Israel's Channel 10 Faces Closure After State Rejects Debt Deal

The channel, which lost NIS 1.3 billion in its 10 years of operation announced it would not be able to repay its debt and that it would shut down.

Channel 10's request to delay its debt repayment was rejected on Monday by the Knesset Finance Committee. The channel will now have to repay some NIS 45 million to the state immediately, with the Knesset committee's decision likely to lead to the closure of the station within six weeks and the firing of hundreds of workers.

The decision not to postpone the repayment came after the committee members' eight to five vote against the request. All members of Prime Minister Benjamin Netanyahu's coalition also vetoed the plan.

Yossi Warshavsky - Lior Mizrahi / Israel Hayom - 13122011
Lior Mizrahi / Israel Hayom

Channel 10 was supposed to repay its debt by the end of year so as to be able to continue to broadcast after its franchise expires at the end of January 2012. However, due to the crisis in the advertising industry, the need for the channel's news company to relocate to Jerusalem by the end of the year, and the shareholders' refusal to inject more money into the channel, which has lost some NIS 1.3 billion since it was launched 10 years ago, the Channel 10 directors announced that they would not be able to repay the debt at this point in time and that the channel would be shut down.

Speaking Monday night to the Knesset committee, Channel 10 CEO Yossi Varshavsky pleaded with the lawmakers. After emphasizing that the company had met all the obligations it took upon itself, and that its shareholders were currently in the process of expanding their financial base, he suggested the Knesset committee had ulterior motives in opposing the delay.

"There is a type of out-of-place vindictiveness in not postponing the debt," Varshavsky said. "If you don't approve the postponement of the debt, I will have to advise the shareholders to close the channel.

"Channel 10 will close, the television market will go back a decade and remain so for a long time," Varshavsky continued. "The television companies struggle to recruit investors, and if you reject our request, we will end up for many years with a situation in which there will be one news company and a television market with hundreds of sacked workers."

Varshavsky's statements about "a type of vindictiveness" alludes to the broader backdrop behind the Knesset committee's decision. Last month, Haaretz reported that senior Channel 10 officials had apparently received messages from elements in the Prime Minister's Bureau that seemed to link the tough stance against the channel to investigative reports it ran against Netanyahu.

Last month, a high-ranking official at Channel 10 News said officials from the Prime Minister's Bureau and Likud had told Channel 10 executives that the government would ease up on the television station's obligation to repay the debt by December if it either fires leading political analyst Raviv Drucker or places him on unpaid leave.

In March, Drucker published his "Bibi Tours" report, about Netanyahu's overseas travel during the period between his two terms as prime minister. The report led to a state comptroller's probe into the matter.

Following Drucker's report, Netanyahu filed a libel suit against Drucker that has yet to be decided.

Labor leader MK Shelly Yachimovich said Monday's decision was motivated by a scathing desire to get rid of a channel that is not interested in flattering the government, and called upon Netanyahu, as someone who praises market competition, to change his mind and allow the channel to continue functioning.

Knesset Economic Affairs Committee chairman MK Carmel Shama-Hacohen (Likud ) said the committee was "not a rescue fund," and that it intended on conducting a thorough investigation to promote industry reforms. "We believe that Channel 10 will continue to broadcast despite its bleak forecasts," said Shama-Hacohen.