Hot CEO: Subscriber numbers consistently falling

Tal Granot

Tal Granot complains that new rivals Cellcom TV and Netflix are not subject to the same regulation.

Hot Telecommunication Systems Ltd. (TASE: HOT.B1) CEO Tali Granot is demanding that Ministry of Communications director general Shlomo Filber prevent Council for Cable TV and Satellite Broadcasting chairperson Yifat Ben-Hay-Segev from requiring the company to invest more in original productions.

Ben-Hay-Segev is expected to announce a requirement for greater investment in original productions by Hot and DBS Satellite Services (1998) Ltd. (YES), from 8% at present, probably to 9%.

Granot is alleging that this decision is not urgent, particularly in view of the fact that the a committee headed by Filber is currently meeting to make overall decisions about regulations in the media market.

In her letter, Granot listed the challenges currently facing the cable company. In particular, she cited Cellcom TV, and Netflix's plan to enter the Israeli market.

"Until new regulations are adopted, Hot is playing on a non-level field, given the growing competition from new players that are not subject to regulation," Granot wrote in her letter. "Multi-channel broadcasting groups are being seriously affected, and have been waiting for a long time for the regulator to say something about enforcing equality, fairness, and balance in the regulatory rules, and to adapt the existing rules to the new situation.

"At the same time, Hot is coping with a continuing decline in the number of subscribers and income per subscriber, combined with the existence of burdensome regulation that has not been adjusted to the extremely significant change in circumstances in the market. Making the burden heavier at this time, when the changes in the market are already having an effect, is not only unreasonable, but also wrong and unjust. It ignores the existing situation and other factors relevant to a decision in this matter, does not take them and their possible effect into account, and is expected to have a disproportionate and unreasonable negative impact on Hot and its profit margin."

The Ministry of Communications said, "Any decision taken will be the result of cooperation between the director general and the Council for Cable TV and Satellite Broadcasting chairperson."

Hot announced, "Hot wrote a letter to the Council for Cable TV and Satellite Broadcasting chairperson, in which it stated that in view of the upheaval taking place in the broadcasting market, including the entry of new competitors to which the regulatory rules do not apply, increasing the regulatory burden is unreasonable, and especially unreasonable because it is being done outside the comprehensive regulation and in isolation from the broadcasting committee discussions."

The Council for Cable TV and Satellite Broadcasting said, "Under the Telecommunications Law, the Council for Cable TV and Satellite Broadcasting is obligated to set the proportion of annual revenue for the owners of the licenses for Hot and Yes in the 8-12% range. The Council has to set the rate to be invested in original productions from 2016 onwards, as required by law. The Council has begun a thorough examination of all aspects pertaining to the rate of investment, including a public hearing and soliciting a comprehensive and exhaustive economic opinion from an external consultant firm.

"The analysis of all the aspects pertaining to the matter is also taking into account the state of investments in original productions in the television environment outside the cable and satellite framework, including the broadcast channels and the Israel Broadcasting Authority, and the new media. It is the Council's duty to uphold the law, and determine the rate within the legally stipulated range."

Published by Globes [online], Israel business news - www.globes-online.com - on November 8, 2015

© Copyright of Globes Publisher Itonut (1983) Ltd. 2015

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