tv middle east & africa mipcom 2010

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MIPCOM & MY CONTENT EDITION South African Media Israel’s TV Market www.tvmea.ws THE MAGAZINE OF MIDDLE EASTERN & AFRICAN TV OCTOBER 2010

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MIPCOM & MY CONTENTEDITION

South African MediaIsrael’s TV Market

www.tvmea.ws THE MAGAZINE OF MIDDLE EASTERN & AFRICAN TV OCTOBER 2010

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TV MIDDLE EAST & AFRICA 3

Mondo TV has been increasing its presence in the Mid-dle Eastern and African markets, already lining up solidpartnerships in Nigeria, Senegal, Kenya and Ghana,among other territories. Micheline Azoury, the head ofinternational sales and brand manager, does acknowl-edge that this has not been without challenges. “It is nottoo easy placing or convincing many African TV chan-nels to spend some of their budget on kids’ programs,”she say. But Azoury says that the “cute, lovely, colorful,quality stories” found in Mondo’s programs are whatwill draw buyers from this region in. On the roster arePuppy in My Pocket, Angel’s Friends: The Secret WorldAround You and Virus Attack. Mondo has a new boy-skewing show in the catalogue, with Power Buggz, andits first branded preschool series Playtime Buddies.

• Puppy in My Pocket• Power Buggz• Playtime Buddies• Angel’s Friends: The Secret World Around You• Virus Attack

Angel’s Friends

Mondo TV S.p.A.www.mondotv.it

• Revelation• A Rose with Love• Bridal Veil For Sale• Wildlife Adventure• Connection’s Reporter

SBT (Sistema Brasileirode Televisão)

SBT has seen an increasing demand for its telenovelas inthe Middle East and Africa, according to CarolinaScheinberg, the company’s international sales executive.“Revelation is already showing in all of the Portuguese-speaking African countries. Strengthening and expandingour presence in the Middle East and Africa is a priorityfor us,” she notes. Among the other offerings SBT is highlighting for theregion are A Rose with Love, Bridal Veil For Sale, WildlifeAdventure and Connection’s Reporter. “SBT is building newpartnerships, making new contacts every day and partici-pating in industry events focused specifically on the MiddleEast and Africa,” Scheinberg says of the company’s increas-ing presence in this part of the world. “We’re very opti-mistic about the year to come.”

www.sbt.com.br

Ricardo Seguin GuisePublisher

Anna CarugatiEditor

Mansha DaswaniExecutive Editor

Kristin BrzoznowskiManaging EditorMatthew Rippetoe

Production and DesignDirector

Simon WeaverOnline DirectorPhyllis Q. BusellArt DirectorKelly Quiroz

Sales & MarketingManager

Erica Antoine-ColeBusiness Affairs Manager

Cesar SueroSales & MarketingCoordinator

Alyssa MenardSales & Marketing Assistant

Ricardo Seguin GuisePresident

Anna CarugatiExecutive VP and

Group Editorial DirectorMansha DaswaniVP of StrategicDevelopment

TV Middle East & Africa© 2010 WSN INC.1123 Broadway, #1207New York, NY 10010

Phone: (212) 924-7620

Fax: (212) 924-6940

Website: www.tvmea.ws

IN THIS ISSUEThe New South AfricaPay TV is transformingthe market 6

Small Market,Big AmbitionSpotlighting Israel 12

“This yearwe will beexhibiting newTV shows andwe have moreproperties thanever before.”—Micheline Azoury

Connection’s Reporter

“Our focus now is onbuilding strong, long-termrelationships in the wholeregion.”

—Carolina Scheinberg

Puppy in My Pocket

by visiting www.tvmea.ws

Get daily news on Middle Eastern and African television

AFRICA_1010_UPFRONT_EUR_1006_ELLENDER 9/16/10 12:40 PM Page 2

440 World Screen 10/10

The Middle East and Africa have evolved over the yearsto become a successful part of Telemundo Interna-cional’s sales business. “The territory has a continuousinterest for the [telenovela] genre, including more of itin their programming every day,” says Karina Etchison,the VP of sales for Europe, the Middle East and Africaat Telemundo. “The Middle East has also opened up interms of regions. We are not only targeting the Arabic-speaking audience, but we are also approaching Farsi-speaking territories such as Iran, as well as Dari andPashto, the local languages of Afghanistan.” Telemundolooks to expand on its current success with new deals onthe format The Reyes Brothers, the Spanish remake byEndemol Spain of its top telenovela of all time, HiddenPassion. Someone’s Watching is a suspense-filled telenovelathat tell the story of four friends who witness a crimeand wind up caught up in the investigation. Also a high-light is Behind Every Woman, a new series produced byArgos in Mexico.

