

During those six months strange things happened once again. The RGE media group, whose main shareholder is billionaire Leonard Blavatnik, entered talks to buy control of Channel 10. Netanyahu is close to Blavatnik and met with him during the negotiations.

Then RGE announced it was abandoning the deal after Netanyahu announced he would impose a high 17-million-shekel debt on the channel. The station petitioned the High Court of Justice, but several weeks later the deal with RGE went through and the company gained control of Channel 10.

The current relationship between Channel 10’s controlling shareholders and the prime minister is unclear. According to media sources, Netanyahu had hoped Blavatnik would slant Channel 10 coverage in his favor – via Chairman Mudi Friedman – but he’s disappointed with the two on the issue. Friedman has left RGE and is expected to end his term as Channel 10 chairman in April.

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