In 1996, Keshet, Reshet and Telad became virtually synonymous with a profit bonanza. The three concessionaires of Israel Television’s Channel Two generated impressive profits for their shareholders since they began operating at the end of 1994, and the rate of increase in profits has itself become a much discussed topic in the telecommunications market.
Even the three concessionaires, however, have been hurt by the economic slowdown. Hardest hit of them all is Telad, held by, inter alia, three TASE representatives: Maariv (18%), Discount investments (23%) and Harel Hamishmar (15%).
In 1996, Telad earned more than its two competitors. But at the beginning of 1997, it switched to broadcasting two days a week only, as against three days in the corresponding period of 1996. This fact, together with the slow pace of economic activity, produced a steep, 84% fall in Tel-Ad’s profits, to a level of NIS 1.4 million.
The profits of Keshet Broadcasts, whose first quarter results were published in Clal Trade’s financial statements, are also eroded, but more moderately: from NIS 6.8 million in the corresponding quarter last year to NIS 4.5 million in the reported period. The company’s turnover fell 4% compared to the first quarter of 1996, amounting to NIS 38.3 million. The report, annexed to that of Clal Trade, which holds 28.6% of Keshet’s shares, indicates that the cost of broadcasts in the first quarter shot up sharply, and was the key factor in reducing the company’s profits.
The position of Reshet Broadcasts, whose Tel-Aviv Stock Exchange shareholders are Poalim Investments (24%) and Elite (21%), is similar. In the first quarter, Reshet actually benefited from inheriting Saturday broadcasts. Its turnover accordingly swelled to NIS 50.1 million, compared to NIS 36.7 million in 1996. But here too, the increase in income was paralleled by a much steeper rise in broadcast costs, and profit was accordingly eroded by double digit percentages: a profit of NIS 2.6 million, compared to NIS 5.9 million in the corresponding period last year