• The Reyes Brothers• Someone’s Watching• Behind Every Woman

Telemundo Internacional

“Behind Every Woman is touching like a melo-drama but contemporary and fast-paced like aseries from North America.”

—Karina Etchison

www.telemundointernacional.com

4 TV MIDDLE EAST & AFRICA

• Driver Dan’s Story Train

twofour54

With a mission to grow a sustainable Arabic media indus-try, twofour54 identified the children’s area as one withgreat potential in the Middle East and North Africa(MENA). Jane Smith, the general manager of twofour54ibtikar commercial, notes that 60 percent of the region’spopulation of 340 million is under 25, meaning “there isa significant market for children’s brands and content.”As such, the 3Line Media and twofour54 Abu Dhabi pro-duction for CBeebies, Driver Dan’s Story Train, is top of thelist. “Driver Dan’s Story Train was identified as the idealbrand for investment as it fulfills the criteria of being ofthe highest quality, the format can be adapted for region-al audiences, it works across all platforms including con-sumer products, and it has a strong educational messageregarding the importance of literacy as part of the devel-opment process for young children,” says Smith. All 52episodes will be completed in November, with a dual lan-guage website (in Arabic and English) launching to com-plement the brand. Conversations with broadcasters areongoing with a rollout across all media planned for 2010and 2011.

www.twofour54.com

Driver Dan’s Story Train

Behind Every Woman

“Every element [of Driver Dan’s Story Train] isreviewed to ensure that the Arabic-languageproduction reflects the language and culture ofthe region.”

—Jane Smith

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By Jay Stuart

SouthAfrica

442 World Screen 10/10

The New

The FIFA World Cup in South Africa was a golden momentfor SABC. During the opening match between South Africaand Mexico on June 11, the public broadcaster set a record forthe highest viewership ever in the country with a 76.1-percentshare of television viewers on SABC1—even bigger than forthe release of Nelson Mandela from prison in 1990. Ironically,the huge audience for SABC during the tournament came at atime of crisis for the broadcaster. Indeed, television in SouthAfrica is in a phase of massive change across the board.The World Cup was also a key moment for MultiChoice’s

DStv, a pay-TV satellite service, which started a major mar-keting push based on a new pricing strategy. MultiChoice hadalways favored a one-size-fits-all pricing policy with no tier-ing. And for good reason. It complicates the business opera-tion and reduces the ARPU (average revenue per subscriber).But the launch of its lower-priced Compact tier generated asurge in subs. DStv had 2.852 million subs as of April 2010,60 percent of them Premium and 30 percent Compact. Dur-ing the past financial year, the subscriber base grew by450,000, with 245,000 signing up for Compact. The reason for DStv’s big marketing push is competition. A

new pay-TV platform, Top TV, launched in May 2010 as alower-priced challenger. On Digital Media (ODM), the plat-form’s owner, is clearly trying to attract black African sub-scribers by being more affordable. ODM also presents itselfas a company representing black empowerment, while Multi-Choice might be viewed as an Afrikaner-led organizationthat initially achieved its privileged position under theapartheid regime.But there is a bigger story in South Africa than pay TV ver-

sus pay TV. It is the competition between subscription satelliteand free TV for viewers. The market is changing very fast.

“Satellite television is steadily getting a bigger audienceshare,” says Paul Haupt, the CEO of the South African Adver-tising Research Foundation (SAARF). “Pay TV is one of thethings that people want to acquire as they become more pros-perous. There is a lot of choice available on pay TV. Choiceis quite restricted otherwise with only four channels. With thechallenge of a new competitor, MultiChoice has been mak-ing a big marketing push and this has had an impact.”

