The Ministry of Communications last week completed its work on a bill designed to impose supervision on Cellcom TV and Partner TV. The bill will now be sent to the Ministry of Justice and the Ministry of Finance for comment, sources inform "Globes."
Under the proposed bill, the two new multi-channel television companies, which are currently unsupervised, will be subject to regulation by the Council for Cable TV and Satellite Broadcasting, which currently oversees only broadcasts by DBS Satellite Services (1998) Ltd. (YES) and HOT Telecommunication Systems Ltd. (TASE: HOT).
A proposal along these lines was already included in the initial drafts of the Economic Arrangements bill, but the clause was later removed due to assertions involving mainly legal problems and issues. Shortly after the clause was removed from the Economic Arrangement bill, "Globes" reported that the government was planning to nevertheless promote the issue through a separate bill in the current Knesset session.
One of the material issues that supervision of the two new companies is designed to address is the commitment to original productions and local programming. The two veteran companies are currently required to invest 8% of their annual revenue in original productions according to a complicated series of rules. Cellcom Israel Ltd. (NYSE:CEL; TASE:CEL) and Partner Communications Ltd. (Nasdaq: PTNR; TASE: PTNR) have no such obligation, and the money that they are nevertheless putting into the local production market is based on their own considerations.
Under the emerging bill, regulation will be imposed on the companies in stages according to their market share, other than a number of basic rules that will be imposed in any case, in accordance with the principles proposed in the Filber report published in 2016. The obligation to invest in original programming will begin when a 10% market share is reached.
The question of market share raises another issue about which it is currently unclear whether a final decision has been made. If market share is determined solely according to the four companies' numbers of subscribers, CellcomTV has already exceeded this share, and regulatory supervision will apply to it as soon as the bill becomes effective.
On the other hand, if it is decided to calculate market share according to revenue from television subscribers, then Cellcom and Partner, whose revenue per customer is much lower, will take longer to exceed the minimum share for the regulatory requirement. Furthermore, although the veteran companies include revenue per television customer in their reports, this parameter is much more subject to manipulation, especially with respect to pricing revenue from a television customer who purchased his or her subscription as part of a triple package.
According to the draft bill, full supervision like that imposed on Hot and Yes will apply to a company with a market share of over 20%. At the same time, the bill itself is designed to prune the current regulation (some of it is already reduced through the Economic Arrangements bill) and make it more relevant to the current time.
Published by Globes [online], Israel business news - www.globes-online.com - on May 28, 2018
© Copyright of Globes Publisher Itonut (1983) Ltd. 2018