TV Middle East & Africa MIPCOM 2010

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MIPCOM & MY CONTENT EDITION

South African Media Israel’s TV Market

www.tvmea.ws

THE MAGAZINE OF MIDDLE EASTERN & AFRICAN TV OCTOBER 2010

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Mondo TV S.p.A. www.mondotv.it • Puppy in My Pocket • Power Buggz • Playtime Buddies • Angel’s Friends: The Secret World Around You • Virus Attack

Mondo TV has been increasing its presence in the Middle Eastern and African markets, already lining up solid partnerships in Nigeria, Senegal, Kenya and Ghana, among other territories. Micheline Azoury, the head of international sales and brand manager, does acknowledge that this has not been without challenges. “It is not too easy placing or convincing many African TV channels to spend some of their budget on kids’ programs,” she say. But Azoury says that the “cute, lovely, colorful, quality stories” found in Mondo’s programs are what will draw buyers from this region in. On the roster are Puppy in My Pocket, Angel’s Friends: The Secret World Around You and Virus Attack. Mondo has a new boyskewing show in the catalogue, with Power Buggz, and its first branded preschool series Playtime Buddies.

IN THIS ISSUE

“

Angel’s Friends

This year we will be exhibiting new TV shows and we have more properties than ever before.

”

—Micheline Azoury

Pay TV is transforming the market

Small Market, Big Ambition Spotlighting Israel

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Ricardo Seguin Guise

Publisher Anna Carugati

Editor Mansha Daswani

Executive Editor Kristin Brzoznowski

Managing Editor Matthew Rippetoe

Production and Design Director Simon Weaver

Puppy in My Pocket

Online Director Phyllis Q. Busell

Art Director

SBT (Sistema Brasileiro de Televisão)

Kelly Quiroz

Sales & Marketing Manager Erica Antoine-Cole

Business Affairs Manager Cesar Suero

www.sbt.com.br

Sales & Marketing Coordinator

• Revelation • A Rose with Love • Bridal Veil For Sale • Wildlife Adventure • Connection’s Reporter

SBT has seen an increasing demand for its telenovelas in the Middle East and Africa, according to Carolina Scheinberg, the company’s international sales executive.

“Revelation is already showing in all of the Portuguesespeaking African countries. Strengthening and expanding our presence in the Middle East and Africa is a priority for us,” she notes.

Among the other offerings SBT is highlighting for the region are A Rose with Love, Bridal Veil For Sale, Wildlife Adventure and Connection’s Reporter. “SBT is building new partnerships, making new contacts every day and participating in industry events focused specifically on the Middle East and Africa,” Scheinberg says of the company’s increasing presence in this part of the world. “We’re very optimistic about the year to come.”

The New South Africa

Alyssa Menard

Sales & Marketing Assistant

Ricardo Seguin Guise

President Anna Carugati

Connection’s Reporter

Executive VP and Group Editorial Director Mansha Daswani

“ Our focus now is on

building strong, long-term relationships in the whole region.

”

—Carolina Scheinberg

VP of Strategic Development TV Middle East & Africa © 2010 WSN INC. 1123 Broadway, #1207 New York, NY 10010 Phone: (212) 924-7620 Fax: (212) 924-6940 Website:

www.tvmea.ws

Get daily news on Middle Eastern and African television by visiting www.tvmea.ws

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Telemundo Internacional www.telemundointernacional.com • The Reyes Brothers • Someone’s Watching • Behind Every Woman

“Behind Every Woman is touching like a melodrama but contemporary and fast-paced like a series from North America.