TELEVISION BARREDIncredibly, the South African public did not have television atall until the start of 1976 mainly because the apartheid regimesaw the new medium as a modernizing threat to its power.Despite the late start of free TV, South Africa is actually oneof the world’s most well established pay-TV markets.In 1986, SABC’s television monopoly was broken. Not

by the arrival of a commercial free-TV competitor, but bythe launch of the pay-TV company M-Net by theNaspers media group (parent of MultiChoice), headed byKoos Bekker. MultiChoice has since grown into a great financial suc-

cess. Pay-TV revenue grew to R16.66 billion ($2.28 bil-lion) in the 2010 financial year (ending 31 March), up 12percent from R14.86 billion ($2.04 billion) in 2009. PayTV accounted for about 60 percent of the group’s total rev-enue, but 88 percent of total EBITDA and 95 percent oftotal operating profits.In 1996, two years after Nelson Mandela was elected as

the country’s first black president, SABC’s airtime was finallyapportioned more fairly among language groups, andAfrikaans programming dropped from 50 percent to under 5percent of the total.

Pay TV sets thepace of change inthe South Africantelevision market.

6 TV MIDDLE EAST & AFRICA

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In 1998, SABC’s free-TV monopoly was ended with thelaunch of e.tv, which was also permitted to show news—amonopoly of SABC to that point. With two pay-TV platformspushing hard for subs, e.tv’s current slogan is “Be Free.”Television penetration is still growing in South Africa. “Pen-

etration is closely related to the supply of electricity,” saysSAARF’s Haupt. “As electrification proceeds, television follows,with a slight lag. Clearly, there is still scope for a lot of growth.”Mains electricity expanded from reaching 73.1 percent of

the population to 90.2 percent during the 1999-2009 period,according to AGB Nielsen’s All Media and Products Survey(AMPS). During the same period, penetration of televisionsets grew from 62.8 percent to 83.9 percent.In the less affluent homes, very often the family does not

watch TV during the week, and viewing figures shoot up onthe weekend.SAARF’s Living Standards Measure (LSM) ranks con-

sumers in terms of living standards measure, measured on ascale from LSM 1 to LSM 10. This scale not only measuresincome, but also things like housing and ownership of appli-ances. Television penetration among the LSM 1-4 group isgrowing most rapidly.Almost all of DStv’s subs are in the LSM 8-10 range. When

DStv started to prepare for the FIFA World Cup last year itadded a new tier, the Compact package, and this started toattract people down as far as the LSM 5 group (income about5,500 rand ($744) per month. Top TV’s target is the LSM 4-8 demographic.

SEPARATE UNIVERSESAs of mid-2010, South Africa has 9.65 million televisionhomes. Of these, 12.4 percent are English-speaking. This isconsidered the most affluent group. Speakers of Afrikaans andboth languages make up 16.8 percent, while the rest arespeakers of vernacular African languages; the biggest groupsspeak Nguni (39.7 percent) and Sotho (31.1 percent).The potential coverage of the over-the-air networks has

improved over the past few years, with SABC1 reaching more

than 70 percent of homes, while SABC2 reaches more than60 percent, as does e.TV, while SABC3 covers in excess of50 percent. The big growth has been for DStv with coveragemore than doubling since 2007 and now at over 20 percent. There is a huge split in the viewing audience among the eth-

nic groups, according to Lorna Long, the client services director inSouth Africa for Telmar Media Systems, a worldwide supplier ofresearch software and systems for the media industry.“SABC is really the single source of contact with the African

vernacular audiences,” she says. “It’s practically a monopoly in thatsense. SABC1 is aimed at the Nguni speakers, the Zulus. SABC2is a family channel, which caters part of the time to Afrikaansviewers and Sotho speakers. This is a strange cohabitation,which some of the Afrikaans audience apparently resent.SABC3 is aimed at English-speaking and, especially onThursday evenings, also Afrikaans viewers. E.tv appeals tolower-income viewers who are comfortable in English as wellas more affluent viewers.”Nguni/Sotho adult (16+) viewers watch SABC1 for an aver-

age of an hour and eleven minutes (01:11) per day, accordingto SAARF figures released in July, making it their most popularchannel. But for English/Afrikaans viewers, the most pop-ular provider is the pay-TV service DStv, with 1:19 of view-ing per day. In contrast, they watch only 00:20 of SABC1, whileNguni/Sotho viewers watch only 00:22 of the DStv platform.SABC2 attracts 00:49 of viewing among English/Afrikaans

adults and 00:29 among Nguni/Sotho viewers. For SABC3,the respective figures are 00:43 and 00:24. The channel with the broadest appeal is e.tv, viewed for an

average of 00:49 by Nguni/Sotho adults and 00:38 by English/Afrikaans adults. Among children these gaps are similar.

