The Yes satellite television broadcaster published its second-quarter financial statements three weeks ago. It reported increasing revenues, and a steep drop in losses. Its report received wide press coverage, and its chief executive was only too happy to explain how he had improved its profitability. Correction: Yes didn't publish its financial statements. It published a press release containing a summary of its results, as it chose to present them. When we asked its CEO, Shlomo Liran, for the full financial statements, as we'd done in the past he said that Yes is not obliged to publish them. Yesterday the
Bezeq (TASE: BZEQ ) phone company published its second-quarter statement, which incorporate Yes's full results. Turns out that Yes had at least one very good reason to play coy: Its quarterly loss narrowed mainly thanks to one-time financing income. Yes's gambit is obvious. Its people figured they'd get some good press, and by the time Bezeq's report rolled around, they'd be page 14 news. That is but one of the tricks companies can play with their financials. Much the same ploy was carried out by Keshet, one of three companies running the commercial TV channel, Channel 2. It surprised the press by releasing a summary of his company's financials, after many moons of staying mum. What had changed? Only the bottom line. In 2001, the company's Internet adventures led it to lose a net NIS 4 million, while in 2002, it was back in the black. Ergo, when it's convenient, why not release the results, and when it isn't, just say the company is privately held and isn't obliged to report a thing. Back to Yes, whose reports do not settle the question as to its ultimate survival. That depends mainly on whether Bezeq decides to keep footing its bills, and whether Bezeq which belongs to the state will keep getting the politicians' thumbs-up for more financial infusions. The only sure thing is that if Bezeq wants to, it has the wherewithal. In its report yesterday, it showed that enough cash flow eroded, it's still the plumpest cash cow in the country. For the first half Bezeq reported bringing in NIS 1.34 billion from operations, compared with NIS 1.6 billion in the parallel half. Much of that cash has been routed to supporting its loss-making subsidiaries Pele-Phone Communications, Yes, and Bezeq International. Bezeq has finally achieved positive cash flow, while subsidies for Pele-Phone and Yes are expected to plunge in the coming year. Therefore, even if Bezeq's cash flow continues to shrink as competition arises, it may find itself with more to spend as the appetite of its daughter companies subsides. Indeed, Bezeq's report shows that it reduced its debt this year: it has NIS 1.7 billion cash, and surplus financial assets over commitments of about a billion shekels. Bezeq, the government monopoly over domestic communications, remains Israel's strongest, most liquid company. Until a year ago, competitors for that title included Bank Leumi (TASE: LUMI ) and Bank Hapoalim (TASE: POLI ) . But, as their second quarter reports show, both proved far from immune to the deepening recession. Leumi presented earnings of NIS 304 million for the first half of the year compared with NIS 685 million for the parallel. Most of the drop was attributable to towering provision for doubtful debt, for loans to hi-tech and communications companies, or highly leveraged groups like Peled-Givony. The difference between Leumi's problem companies and Yes which is also a heavy borrower from Leumi is that Yes has a sugar daddy, Bezeq, which looks likely to keep handing out the candy. Another major Leumi borrower is Gilat Satellite Networks (NASDAQ: GILTF) , but it doesn't have a rich parent. Yet another is the Tevel cable TV company, which does - Discount Investment Corporation (TASE: DISI) , but it cut the cord and is letting Tevel flounder on its own. Which brings us to Green Venture Capital (TASE: GREN) . Yesterday the fund of funds, which belongs to tycoon Yitzhak Tshuva, published its financial statements, which aren't much better than that of Yes or Tevel. The company, which invested in funds that invested in startups, has NIS 450 million in commitments and an equity hole of NIS 81 million. Again, Leumi is its chief creditor. Ostensibly, Green should be considered one of Leumi's greatest failures, as the assets it can foreclose on are a bunch of shares in startups. Selling the holdings would probably result in hefty losses for the bank, compared with the sums lent to Green. Worse - Green's chairman is one Yehoshua Maor, who is the husband of Galia Maor, Leumi's chief executive. If Galia Maor had to set aside NIS 100 million or NIS 200 million on a loan to a company that her husband chairs that would be exceedingly embarrassing, even though she declared that she shut all doors between herself and handling that client. But there's something different about Green. After the startups industry collapsed and it became evident that the company couldn't meet its commitments, its controlling shareholder decided to take personal responsibility. Every few months, he dips his hand into his own pocket and makes good on the company's interest or principal payments. Why doesn't Tshuva take advantage like most businessmen would of the fact that Green is a limited-liability company? Why does he keep it going using his own money? Why doesn't he behave like, for instance, IDB Holding Corporation (TASE: IDBH) - one of the biggest holding companies in Israel - which is allowing its subsidiary Tevel to slither toward bankruptcy? Is Tshuva doing it because of his relations with Bank Leumi? Because his business culture is different? How much money is he prepared to spend in covering Green's debts, and what will happen to the company if he stops? Galia and Yehoshua would surely love to know, but the only one who has the answer is Yitzhak Tshuva.