The entry of television producer giant Endemol Ltd. into Israel is one the most important events in the domestic media world. Endemol moved behind the scenes to acquire Elad Kuperman's Kuperman Productions Ltd., but the deal has repercussions, which while it may too soon to see, have been building up for a long time. Israel has been a fount of talent in recent years, with television programs and formats spreading worldwide, achieving success, financing, and fans in the profession.
No Sheshinksi Committee has been set up to distribute the rights of television creativity between those who find the talent and those who invest in and distribute it. The powerbrokers in the industry have kept almost complete control of the sources of content.
It was only a matter of time before the major foreign powers sought to tap into this wealth, which until now was considered a national resource that belonged only to us, and which only the domestic industry could enjoy its advantages. Germany's ProSiebenSat.1 Media AG (DAX: PSM) was the first, acquiring a chunk of July August Productions Ltd., and now Endemol, which has recovered from its financial crisis to become a multibillion-dollar multinational operating in 30 countries.
The branches of these companies operate as a single organism: what is learned in Europe is instilled immediately in Asia, and now Israel has an arm of its own in this dominant body.
Only one address in Israel
Endemol is not prepared to be just the end of the chain that benefit from Israeli content creation talent. It wants to be involved in every stage of the endeavor. Through Kuperman Productions (now Endemol Israel), it want to develop the concepts, dress them up with the enterprise's wisdom, offer them for sale to an Israel or foreign broadcaster, and then to distribute the format and make a return on the investment.
Besides the exaggerated confidence among these big companies about the domestic industry, their entry can change the balance of forces in the Israeli market. It will be especially interesting to see how this will affect the relations of Elad Kuperman and his eponymous company with Channel 2 franchisee Keshet Communications Ltd. over time.
Keshet likes to be responsible for the entire process. The franchisee, which has founded a branch in the UK, wants to be responsible for distribution there, in addition to development and production. Endemol is now telling Keshet, and to its co-franchisee Reshet Television Ltd., to cable company Hot Telecommunication Systems Ltd. (TASE: HOT.B1), and to Channel 10, too: you will only broadcast and profit from advertising revenue. All the rest will belong to us.
The repercussions will also affect the productions market. Endemol, and possible companies which will follow it, will have just one address in Israel: Endemol Israel. It will be the only company allowed to use its formats.
Although Kuperman's company will not change in scale, the production company's power will grow multifold. Its power will grow exponentially in the productions market, and the share of the pie of other producers may shrink.
Endemol can bring a lot of money into Israel, in content development centers, and in new productions which will enrich the market, even if they are not broadcast here. But, most of all, its entry signals to the Israeli market that it needs to arrange the management of power and the distribution of rights between the parties in the local content industry, including the state, which ought to provide support and demand revenues. If that happens, it will be managed by the Israeli production company that made it. In the end, it will all end up in foreign hands.
Published by Globes [online], Israel business news - www.globes-online.com - on May 2, 2013
© Copyright of Globes Publisher Itonut (1983) Ltd. 2013