Israeli Daily at Risk of Advertisers Fleeing Amid Netanyahu Corruption Scandal Probe

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The Yedioth Ahronoth offices in Rishon Letzion, January 11, 2017.
The Yedioth Ahronoth offices in Rishon Letzion, January 11, 2017.Credit: Tomer Appelbaum

The widening police investigation into alleged deals between Prime Minister Benjamin Netanyahu and Arnon Mozes, who controls the Yedioth Ahronoth group, is threatening to undermine Mozes’ media empire, advertising industry figures told TheMarker on Monday.

Marketing consultants, most of whom agreed to speak only on condition of anonymity, said the probe was undermining the credibility of Israel’s biggest newspaper and its popular new web site. A survey of social media traffic by the market research firm Vigo found that 32% of people online now thought the newspaper’s coverage was biased, up from just 8% a week ago.

One source, who acts as a marketing consultant to some of Israel’s biggest companies, called Yedioth Ahronoth “among the leading Israeli brands,” alongside dairy products maker Tnuva, the Maccabee Tel Aviv basketball team and El Al Airlines. But, he stressed, it also exerts major influence over public opinion, which ensured the cooperation of elected officials and businesses.

“That helped the group to get advertisers to advertise in their newspapers and web site and to collaborate on commercial ventures as an editorial ‘insurance policy,’” said the consultant. “With what’s happening now, I’m advising my clients to keep advertising in Yedioth only if they think it really benefits their brands – but not out of fear or hope for preferential [editorial] treatment.”

Although details of the police investigation remain under wraps, leaked recordings of conversations between Netanyahu and Mozes point to a deal under which Mozes would have ordered Yedioth to tone down its hostile coverage of the prime minister. In return, Netanyahu would back a law that would have barred newspapers from being distributed for free, undermining the business model of Yedioth’s bitter rival, Israel Hayom. Mozes was called for questioning by police again on Monday as was Yedioth editor-in-chief Ron Yaron.

Another senior marketing executive recalled a meeting he had on Sunday with the CEO of an unnamed publicly traded company. “He said to me, ‘I don’t want to advertise in Yedioth Ahronoth when I know how they were ready to sell out,’” the marketing executive said.

He added that the reputation problem was extending beyond the flagship newspaper and the Ynet news site, both of which have been directly implicated in the alleged deal, to other publications associated with Yedioth Ahronoth like the Calcalist financial daily (and rival of TheMarker) and the women’s weekly La’Isha.

“Advertisers know they are part of Yedioth Ahronoth and I think not a few of them will be reducing their advertising there for now,” he said.

Another media consultant said the negative image surrounding the group now wouldn’t absolutely deter advertisers but would for the time being cause them to choose other outlets first. “The [public’s] trust in the media in which you advertise radiates to your ads,” he said. But, on the other hand, the impact was likely to be short-lived because there were not any alternatives.

Others were even more optimistic about the media group’s ability to emerge from the crisis without serious damage, among them Amit Livni, who was until recently head of the Gitam BBDO advertising agency.

“Certainly it is causing a certain amount of damage to the brand. But the Yedioth Ahronoth newsroom is covering the [Netanyahu-Mozes] affair extraordinarily well. Whether that’s because of journalistic ethics or cold calculations, they are giving wide coverage to the affair and showing courage in publishing quotes from the recordings that have appeared by other media,” Livni said.

Livni said Yedioth’s coverage of the case was giving it credibility that it would have lost if it had tried to ignore or justify Moze’s alleged role. In his view, the newspaper did itself more damage in the 2015 election with its unremittingly critical coverage of the prime minister.

Eilon Zarmon, CEO of the Zarmon Group ad agency, said he wouldn’t hesitate to continue advertising in Yedioth media. “It’s a big and powerful group that brings business results. My clients are continuing to advertise with them as usual and none of them have asked to stop,” he said, adding, however, “I would recommend to Yedioth that they work hard to restore the trust they’ve lost.”

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