PROGRAMMING APPETITESA glance at the weekly top ten programs of the var-ious channels shows almost the same divergence.On SABC1 (in July), three shows ranked in the

top ten for both Nguni/Sotho andEnglish/Afrikaans audiences. They are the long-running soap opera Generations, and twolocal drama series, Zone 14 and Tshisa. No shows on SABC2 make the top

ten for both groups. On SABC3, KnightRider is number one for both sets ofviewers, while Days of Our Lives andThe Oprah Winfrey Show also rate inthe top ten for both.World Wrestling Entertain-

ment, e.TV’s ratings stalwart,rates in the top ten for bothgroups of viewers. But theAfrican drama Rhythm City isfar and away number oneamong Nguni/Sotho viewers(22.2 percent AMR), whilenot cracking the chart for thewhite audience. In 2004 e.tvstarted showing The Young andthe Restless, which aired onSABC3 until 1999. It hasbeen successful in itsnew home.

Host with the most: Comedian Trevor Noah

hosts the talk showTonight with Trevor

Noah Wednesdays onM-Net.

On call: The soap opera Binneland Sub Judice recently premieredin its sixth season on both M-Net and DStv’s kykNET channel.

a

7TV MIDDLE EAST & AFRICA

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In 2009, SABC admitted to having a deficit of R784 mil-lion ($107.4 million) and the picture has probably notimproved. But its crisis actually goes far beyond the bleakfinancial picture, which may lead to bankruptcy. The word‘corruption’ crops up again and again too.

GREAT EXPECTATIONSAs Telmar’s Long describes it: “SABC has several big prob-lems. One is that too much has been expected of it. The reg-ulator ICASA, the Independent Communications Authorityof South Africa, has set out quite onerous requirements forprogramming that cater to all the communities with localproduction. There has been an estimate that this costs 14times as much as running the channel without the require-ments. With the charges of management corruption, there isoperational chaos. A number of top people have been sus-pended and protracted legal battles are underway. SABCwould want to have these people back. But it might take along time for innocent people to be cleared, and they willgo elsewhere. There is a void of talent. And there is no budget.They are showing Chinese movies with English subtitles andAfrikaans programs from the 1970s.”She adds: “Advertising budgets in South Africa are small.

Ford might spend £600 million ($935 million) a year on tele -vision in the U.K. In South Africa, that might be R40 million($5.5 million).”

The crisis has knocked the wind out of the local produc-tion industry, which has strongly depended on SABC.E.tv is 64 percent owned by Hosken Consolidated Invest-

ments, whose chairman Marcel Golding is the channel’sCEO. Hosken earned a profit before taxes of R570.9 million($78 million) on its media activities (meaning e.tv) in thelatest financial year (ending March 31, 2010). “If e.tv could have anything it wanted, it would be more

airtime to sell,” says Ian Woodrow, the chief content officerat the pay-TV company Top TV. “It’s a good product aimedsquarely at middle South Africa.”In its annual report, however, Hosken acknowledged: “Both

audiences and revenue share for e.tv are under pressure fromthe growth in pay TV, which has seen an unprecedentedincrease in middle-income earners.”Audience attrition is a fact of life for all free-TV networks

as pay TV grows. Figures show big year-on-year drops inaudience for SABC1’s most popular series, Generations, andSABC2’s major series, while Days of Our Lives lost groundon SABC3.

NEW ENTRANTSIn 2006, media regulator ICASA decided to open up thesubscription-TV market. There was a rush of interest with18 applicants for five licenses. The licenses were awarded inSeptember 2007.