”

The Middle East and Africa have evolved over the years to become a successful part of Telemundo Internacional’s sales business. “The territory has a continuous interest for the [telenovela] genre, including more of it in their programming every day,” says Karina Etchison, the VP of sales for Europe, the Middle East and Africa at Telemundo. “The Middle East has also opened up in terms of regions. We are not only targeting the Arabicspeaking audience, but we are also approaching Farsispeaking territories such as Iran, as well as Dari and Pashto, the local languages of Afghanistan.” Telemundo looks to expand on its current success with new deals on the format The Reyes Brothers, the Spanish remake by Endemol Spain of its top telenovela of all time, Hidden Passion. Someone’s Watching is a suspense-filled telenovela that tell the story of four friends who witness a crime and wind up caught up in the investigation. Also a highlight is Behind Every Woman, a new series produced by Argos in Mexico.

—Karina Etchison

Behind Every Woman

twofour54 www.twofour54.com Driver Dan’s Story Train

• Driver Dan’s Story Train

With a mission to grow a sustainable Arabic media industry, twofour54 identified the children’s area as one with great potential in the Middle East and North Africa (MENA). Jane Smith, the general manager of twofour54 ibtikar commercial, notes that 60 percent of the region’s population of 340 million is under 25, meaning “there is a significant market for children’s brands and content.”

As such, the 3Line Media and twofour54 Abu Dhabi production for CBeebies, Driver Dan’s Story Train, is top of the list. “Driver Dan’s Story Train was identified as the ideal brand for investment as it fulfills the criteria of being of the highest quality, the format can be adapted for regional audiences, it works across all platforms including consumer products, and it has a strong educational message regarding the importance of literacy as part of the development process for young children,” says Smith. All 52 episodes will be completed in November, with a dual language website (in Arabic and English) launching to complement the brand. Conversations with broadcasters are ongoing with a rollout across all media planned for 2010 and 2011.

“Every element [of Driver Dan’s Story Train] is

reviewed to ensure that the Arabic-language production reflects the language and culture of the region.

”

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—Jane Smith

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Pay TV sets the pace of change in the South African television market.

The New

South Africa

By Jay Stuart The FIFA World Cup in South Africa was a golden moment for SABC. During the opening match between South Africa and Mexico on June 11, the public broadcaster set a record for the highest viewership ever in the country with a 76.1-percent share of television viewers on SABC1—even bigger than for the release of Nelson Mandela from prison in 1990. Ironically, the huge audience for SABC during the tournament came at a time of crisis for the broadcaster. Indeed, television in South Africa is in a phase of massive change across the board.

The World Cup was also a key moment for MultiChoice’s DStv, a pay-TV satellite service, which started a major marketing push based on a new pricing strategy. MultiChoice had always favored a one-size-fits-all pricing policy with no tiering. And for good reason. It complicates the business operation and reduces the ARPU (average revenue per subscriber).

But the launch of its lower-priced Compact tier generated a surge in subs. DStv had 2.852 million subs as of April 2010, 60 percent of them Premium and 30 percent Compact. During the past financial year, the subscriber base grew by 450,000, with 245,000 signing up for Compact.

The reason for DStv’s big marketing push is competition. A new pay-TV platform, Top TV, launched in May 2010 as a lower-priced challenger. On Digital Media (ODM), the platform’s owner, is clearly trying to attract black African subscribers by being more affordable. ODM also presents itself as a company representing black empowerment, while MultiChoice might be viewed as an Afrikaner-led organization that initially achieved its privileged position under the apartheid regime.

But there is a bigger story in South Africa than pay TV versus pay TV. It is the competition between subscription satellite and free TV for viewers. The market is changing very fast.

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“Satellite television is steadily getting a bigger audience share,” says Paul Haupt, the CEO of the South African Advertising Research Foundation (SAARF). “Pay TV is one of the things that people want to acquire as they become more prosperous. There is a lot of choice available on pay TV. Choice is quite restricted otherwise with only four channels.With the challenge of a new competitor, MultiChoice has been making a big marketing push and this has had an impact.”

TELEVISION BARRED

Incredibly, the South African public did not have television at all until the start of 1976 mainly because the apartheid regime saw the new medium as a modernizing threat to its power.

Despite the late start of free TV, South Africa is actually one of the world’s most well established pay-TV markets.

