Israeli Cable Operators Lose Tiering Battle

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Tel Aviv, Israel -- Local direct-to-home satellite start-up
DBS Satellite Services won another battle in its effort to hold Israel's cable operators
at bay as it prepares to launch its service early next year.

In a High Court decision July 4, Israel's three cable
operators -- Golden Channels, Matav Cable Systems Media Ltd. and Tevel Israel
International Communications Ltd. -- lost their petition against government operating
conditions that prohibited them from offering tiered program lineups.

The Court upheld a Communications Ministry decision to
award DBS Satellite an exclusive tiering window of 18 months to 27 months after its
launch, or until it signs up 250,000 subscribers -- whichever comes first. A precise
window will be determined 12 months after DBS Satellite's commercial launch

DBS Satellite, Israel's first DTH platform, had at one
point threatened to return its license to the government if it did not receive an
exclusive tiering window.

DBS Satellite spokesman Gilad Hayman said the company was
"very happy with the decision. It's what we wanted."

With the tiering battle behind it, DBS Satellite is now
focusing its sights on two new areas of dispute.

Last week, the company once again turned to the courts,
this time to try to overturn a controversial agreement between Israel's National Soccer
League and Mylan Tenzer, general manager of Jerusalem Capital Studios, which supplies
programming to The Sports Channel, a sports channel carried by the three operators.

The contract is valued at $20 million per year, and it
gives the cable operators exclusive rights to offer pay-per-view soccer matches. However,
only DBS Satellite has a license to provide live PPV events such as sports or concerts.

"They can't give what they're preventing us from
giving," Hayman said.

DBS Satellite also objected to the six-year life of the
contract, which extends well beyond the cable operators' three-year licenses.

At the same time, the company has also complained to the
Communications Ministry and the Monopolies Commission that Israel Cable Programming -- the
cable operators' jointly owned programming arm, which is due to be disbanded Sept. 1 --
should not be allowed to continue to negotiate deals on the basis of 1.1 million
subscribers when, in fact, each cable company has only between 300,000 and 400,000
subscribers each.

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