One of them was On Digital Media (ODM),created five years ago when two people fromMultiChoice, Mergan Moodley and HeatherKennedy, set out to launch a competitor. Theywent to the Industrial Development Corporation(IDC), and European satellite company SES Astrawas brought in as a partner, with a 20-percentstake. The bid was driven by Vino Govender ofFirst National Media Investment Holdings, nowthe CEO at Top TV. Other partners include BlackEconomic Empowerment (BEE) companies FirstAone Trade & Investment and Red Gold Invest-ments, plus the National Empowerment Fund.Also winning licenses were a consortium led by

local telco Telkom Media, e.tv, MultiChoice(technically without a license before) and a blackempowerment group called Walking on Water(WOW), which has not progressed since.E.tv planned to launch a pay-TV news chan-

nel but Golding soon got cold feet. Instead ofgoing it alone, he made a deal with MultiChoiceto make the news channel an exclusive part of theDStv bouquet with a plan to provide other chan-nels in the future. The exit of Telkom’s consortium, in which the

telco held 75 percent, was probably more surpris-ing. After a brief flurry of buying programming,Telkom sold its stake to China’s Shenzhen Media,which created a new local entity now calledSuper 5 Media. Significantly, a 15-percent part-ner is Videovision Entertainment headed byAnant Singh, South Africa’s top movie producer. With the stated aim of providing “converged

services,” Super 5 Media says it “believes thatadvances in television, Internet and wireless tech-

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8 TV MIDDLE EAST & AFRICA

Red alert: The local drama4 Play: Sex Tips forGirls airs on theterrestrial service e.tv.

AFRICA_1010_SOAFRICA_EUR_1006_ELLENDER 9/14/10 8:54 PM Page 14

The most admired soccer in the world is shown on PFC.

Contact us: 55 11 5112-4353 or [email protected]

GLOBOSAT_TVMEA_2010_Layout 1 9/14/10 9:09 PM Page 1

nologies have created opportunities to build value throughthe provision of online and interactive services.” So the idea isto leapfrog over digital satellite into IPTV.That has left Top TV alone facing off against Multi-

Choice. Top TV’s programming strategy is built on carry-ing third-party channels. Top TV offers seven packages,ranging from an entry price of R99 ($14) for 24 channelsin a basic tier, including Fox News, Eurosport, MSNBC,BBC World, Al Jazeera, the MGM movie channel and ZeeCinema from India.The package at R159 ($22) adds either 13 children’s and

music channels or 11 entertainment and knowledge chan-nels, including Fox, BET, three Discovery channels andFox Retro (featuring vintage series). For another R30 ($4)subs get both those additional packages. For R249 ($34)they can add six movie channels as well, including FX andShowtime.Top TV also has seven channels of its own (Top Movies,

Top Gospel, Top One, Top Junior, Top Crime, Top Historyand Top Explore). These are made in Germany and packagedwith the Top TV brand. To break even, the platform needs 300,000 to 400,000

subs. With 300,000 subs, it would start to attract advertisingrevenue as well. Top TV already has 100,000 dishes in themarket, but not that many subs.Responding to the lower-priced entrant, MultiChoice

now offers six different packages ranging from R550 ($75)down as low as DStv Lite with 26 channels for R99 ($14) andeven a service for improving the signal for people who havedifficulty getting terrestrial reception, called EasyView with15 channels for R20 ($3).

Almost all of DStv’s channels are exclusive. Only verystrong operators such as BBC World or Al Jazeera have insistedon non-exclusive deals. Disney, Discovery, National Geo-graphic, CNN and MTV are all exclusive.

COMPETITIVE SPIRITMost important of all, DStv has exclusive sports. As one pro-grammer puts it, “DStv’s SuperSport-branded channels haveeverything in the known universe. Go down the list of everyproperty in the world and they have it exclusively.” Top TV offers only Setanta South Africa, with no pre-

mium content. Robin Welch, the founder of consultancyPharare Associates, says, “Not having a real sports channelis a big obstacle. Pay TV has never worked without sport.”But Top TV CEO Govender has indicated that his

approach is lateral. Before Top TV’s launch, he said of hiscompany’s market research, “The numbers are coming backand telling us that 40 percent of the market are sports sub-scribers, who subscribe to pay-TV platforms mainly for theirsports offering. There’s another 60 percent of the market thatare generally looking for good wholesome family entertain-ment and that’s where our focus is.”Part of Top TV’s game plan seems to be to sign up subs

