U-Turns Change Israeli Pay TV Game


Tel Aviv, Israel -- In a speedy reversal of its decision to
return its 30 million-shekel ($7.5 million) license to provide a direct-to-home platform
and sue the government, Israeli start-up DBS Satellite Services has retrieved its license.

The U-turn came only one week after DBS Satellite's
May 12 decision to give up the license.

DBS Satellite wasn't the only one reversing course:
The government also changed its position on cable's tiering conditions.

At a legal hearing May 16, the attorney general's
office told the High Court of Justice that it was a "mistake" for the government
to have held secret negotiations with Israel's three cable companies regarding
tiering, and to have excluded DBS Satellite.

Those negotiations resulted in an accord -- no longer in
effect -- between outgoing communications minister Limor Livnat and the cable companies
that would have blocked the country's operators from tiering their channel offerings
for one year after DBS Satellite's launch, or until the DTH platform reached a
subscriber base of 140,000.

DBS Satellite had lobbied for the exclusive right to offer
tiered programming packages for a period of three years, or until it reached 400,000
subscribers. The company is now expected to enter renewed negotiations with the
government, together with the cable operators, on the terms of its exclusive tiering

A second company, Israel Digital Broadcasting Group, has
also received permission to buy a DTH license, and it has approached the Cable and
Satellite Broadcasting Board with a request to be included in the discussions -- so far
without success.

"It's a big mess. This is not a normal market.
The government first says one thing, then another," said Idit Herzeg, a spokeswoman
for Israel's largest cable operator, Golden Channels.

DBS Satellite spokesman Gilad Hayman added, "The issue
is not simply tiering. There is also the matter of the government's decision to
extend the cable operators' licenses until 2013, sports channels and other

Now, everything is on hold until a new communications
minister is appointed in the wake of Israel's general elections last month.

Livnat was considered supportive of the satellite
enterprise but unable to withstand pressure during an election campaign from the cable
operators' owners, who have other powerful media interests.

There were also reports of policy differences within the
Communications Ministry itself.