In 1986, SABC’s television monopoly was broken. Not by the arrival of a commercial free-TV competitor, but by the launch of the pay-TV company M-Net by the Naspers media group (parent of MultiChoice), headed by Koos Bekker.

MultiChoice has since grown into a great financial success. Pay-TV revenue grew to R16.66 billion ($2.28 billion) in the 2010 financial year (ending 31 March), up 12 percent from R14.86 billion ($2.04 billion) in 2009. Pay TV accounted for about 60 percent of the group’s total revenue, but 88 percent of total EBITDA and 95 percent of total operating profits.

In 1996, two years after Nelson Mandela was elected as the country’s first black president, SABC’s airtime was finally apportioned more fairly among language groups, and Afrikaans programming dropped from 50 percent to under 5 percent of the total.

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On call: The soap opera Binneland Sub Judice recently premiered in its sixth season on both M-Net and DStv’s kykNET channel.

In 1998, SABC’s free-TV monopoly was ended with the launch of e.tv, which was also permitted to show news—a monopoly of SABC to that point.With two pay-TV platforms pushing hard for subs, e.tv’s current slogan is “Be Free.”

Television penetration is still growing in South Africa. “Penetration is closely related to the supply of electricity,” says SAARF’s Haupt.“As electrification proceeds, television follows, with a slight lag. Clearly, there is still scope for a lot of growth.”

Mains electricity expanded from reaching 73.1 percent of the population to 90.2 percent during the 1999-2009 period, according to AGB Nielsen’s All Media and Products Survey (AMPS). During the same period, penetration of television sets grew from 62.8 percent to 83.9 percent.

In the less affluent homes, very often the family does not watch TV during the week, and viewing figures shoot up on the weekend.

SAARF’s Living Standards Measure (LSM) ranks consumers in terms of living standards measure, measured on a scale from LSM 1 to LSM 10. This scale not only measures income, but also things like housing and ownership of appliances. Television penetration among the LSM 1-4 group is growing most rapidly.

Almost all of DStv’s subs are in the LSM 8-10 range.When DStv started to prepare for the FIFA World Cup last year it added a new tier, the Compact package, and this started to attract people down as far as the LSM 5 group (income about 5,500 rand ($744) per month. Top TV’s target is the LSM 48 demographic.

SEPARATE UNIVERSES

As of mid-2010, South Africa has 9.65 million television homes. Of these, 12.4 percent are English-speaking. This is considered the most affluent group. Speakers of Afrikaans and both languages make up 16.8 percent, while the rest are speakers of vernacular African languages; the biggest groups speak Nguni (39.7 percent) and Sotho (31.1 percent).

The potential coverage of the over-the-air networks has improved over the past few years, with SABC1 reaching more 10/10

than 70 percent of homes, while SABC2 reaches more than 60 percent, as does e.TV, while SABC3 covers in excess of 50 percent. The big growth has been for DStv with coverage more than doubling since 2007 and now at over 20 percent.

There is a huge split in the viewing audience among the ethnic groups, according to Lorna Long, the client services director in South Africa for Telmar Media Systems, a worldwide supplier of research software and systems for the media industry.

“SABC is really the single source of contact with the African vernacular audiences,” she says.“It’s practically a monopoly in that sense. SABC1 is aimed at the Nguni speakers, the Zulus. SABC2 is a family channel, which caters part of the time to Afrikaans viewers and Sotho speakers. This is a strange cohabitation, which some of the Afrikaans audience apparently resent.

SABC3 is aimed at English-speaking and, especially on Thursday evenings, also Afrikaans viewers. E.tv appeals to lower-income viewers who are comfortable in English as well as more affluent viewers.”

Nguni/Sotho adult (16+) viewers watch SABC1 for an average of an hour and eleven minutes (01:11) per day, according to SAARF figures released in July, making it their most popular channel. But for English/Afrikaans viewers, the most popular provider is the pay-TV service DStv, with 1:19 of viewing per day. In contrast, they watch only 00:20 of SABC1, while Nguni/Sotho viewers watch only 00:22 of the DStv platform.