while the progress of digital terrestr ial television isstalled. DTT was supposed to launch for the World Cup.“But the government, which has invested billions of randin the transition, did not seem to take account of the costto consumers at the lower end of the scale,” says Telmar’sLong. “If a family in the LMS 3 group has a monthlyincome of R3,000 ($411), it is unheard of to lay outR600 ($82) for a box. There is discussion with the Chi-nese about technology. There is no fixed date for launchnow. It might possibly be by the end of this year. It’shighly politicized.”The Department of Communications has begun a review

of the standards to be used for DTT and appears to favorswitching from DVB, which the country adopted in 2008,to ISDB. M-Net and e.tv have been running DTT trialstogether in DVB. “The decision to open the debate is notonly silly but undermines the co-ordinated and determinedefforts by all parties, including the SABC, to get our countryready for this migration,” observes Hoskin’s Golding.Despite the arrival of pay-TV competition, the market for

programs in South Africa remains weak, according toPharare Associates’ Welch. “It is very much a buyer’s mar-ket,” he said. “SABC is not buying. Top TV buys channels,not programs. E.tv screws prices down and MultiChoice isbrutal, very hard on prices.”Injecting vitality in the programmarket will no doubt require SABC to get back on its feet. Beyond the current television landscape, the fragmented

South African market, with itsmany languages and identities,would seem to be ideal for new-media delivery. PC penetration rose from 7.6

percent in 1999 to 18.8 percentin 2009. That is lower than digi-tal satellite. But MultiChoice isalready developing IPTV, and theChinese are waiting quietly inthe wings.

446 World Screen 10/10

10 TV MIDDLE EAST & AFRICA

Source: PricewaterhouseCoopers Global Entertainment & Media Outlook 2010-14

South African Gains 2010 2011 2012 2013 2014 2010-2014 CAGR

Ent. & Media Market 7,482 7,849 8,461 9,215 10,065 7.6

Advertising 2,594 2,670 2,900 3,154 3,470 7.2

Consumer Media Spending 3,193 3,295 3,432 3,618 3,828 5.0

*US$ Millions**Compound Annual Growth Rate

* **

Power women: The daily Venda soapMuvhango on SABC2incorporates andreflects township andSowetan life.

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12 TV MIDDLE EAST & AFRICA

By Elie Leshem

Small Market

448 World Screen 10/10

After YES, Israel’s DBS satellite TV service, began broadcast-ing in 2000, the rules of the game changed. Within four years,the country’s three cable providers, Matav, Tevel and GoldenChannels, had combined to form a new company, HOT, andjoined the digital revolution. Since then, Israel’s televisionmarket has for the most part been a two-horse race, withHOT and YES vying for a very small base of consumers.

The competition has spread to other avenues as well, withHOT and YES providing telecommunications and broadbandInternet—as standalone services and in triple-play packages—as well. HOT does this through its own cable infrastructurewhile YES provides its non-satellite-based services via an infra-structure installed by Bezeq, the Israeli telecommunicationsgiant, which happens to hold some 49 percent of YES’s shares.

The same duopoly also came to define the online contentbattle, with YES and HOT forging partnerships with Israel’stwo largest news and content sites, Walla! and Ynet, respec-tively. It didn’t hurt that Walla!, like YES, is controlled byBezeq, or that Ynet’s owner, Arnon Mozes, also happens tohold a stake in HOT.

In such a centralized media market it comes as no surprise,then, that HOT and YES have established a cartel of sorts.Both companies offer comparable prices and channels as wellas triple-play packages that require subscribers to commit tolengthy periods before they can switch providers. All told,even though there has been an ongoing trickle of customersfrom HOT to YES, HOT has been steadily stemming the

flow, and both companies have succeeded in stabilizing a fairlysolid client base. As of the end of 2009, HOT had some910,000 subscribers as opposed to YES’s 571,000.

DUELING DUOPOLYThe deadlock between these two communications giants isexacerbated by the fact that Israel is one of only a few coun-tries in the world where the law forbids multichannelproviders to run ads on channels that haven’t received a spe-cial permit. The country has only two commercial channels,and HOT and YES, which either independently produce orpurchase much of their own content, do not earn the adver-tising revenues that would allow them to offer more com-petitive pricing schemes. The Council for Cable TV andSatellite Broadcasting, the government body that regulates theactivities of HOT and YES, has announced its intention toallow the gradual integration of advertising content intomany of the channels carried by the two providers. However,this scheme is still in the offing, like other far-reachingreforms slated to revolutionize Israel’s communications indus-try, and original content currently produced by HOT andYES can only earn advertising revenues when it is madeavailable on free, web-based video-on-demand platforms.

