The cable infrastructure company that will be founded following the cable companies merger will have to serve other multi-channel TV companies as well, and not just the cable companies' new broadcasting company. The Antitrust Commissioner, Dror Strum, is planning to include this demand as a condition for the approval of the merger.
This arrangement will enable the establishment of a new company that will compete against the merged entity, without having to invest in infrastructure and a broadcasting center. The "virtual company" will lease the cable infrastructure at a price based on what the infrastructure company charges the broadcasting company.
Strum also demands the cable companies allocate 100 channels to private operators who receive Communication Ministry approval to broadcast single TV channels. The cable companies will be required to provide billing and infrastructure services to holders of these special licenses.
The Antitrust Commissioner refused the request from the representative of the cable companies, Ram Belinkov, chairman of Golden Channels, that the price of the infrastructure services these special license owners will pay be pre-determined, and said the price will be based on the price the infrastructure company offers the broadcasting company.
Sources close to the talks said the cable companies are disappointed with the harsh conditions the commissioner has imposed on them as a condition for the merger, and that today it seems the merger will not pay off.
The merger will force the companies to set up three separate companies, with different managements and different holding structures. Strum also plans to make them sell 25% to 30% of their broadcasting company or infrastructure company to an outside concern. Strum believes this will ensure fair transaction prices between the two companies.
The cable companies object to some of Strum's demands in the matter, and are working to find a compromise.