SABC2 attracts 00:49 of viewing among English/Afrikaans adults and 00:29 among Nguni/Sotho viewers. For SABC3, the respective figures are 00:43 and 00:24.

The channel with the broadest appeal is e.tv, viewed for an average of 00:49 by Nguni/Sotho adults and 00:38 by English/ Afrikaans adults. Among children these gaps are similar.

PROGRAMMING APPETITES

A glance at the weekly top ten programs of the various channels shows almost the same divergence.

On SABC1 (in July), three shows ranked in the top ten for both Nguni/Sotho and English/Afrikaans audiences.They are the longrunning soap opera Generations, and two local drama series, Zone 14 and Tshisa.

No shows on SABC2 make the top ten for both groups. On SABC3, Knight Rider is number one for both sets of viewers, while Days of Our Lives and The Oprah Winfrey Show also rate in the top ten for both.

World Wrestling Entertainment, e.TV’s ratings stalwart, rates in the top ten for both groups of viewers. But the African drama Rhythm City is far and away number one among Nguni/Sotho viewers (22.2 percent AMR), while not cracking the chart for the white audience. In 2004 e.tv started showing TheYoung and the Restless, which aired on SABC3 until 1999. It has been successful in its new home.

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Host with the most: Comedian Trevor Noah hosts the talk show Tonight with Trevor Noah Wednesdays on M-Net.

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In 2009, SABC admitted to having a deficit of R784 million ($107.4 million) and the picture has probably not improved. But its crisis actually goes far beyond the bleak financial picture, which may lead to bankruptcy. The word ‘corruption’ crops up again and again too.

GREAT EXPECTATIONS

Red alert: The local drama 4 Play: Sex Tips for Girls airs on the terrestrial service e.tv.

As Telmar’s Long describes it: “SABC has several big problems. One is that too much has been expected of it. The regulator ICASA, the Independent Communications Authority of South Africa, has set out quite onerous requirements for programming that cater to all the communities with local production. There has been an estimate that this costs 14 times as much as running the channel without the requirements. With the charges of management corruption, there is operational chaos. A number of top people have been suspended and protracted legal battles are underway. SABC would want to have these people back. But it might take a long time for innocent people to be cleared, and they will go elsewhere.There is a void of talent. And there is no budget.

They are showing Chinese movies with English subtitles and Afrikaans programs from the 1970s.”

She adds: “Advertising budgets in South Africa are small.

Ford might spend £600 million ($935 million) a year on television in the U.K. In South Africa, that might be R40 million ($5.5 million).”

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The crisis has knocked the wind out of the local production industry, which has strongly depended on SABC. E.tv is 64 percent owned by Hosken Consolidated Investments, whose chairman Marcel Golding is the channel’s CEO. Hosken earned a profit before taxes of R570.9 million ($78 million) on its media activities (meaning e.tv) in the latest financial year (ending March 31, 2010).

“If e.tv could have anything it wanted, it would be more airtime to sell,” says Ian Woodrow, the chief content officer at the pay-TV company Top TV. “It’s a good product aimed squarely at middle South Africa.”

In its annual report, however, Hosken acknowledged: “Both audiences and revenue share for e.tv are under pressure from the growth in pay TV, which has seen an unprecedented increase in middle-income earners.”

Audience attrition is a fact of life for all free-TV networks as pay TV grows. Figures show big year-on-year drops in audience for SABC1’s most popular series, Generations, and SABC2’s major series, while Days of Our Lives lost ground on SABC3.

NEW ENTRANTS

In 2006, media regulator ICASA decided to open up the subscription-TV market. There was a rush of interest with 18 applicants for five licenses. The licenses were awarded in September 2007.

