Ofer Nimrodi Stands Alone at the Helm

Maariv is adrift at sea as circulation shrinks, money presses and new rival newspapers spring up. Try recruiting fresh talent under these conditions.

The Nimrodi family bought the Maariv Hebrew-language daily 15 years ago, and the newspaper has known many a crisis since then. The worst, until now that is, were when Ofer Nimrodi was convicted of crimes and spent time in prison.

Currently, the mood in the corridors of Maariv is more sour than ever before. The paper's losses threaten its future, top workers are leaving and relentlessly eroding circulation combine to make Maariv one of the most miserable places in Israel's press arena, and it is happening at a time that's tough for all the players.

Ofer Nimrodi, Maariv publisher and the man who reduced the paper to its sorry state, has a unique way of coping with the troubles. Workers, editors, managers, suppliers and customers who went searching for the sinking ship's publisher last week discovered that he has found another ship, albeit smaller, but a lot nicer.

Last Thursday, Nimrodi returned from his summer vacation abroad. He'd sailed his yacht to the blue seas and soothing shores of the eastern Mediterranean. His choice of timing to swan off and leave behind the paper run from Tel Aviv's Carlebach Street is especially strange given that he hasn't managed to fill top positions abandoned by fleeing executives and editors over the last two months.

Maariv today is a paper with an editor in chief, Amnon Dankner, who announced five weeks ago that he'll be leaving. Its star columnist, Dan Margalit, is gone, and its news Web site, nrg.co.il, has no editor.

The commercial side looks just as tattered. For years, the company has been effectively been run by Moshe Reuveni, the vice president in charge of advertisements and subscriptions, and by Aviad Friedman, the chief operating officer. Both quit a month ago, each for their own reasons.

Dankner announced his resignation as chief editor two days after Margalit, a personal friend, disclosed that he'd be leaving Maariv for the free newspaper Israel Hayom. Margalit spoke of new challenges and excitement, but if Maariv hadn't been sinking, he wouldn't have moved to a new, untried paper of uncertain status. Margalit isn't some startup kid; he's a veteran who has spent most of his career at established, venerated papers such as Haaretz.

Nimrodi hasn't found people for most of the vacant top positions. One that has been filled, is CEO of nrg.co.il. Shauli Elimelech left after three years and has been replaced by Aviad Sarig.

In fact, Nimrodi is also looking for somebody to replace himself as CEO of Maariv Holdings. Among the people to whom he's offered the job is Roni Kleinfeld, who's been a top executive at Maariv for years, including as CEO of Maariv's publishing house. Kleinfeld also served as CEO of Maariv Holdings itself, for six months from May to November 2002, but left after an acerbic conversation with Nimrodi, who had serious complaints about him. In the months that followed, the relationship between Kleinfeld and Nimrodi was hostile. Maariv officially stated that Kleinfeld had resigned for reasons that investors didn't have to know.

So why would Nimrodi want him back now? Mainly because of Kleinfeld's long years at the paper and management experience, presumably. And, because Nimrodi can't find anybody else.

Kleinfeld has made his consent contingent on a golden parachute, providing fat compensation if he's fired. The negotiations between the two, which Nimrodi has denied, continue.

Nimrodi has a two-pronged problem: recruiting captains for a foundering ship, and competition in the form of not one but two new newspapers, flush with cash, which are hiring journalists, editors and managers at top prices.

The richer and more in need of professional talent is Israel Hayom, which belongs to American billionaire Sheldon Adelson. The second is a new business paper being put out by Yedioth Ahronoth.

Before launching Israel Hayom, Adelson was in negotiations to buy Maariv. His due-diligence inspection began in March of this year, creating much hope among Maariv's 1,000 workers. But the talks broke down in late June, though Nimrodi had realized he'd have to compromise. A year ago, he claimed Maariv was worth $250 million, but Adelson was talking about $100 million.

Business sources say that Adelson's demands from Nimrodi were almost impossible. Adelson refused to buy the company as-is, and insisted on the right to sue Nimrodi if problems arose that hadn't been found during due diligence. Nimrodi's lawyers advised him to forgo the deal, says a source.

When the Adelson deal evaporated, Nimrodi announced that the paper wasn't for sale any more, but at least one business source said at the time that Nimrodi was putting out feelers, asking if anyone would buy a controlling interest at a company valuation of $120 million. "I think a deal could close for a lot less," said the source.

It was when the deal with Adelson fell through that the staff desertion began. Reuveni, Margalit, Dankner and Friedman left in July and Sharir jumped ship in August. Margalit's defection to Israel Hayom was the most painful blow. Relations between Nimrodi and Adelson sank so low that Maariv complained to the police, claiming that Israel Hayom had ordered its distributors to break down the doors of Maariv subscribers.

Adelson aims to make Israel Hayom the biggest paper in the country and Yedioth needs talent for its new business paper. Nimrodi's recruitment trouble won't be easing any time soon. He can't promise a rosier future at the business level, either: Maariv is a paper that has chronically operated in the red. It's posted operating losses for six quarters and is expected to admit to more of the same for the second quarter of 2007. A market source estimates that Maariv will post an operating loss of NIS 40 million for the year 2007. Maalot may have to downgrade its debt again, which would make its bankers sweat, the source adds.

Under such conditions, is it any wonder that Maariv is having trouble filling its offices?