The Israel Phoenix group could sell its holdings in newly launched Channel 10. Phoenix owns 13.5% in the channel and has to date invested about $1.6 million. Phoenix joins Alfred Akirov, who also has declared no interest in continued cash infusions to the channel and is expected to seek a buyer for his 20% stake.
Atara Investment CEO Yariv Lotan told TheMarker that it's impossible to maintain a television channel whose rating equals that of a niche channel. Lotan is one of two Phoenix group representatives serving on the Israel 10 board.
Lotan said that the group hadn't committed to finance the commercial channel. The group had thought that Channel 10 would be a better deal than it turned out to be, Lotan explained.
Lotan added that the current market conditions are different from the conditions that prevailed when the group joined the tender. The channel is operated by one franchisee rather than two because of the ongoing legal battle relating to the other winning bids for the channel. In addition, regulators have not sufficiently eased restrictions, and all these factors change the economic viability of the venture, Lotan said.
Lotan referred to the change in the Phoenix ownership structure. These days the deal for the transfer of control is expected to be signed, Joseph Hackmey transferring control to the Kaz-Shahar group, headed by Yisrael Kaz and Ya'akov Shahar. The position of the new owners on maintaining the investment in Channel 10 is unknown.
Lotan said it's still too early to decide whether to sell the stake. He said that the channel management should be given time to improve programming and demonstrate its ability get on a track that will eventually generate return on investment, although the mathematics is quite clear. Lotan said that the group doesn't ordinarily stick to bad business for long. He added that the group will reconsider the whole picture in March.
Meanwhile, Channel 10 is placing high hopes on broadcasting soccer matches between Hapoel Tel Aviv and the Italian football club Parma.
As of now the rating continues to be low, with the channel losing some $1 million per week. Within three months the channel is expected to lose as much as it had thought it would lose in a year.
The board is due to tomorrow meet with representatives of Bank Leumi, the Israel 10 group's main creditor.
It is believed that Israel 10 Chairman Yossi Maiman will acquire the stakes of those partners who want to sell their holdings. Maiman, who owns 36% in Israel 10, is not allowed to exceed 45% according to the franchise terms.