One of them was On Digital Media (ODM), created five years ago when two people from MultiChoice, Mergan Moodley and Heather Kennedy, set out to launch a competitor. They went to the Industrial Development Corporation (IDC), and European satellite company SES Astra was brought in as a partner, with a 20-percent stake. The bid was driven by Vino Govender of First National Media Investment Holdings, now the CEO at Top TV. Other partners include Black Economic Empowerment (BEE) companies First Aone Trade & Investment and Red Gold Investments, plus the National Empowerment Fund.

Also winning licenses were a consortium led by local telco Telkom Media, e.tv, MultiChoice (technically without a license before) and a black empowerment group called Walking on Water (WOW), which has not progressed since.

E.tv planned to launch a pay-TV news channel but Golding soon got cold feet. Instead of going it alone, he made a deal with MultiChoice to make the news channel an exclusive part of the DStv bouquet with a plan to provide other channels in the future.

The exit of Telkom’s consortium, in which the telco held 75 percent, was probably more surprising. After a brief flurry of buying programming, Telkom sold its stake to China’s Shenzhen Media, which created a new local entity now called Super 5 Media. Significantly, a 15-percent partner is Videovision Entertainment headed by Anant Singh, South Africa’s top movie producer.

With the stated aim of providing “converged services,” Super 5 Media says it “believes that advances in television, Internet and wireless tech10/10

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The most admired soccer in the world is shown on PFC.

Contact us: 55 11 5112-4353 or marcos.milanez@tvglobo.com.br

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Almost all of DStv’s channels are exclusive. Only very strong operators such as BBC World or Al Jazeera have insisted on non-exclusive deals. Disney, Discovery, National Geographic, CNN and MTV are all exclusive.

COMPETITIVE SPIRIT

Power women: The daily Venda soap Muvhango on SABC2 incorporates and reflects township and Sowetan life.

nologies have created opportunities to build value through the provision of online and interactive services.” So the idea is to leapfrog over digital satellite into IPTV. That has left Top TV alone facing off against MultiChoice. Top TV’s programming strategy is built on carrying third-party channels. Top TV offers seven packages, ranging from an entry price of R99 ($14) for 24 channels in a basic tier, including Fox News, Eurosport, MSNBC, BBC World, Al Jazeera, the MGM movie channel and Zee Cinema from India.

The package at R159 ($22) adds either 13 children’s and music channels or 11 entertainment and knowledge channels, including Fox, BET, three Discovery channels and Fox Retro (featuring vintage series). For another R30 ($4) subs get both those additional packages. For R249 ($34) they can add six movie channels as well, including FX and Showtime.

Top TV also has seven channels of its own (Top Movies, Top Gospel, Top One, Top Junior, Top Crime, Top History and Top Explore). These are made in Germany and packaged with the Top TV brand.

To break even, the platform needs 300,000 to 400,000 subs. With 300,000 subs, it would start to attract advertising revenue as well. Top TV already has 100,000 dishes in the market, but not that many subs.

Responding to the lower-priced entrant, MultiChoice now offers six different packages ranging from R550 ($75) down as low as DStv Lite with 26 channels for R99 ($14) and even a service for improving the signal for people who have difficulty getting terrestrial reception, called EasyView with 15 channels for R20 ($3).

South African Gains*

2010

2011

2012

2013

2014

Ent. & Media Market

7,482

7,849

8,461

9,215

10,065

Advertising

2,594

2,670

2,900

3,154

3,470

Consumer Media Spending

3,193

3,295

3,432

3,618

3,828

*US$ Millions **Compound Annual Growth Rate Source: PricewaterhouseCoopers Global Entertainment & Media Outlook 2010-14

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Most important of all, DStv has exclusive sports. As one programmer puts it, “DStv’s SuperSport-branded channels have everything in the known universe. Go down the list of every property in the world and they have it exclusively.”

Top TV offers only Setanta South Africa, with no premium content. Robin Welch, the founder of consultancy Pharare Associates, says, “Not having a real sports channel is a big obstacle. Pay TV has never worked without sport.”

