The Second Broadcasting Authority has come to the aid of Channel 2 franchisees. It is calling on Minister of Communications Reuven Rivlin and Minister for Regional Cooperation Tzipi Livni to reduce the two-year extension fee for the Channel 2 franchisees to a token amount. The extension will run from November 2003 through November 2005.
At today’s meeting, Second Broadcasting Authority Council acting chairman Moscu Alkalay proposed that the Authority ask the responsible ministers to reduce the franchise extension fee.
Livni and Rivlin set the fee at NIS 11 million a year, plus 40% on any revenue above NIS 740 million a year. They sent the proposal to Knesset Economics Committee chairman MK Avraham Poraz (Shinui) for approval, as required by the Second Broadcasting Authority Law.
“Money does not grow on trees. Every shekel sent to the Ministry of Finance is taken from money for programming,” claims Alkalay. “The latest amendment to the Second Broadcasting Authority Law stipulates that the Channel 2 franchisees will pay a ransom for daring to request a two-year extension to their franchises. But three people, the minister of communications, Minister Tzipi Livni, and MK Avraham Poraz, can minimize the damage and set a token amount that causes no harm.”
Alkalay also claims it is inconceivable that the Ministry of Finance would collect an additional annual charge on revenue, rather than let the money be used for original programming.
Second Broadcasting Authority director general Mordechai (Motti) Shklar supports the franchisees and Alkalay’s demand. At the “Globes” Israel Business Conference two weeks ago, Sklar presented the Authority’s revenue predictions for the franchisees for 2003, which state that the franchisees expenditure on programming will rise to 75% of net revenue, up from 68% in 2002. Shklar says that if the relatively stable fixed costs - 14% of net revenue for marketing, administrative and general costs, compared with 13% this year - and 11% of net revenue for franchise fees and royalties, compared with 10% this year, are added, the franchisees’ profit as a percentage of net revenue will fall from 9% to zero.
At the conference, Tel-Ad CEO Uzi Peled said the franchisees will post losses next year. Tel-Ad and the other Channel 2 franchisees strongly oppose the franchise extension fee, and say they will consider not accepting the extension.
Published by Globes [online] - www.globes.co.il - on December 25, 2002