It follows that although the TV market is the arena of ashowdown, as it were, between YES and HOT, the fact thatthese two corporations must not only keep a finger in almostevery piece of the communications pie, but also invest vast

Big AmbitionFor a population of only 7.2 million,Israel’s TV market is diverse andcompetitive—and in need ofmore modern regulation.

Lost in Africa on YES.

AFRICA_1010_ISRAEL_EUR_1006_ELLENDER 9/14/10 8:51 PM Page 2

10/10 World Screen 449

t

n

All in the family: Arab Labor marked amilestone on Keshet

Channel 2 as the first prime-time

program to presentPalestinian characters

speaking Arabic.

resources in producing and buying content, gives apotential edge to media groups that are permitted toadvertise. Channel 2 and Channel 10, the country’stwo main commercial channels, and the concession-aires that produce their programming, have the free-dom to focus almost exclusively on content. Theydon’t need to divert resources towards bringing theirproduct to the customer’s doorstep, as YES and HOTcarry their broadcasts. Even when consumers chooseto view Channel 10 and Channel 2 content online,they do so through high-speed Internet infrastruc-ture provided by YES or HOT.Another thorn in the side of these two conglom-

erates is the government’s recent standardization ofDTT services for the basic package of public-broadcastand commercial channels. Israelis can now pay aone-time sum of around NIS 400 (about $100) andpurchase a box that receives public-broadcast channels1, 33 and 99 and commercial channels 2 and 10. This makesperfect sense to consumers who are either unable or unwill-ing to shell out upwards of NIS 200 (about $50) per monthfor the most basic content packages currently offered byHOT and YES.

AIMING HIGHOne media group that is bringing its relative advantages tobear and is seriously jockeying to break open this two-horserace is Keshet (the Hebrew word for rainbow), one of twoconcessionaires that runs Channel 2 (Reshet is the other).Over the past decade, Keshet has produced severalimmensely popular programs, including, among many oth-ers, the Israeli versions of Idols and Big Brother and EretzNehederet, the country’s premier satire show. Keshet has alsobeen behind many of the popular Israeli formats that havebeen sold worldwide in recent years: game show The Vault

(HaKasefet in Israel) was a hit on Britain’s ITV; the third sea-son of In Treatment (originally BeTipul) is slated to run onHBO later this year; and Mesudarim, a sitcom whose theme,appropriately enough, is the sale of an Israeli startup to anAmerican company, has been bought by FOX. Obviously, the success of Keshet’s programming has trans-

lated into a windfall in advertising revenue. According toIsraeli business daily TheMarker, the first season of Big Brotheralone boosted Keshet’s coffers by some NIS 76 million ($20million). The fact that Channel 2 is carried by both HOTand YES and is also available via DTT and analogue free-to-air broadcasts means that “mega-events” such as the finaleof Big Brother’s first season—borne on a tidal wave of pub-licity, the show had at times become almost a national fixa-tion—can garner almost-unheard-of ratings. A whopping34.1 percent of Israeli households tuned in to the Big Broth-er finale, and Keshet charged a hefty premium for commer-

cial slots.In 2008, Keshet went

beyond its original mandateas a Channel 2 concession-aire, purchasing Channel24, an Israeli music channelthat is carried by HOT andYES. This has caused Chan-nel 2 to express its displeas-ure with Keshet on morethan one occasion, mostrecently after Channel 24screened premium contentduring prime-time hours,opposite programming pro-duced by Reshet, the chan-nel’s other concessionaire.Reshet’s response: “We’repositive that the regulatingbodies...won’t turn a blindeye to [Keshet’s] repeatedviolations, whose goal is todismantle Channel 2.”During the seasons of Big

Brother, Keshet also producesa companion channel, acces-

13TV MIDDLE EAST & AFRICA

The treatment you need: Israeli TV programs are being picked up increasingly abroad, as Dori’shit BeTipul has translated into a major success in the U.S. as In Treatment on HBO.