But Top TV CEO Govender has indicated that his approach is lateral. Before Top TV’s launch, he said of his company’s market research, “The numbers are coming back and telling us that 40 percent of the market are sports subscribers, who subscribe to pay-TV platforms mainly for their sports offering. There’s another 60 percent of the market that are generally looking for good wholesome family entertainment and that’s where our focus is.”

Part of Top TV’s game plan seems to be to sign up subs while the progress of digital terrestrial television is stalled. DTT was supposed to launch for the World Cup. “But the government, which has invested billions of rand in the transition, did not seem to take account of the cost to consumers at the lower end of the scale,” says Telmar’s Long. “If a family in the LMS 3 group has a monthly income of R3,000 ($411), it is unheard of to lay out R600 ($82) for a box. There is discussion with the Chinese about technology. There is no fixed date for launch now. It might possibly be by the end of this year. It’s highly politicized.”

The Department of Communications has begun a review of the standards to be used for DTT and appears to favor switching from DVB, which the country adopted in 2008, to ISDB. M-Net and e.tv have been running DTT trials together in DVB. “The decision to open the debate is not only silly but undermines the co-ordinated and determined efforts by all parties, including the SABC, to get our country ready for this migration,” observes Hoskin’s Golding.

Despite the arrival of pay-TV competition, the market for programs in South Africa remains weak, according to Pharare Associates’ Welch. “It is very much a buyer’s market,” he said. “SABC is not buying. Top TV buys channels, not programs. E.tv screws prices down and MultiChoice is brutal, very hard on prices.”Injecting vitality in the program market will no doubt require SABC to get back on its feet.

Beyond the current television landscape, the fragmented South African market, with its many languages and identities, 2010-2014 CAGR** would seem to be ideal for new7.6 media delivery.

PC penetration rose from 7.6 7.2 percent in 1999 to 18.8 percent in 2009. That is lower than digi5.0 tal satellite. But MultiChoice is already developing IPTV, and the Chinese are waiting quietly in the wings.

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t e k r a M Small Big Ambition For a population of only 7.2 million, Israel’s TV market is diverse and competitive — and in need of more modern regulation.

Lost in Africa on YES.

By Elie Leshem After YES, Israel’s DBS satellite TV service, began broadcasting in 2000, the rules of the game changed.Within four years, the country’s three cable providers, Matav, Tevel and Golden Channels, had combined to form a new company, HOT, and joined the digital revolution. Since then, Israel’s television market has for the most part been a two-horse race, with HOT and YES vying for a very small base of consumers.

The competition has spread to other avenues as well, with HOT and YES providing telecommunications and broadband Internet—as standalone services and in triple-play packages— as well. HOT does this through its own cable infrastructure while YES provides its non-satellite-based services via an infrastructure installed by Bezeq, the Israeli telecommunications giant, which happens to hold some 49 percent of YES’s shares.

The same duopoly also came to define the online content battle, with YES and HOT forging partnerships with Israel’s two largest news and content sites, Walla! and Ynet, respectively. It didn’t hurt that Walla!, like YES, is controlled by Bezeq, or that Ynet’s owner, Arnon Mozes, also happens to hold a stake in HOT. In such a centralized media market it comes as no surprise, then, that HOT and YES have established a cartel of sorts.

Both companies offer comparable prices and channels as well as triple-play packages that require subscribers to commit to lengthy periods before they can switch providers. All told, even though there has been an ongoing trickle of customers from HOT to YES, HOT has been steadily stemming the 448

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flow, and both companies have succeeded in stabilizing a fairly solid client base. As of the end of 2009, HOT had some 910,000 subscribers as opposed to YES’s 571,000.

