TV prices won't fall like mobile prices

Gad Perez

The TV market cannot be compared to the mobile market, which was making excessive profits, while Hot and Yes both lose money.

We really would like to support new Minister of Communications Gilad Erdan, but it is as if he is shooting from the hip, rather than learning the subject more thoroughly. We can only form the impression that on the topic of television he has made decisions without doing serious homework and examining the broader implications, or even listening at what Hot Telecommunication Systems Ltd. (TASE: HOT) and Bezeq Israeli Telecommunication Co. Ltd. (TASE: BEZQ) unit DBS Satellite Services (1998) Ltd. (YES) have to say. In the government's celebrations over reforms, Erdan wants to play his part and gain public affection and so he is shooting the ammunition that he has: forcibly lowering the price of basic cable and satellite TV packages by adding channels to Idan Plus through payments.

Why it is so important and urgent to make such decisions without first taking an in-depth look at the sector's problems? And the TV market cannot be compared to the mobile market, which was making excessive profits by any standards with zero competition in the sector. Hot and Yes both lose money and there is no obstacle to competition. Is anybody stopping a businessman from setting up a TV company possibly even over the Internet. There are just no takers for establishing a new cable or satellite network.

So perhaps the business sector should be given some credit for understanding that there is simply no money in TV and subscribers want content-on-demand and the Internet. Erdan himself knows full well about the broadcast revolution over the Internet and that there is not too much room for regulation of broadcasting. If he wants to encourage competition then he has to come up with something else.

Erdan has not thought that advertising with Idan Plus or any other format could cause a TV station or newspaper to close down. It is not as if Channel 10 and Channel 2 are earning millions.

It seems as if Erda is eager to involve himself with a subject that will bring him the swiftest exposure. To create TV competition via Partner Communications Ltd. (Nasdaq: PTNR; TASE: PTNR) or Cellcom Israel Ltd. (NYSE:CEL; TASE:CEL) would be ten times more desirable than lowering prices with words.

The problem is that to bring Partner and Cellcom into the action would mean creating a new wholesale market on the networks of Hot and Bezeq. This would take much longer to implement. Perhaps Erdan understands that the chances of bringing Cellcom and Partner into the TV market make it a lost cause.

Has he not considered that forcibly lowering prices for a basic TV package will deter them from entering an unattractive market meaning that competitiveness will fall.

This latest decision by Erdan is looking increasingly like his predecessor Moshe Kahlon's wretched decision to bring MVNO's like Rami Levy Chain Stores Hashikma Marketing 2006 Ltd. (TASE:RMLI) into the cellular market before opening up the sector to the new operators like Golan Telecom and Hot Mobile. Guess who Kahlon was able to have his picture taken with?

Published by Globes [online], Israel business news - - on April 28, 2013

© Copyright of Globes Publisher Itonut (1983) Ltd. 2013

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