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sible only to subscribers of YES and HOT, that broadcastsfrom the Big Brother house 24 hours a day. This channel, likeChannel 24, is allowed to run ads. It’s telling that despite theBig Brother channel’s solid viewership, HOT has yet to renewits contract to run it for the coming season. Another case in pointof where the relationship between HOT and Keshet is headedis Bip. The humor channel is produced by Keshet, but ownedby HOT, which has recently announced that it will be discontin-uing Bip in favor of American import Comedy Central.In order to get to the root of this rising friction, though, it

is important to emphasize that Keshet is banking its trueambitions on an entirely different platform—the Internet.Launched in 2008, Keshet’s website and content portal, Mako,directly challenges the dominance of industry leaders Ynetand Walla! and the HOT and YES content they promote.There is a sense that Keshet’s ambitious CEO,Avi Nir, is wait-ing on the sidelines until Israel’s Internet bandwidth—ironi-cally, provided by his competitors—constitutes an informa-tion superhighway broad enough for Keshet to waltz in on ared carpet of web-based high-definition content.

LAW AND ORDERAs is often the case, the flip side of a highly centralized indus-try is weak, fragmented state regulation. There are severalministries with a say in what goes on in the TV industry, fore-most among them the Ministry of Communications, whichover the years has installed two central regulatory bodies: theSecond Authority for Television and Radio, which is taskedwith overseeing the commercial channels, and the Council forCable and Satellite Broadcasting, which supervises the activi-ties of HOT and YES. Another powerful government body isthe Israel Broadcast Authority (IBA), which is in charge ofall public broadcasting, including several television channels.

The current situation makes itvery difficult for the state to over-come strong lobbying and passmuch-needed reforms. A recent example is the way

the government has been fum-bling an initiative to force HOTand YES to offer à la carte optionsand lower-priced basic channelpackages. HOT and YES have saidthey’ll only support the move ifthe government allows them torun ads, but on the other side ofthe fence are Keshet, Reshet andChannel 10, which have no inter-est in sharing the advertising piewith additional parties. In thisand other cases, the various stateregulators often represent con-flicting interests.The Council for Cable and

Satellite Broadcasting’s chairman,Nitzan Chen, has been a vocalopponent of some of the methodspracticed by HOT and YES vis-à-vis their subscribers. They “thumbtheir noses at consumers,” Chensays, referring specifically to the

satellite and cable companies removing channels from theirvarious packages, seemingly haphazardly, without offeringworthy alternatives. “I’m sorry that they don’t understandwhat the public wants, and I’m just as sorry that the law doesnot permit me to get involved when it comes to content.”In a recent interview, Chen stated that he wished to focus

on the shape of the entire TV market. “Technological innova-tion will change the rules of the game,” he said, “and withinfive to ten years there won’t be only HOT and YES, butrather a long line of multichannel broadcasts that will providetelevision content via other methods and technologies.”Although Chen may never get the chance to impose his own

vision on the industry, the prospect of a powerful regulatorybody with the mandate to effect real change may be on its wayto becoming reality. In July 2010, Israel’s minister of communi-cations, Moshe Kahlon, announced the establishment of aNational Communications Authority—most countries havesuch an agency, the equivalent of the American Federal Com-munications Commission (FCC)—that will ultimately replacehis own ministry and regulate all communications in Israel.The need to assemble a professional, independent body that willtake the place of the current inefficient agglomeration of regu-latory authorities has been raised by a succession of govern-ments since 1996 to no avail, and is long overdue. In terms ofcurrent regulators of the television industry, the new authoritywill comprise the Second Authority of Television and Radioand the Cable and Satellite Broadcasting Council. It is unclearwhether the IBA, which is currently under the auspices of theprime minister’s office, will also be subsumed in the new body.Only time will tell if the National Communications Authoritywill be better suited to address the unique challenges posed byIsrael’s volatile, rapidly evolving communications industry. Elie Leshem is a writer for the Jerusalem Post.

450 World Screen 10/10

14 TV MIDDLE EAST & AFRICA

Truth be told: The suspense dramaThe Naked Truth wasoriginally created forChannel 10, yetArmoza Formats offersthe show forlocalized adaptation.

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