DUELING DUOPOLY

The deadlock between these two communications giants is exacerbated by the fact that Israel is one of only a few countries in the world where the law forbids multichannel providers to run ads on channels that haven’t received a special permit. The country has only two commercial channels, and HOT and YES, which either independently produce or purchase much of their own content, do not earn the advertising revenues that would allow them to offer more competitive pricing schemes. The Council for Cable TV and Satellite Broadcasting, the government body that regulates the activities of HOT and YES, has announced its intention to allow the gradual integration of advertising content into many of the channels carried by the two providers. However, this scheme is still in the offing, like other far-reaching reforms slated to revolutionize Israel’s communications industry, and original content currently produced by HOT and YES can only earn advertising revenues when it is made available on free, web-based video-on-demand platforms.

It follows that although the TV market is the arena of a showdown, as it were, between YES and HOT, the fact that these two corporations must not only keep a finger in almost every piece of the communications pie, but also invest vast 10/10

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resources in producing and buying content, gives a potential edge to media groups that are permitted to advertise. Channel 2 and Channel 10, the country’s two main commercial channels, and the concessionaires that produce their programming, have the freedom to focus almost exclusively on content. They don’t need to divert resources towards bringing their product to the customer’s doorstep, as YES and HOT carry their broadcasts. Even when consumers choose to view Channel 10 and Channel 2 content online, they do so through high-speed Internet infrastructure provided by YES or HOT. Another thorn in the side of these two conglomerates is the government’s recent standardization of DTT services for the basic package of public-broadcast and commercial channels. Israelis can now pay a one-time sum of around NIS 400 (about $100) and purchase a box that receives public-broadcast channels 1, 33 and 99 and commercial channels 2 and 10. This makes perfect sense to consumers who are either unable or unwilling to shell out upwards of NIS 200 (about $50) per month for the most basic content packages currently offered by HOT and YES.

(HaKasefet in Israel) was a hit on Britain’s ITV; the third season of In Treatment (originally BeTipul) is slated to run on HBO later this year; and Mesudarim, a sitcom whose theme, appropriately enough, is the sale of an Israeli startup to an American company, has been bought by FOX. Obviously, the success of Keshet’s programming has translated into a windfall in advertising revenue. According to AIMING HIGH One media group that is bringing its relative advantages to Israeli business daily TheMarker, the first season of Big Brother bear and is seriously jockeying to break open this two-horse alone boosted Keshet’s coffers by some NIS 76 million ($20 race is Keshet (the Hebrew word for rainbow), one of two million). The fact that Channel 2 is carried by both HOT and YES and is also available via DTT and analogue free-toconcessionaires that runs Channel 2 (Reshet is the other). air broadcasts means that “mega-events” such as the finale Over the past decade, Keshet has produced several of Big Brother’s first season—borne on a tidal wave of pubimmensely popular programs, including, among many others, the Israeli versions of Idols and Big Brother and Eretz licity, the show had at times become almost a national fixaNehederet, the country’s premier satire show. Keshet has also tion—can garner almost-unheard-of ratings. A whopping 34.1 percent of Israeli households tuned in to the Big Brothbeen behind many of the popular Israeli formats that have been sold worldwide in recent years: game show The Vault er finale, and Keshet charged a hefty premium for commercial slots.

In 2008, Keshet went beyond its original mandate as a Channel 2 concessionaire, purchasing Channel 24, an Israeli music channel that is carried by HOT and YES. This has caused Channel 2 to express its displeasure with Keshet on more than one occasion, most recently after Channel 24 screened premium content during prime-time hours, opposite programming produced by Reshet, the channel’s other concessionaire.

Reshet’s response: “We’re positive that the regulating bodies...won’t turn a blind eye to [Keshet’s] repeated violations, whose goal is to dismantle Channel 2.”

During the seasons of Big Brother, Keshet also produces The treatment you need: Israeli TV programs are being picked up increasingly abroad, as Dori’s a companion channel, acceshit BeTipul has translated into a major success in the U.S. as In Treatment on HBO. 10/10

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All in the family: Arab Labor marked a milestone on Keshet Channel 2 as the first prime-time program to present Palestinian characters speaking Arabic.

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Truth be told: The suspense drama The Naked Truth was originally created for Channel 10, yet Armoza Formats offers the show for localized adaptation.

sible only to subscribers of YES and HOT, that broadcasts from the Big Brother house 24 hours a day. This channel, like Channel 24, is allowed to run ads. It’s telling that despite the Big Brother channel’s solid viewership, HOT has yet to renew its contract to run it for the coming season.Another case in point of where the relationship between HOT and Keshet is headed is Bip. The humor channel is produced by Keshet, but owned

by HOT, which has recently announced that it will be discontinuing Bip in favor of American import Comedy Central.

In order to get to the root of this rising friction, though, it is important to emphasize that Keshet is banking its true ambitions on an entirely different platform—the Internet.

Launched in 2008, Keshet’s website and content portal, Mako, directly challenges the dominance of industry leaders Ynet and Walla! and the HOT and YES content they promote.

There is a sense that Keshet’s ambitious CEO, Avi Nir, is waiting on the sidelines until Israel’s Internet bandwidth—ironically, provided by his competitors—constitutes an information superhighway broad enough for Keshet to waltz in on a red carpet of web-based high-definition content.

LAW AND ORDER

As is often the case, the flip side of a highly centralized industry is weak, fragmented state regulation. There are several ministries with a say in what goes on in the TV industry, foremost among them the Ministry of Communications, which over the years has installed two central regulatory bodies: the Second Authority for Television and Radio, which is tasked with overseeing the commercial channels, and the Council for Cable and Satellite Broadcasting, which supervises the activities of HOT and YES. Another powerful government body is the Israel Broadcast Authority (IBA), which is in charge of all public broadcasting, including several television channels.

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The current situation makes it very difficult for the state to overcome strong lobbying and pass much-needed reforms.

A recent example is the way the government has been fumbling an initiative to force HOT and YES to offer à la carte options and lower-priced basic channel packages. HOT and YES have said they’ll only support the move if the government allows them to run ads, but on the other side of the fence are Keshet, Reshet and Channel 10, which have no interest in sharing the advertising pie with additional parties. In this and other cases, the various state regulators often represent conflicting interests.

The Council for Cable and Satellite Broadcasting’s chairman, Nitzan Chen, has been a vocal opponent of some of the methods practiced by HOT and YES vis-àvis their subscribers.They “thumb their noses at consumers,” Chen says, referring specifically to the satellite and cable companies removing channels from their various packages, seemingly haphazardly, without offering worthy alternatives. “I’m sorry that they don’t understand what the public wants, and I’m just as sorry that the law does not permit me to get involved when it comes to content.”

In a recent interview, Chen stated that he wished to focus on the shape of the entire TV market. “Technological innovation will change the rules of the game,” he said, “and within five to ten years there won’t be only HOT and YES, but rather a long line of multichannel broadcasts that will provide television content via other methods and technologies.”

Although Chen may never get the chance to impose his own vision on the industry, the prospect of a powerful regulatory body with the mandate to effect real change may be on its way to becoming reality. In July 2010, Israel’s minister of communications, Moshe Kahlon, announced the establishment of a National Communications Authority—most countries have such an agency, the equivalent of the American Federal Communications Commission (FCC)—that will ultimately replace his own ministry and regulate all communications in Israel.

The need to assemble a professional, independent body that will take the place of the current inefficient agglomeration of regulatory authorities has been raised by a succession of governments since 1996 to no avail, and is long overdue. In terms of current regulators of the television industry, the new authority will comprise the Second Authority of Television and Radio and the Cable and Satellite Broadcasting Council. It is unclear whether the IBA, which is currently under the auspices of the prime minister’s office, will also be subsumed in the new body.

Only time will tell if the National Communications Authority will be better suited to address the unique challenges posed by Israel’s volatile, rapidly evolving communications industry.

Elie Leshem is a writer for the Jerusalem Post.

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