Israeli Regulator Approves Sale of Channel 13 to Merit Fund

The Second Authority for Television and Radio has approved the transfer of control of Israeli television Channel 13 to Merit Fund, a public benefit company. This decision marks the end of a significant regulatory phase for the acquisition by entrepreneurs Assaf Rappaport and Yinon Costica.

Rappaport and Costica have committed to injecting $120 million into the channel over three years. This investment comes as Channel 13 faces substantial financial challenges, having reported a cash flow operating loss of approximately 118 million shekels in 2024 on revenues of about 372 million shekels. Some estimates suggest annual losses could be as high as 145 to 170 million shekels, indicating that a significant portion of the new investment could be quickly depleted if the current cost and revenue structure persists.

The deal's structure is unique, with Rappaport and Costica indirectly holding control through the Merit Fund. This arrangement is intended to create a separation between donors and the day-to-day management and journalistic operations. The Second Authority has implemented transparency mechanisms, oversight of funding sources, and guarantees for future investments as part of the approval.

Initially, a broader group of high-tech entrepreneurs was expected to participate, but the funding for the acquisition and future injections now primarily comes from the two founders of Waze. This direct financial commitment underscores their personal investment in the channel's future.

The new owners are reportedly planning a significant investment in digital platforms, technology, content, and the news division. Rappaport, with his background in data-driven product measurement, is expected to bring a different management approach to the traditionally run television channel. However, Channel 13 faces stiff competition from Keshet 12, which dominates prime time and advertising, and the growing influence of Channel 14 in the news and current affairs sector. Previous attempts by wealthy owners, such as Len Blavatnik, to turn the channel around with substantial funding have not resulted in stable profitability, highlighting the complex challenges of ratings, content costs, management changes, and a shifting advertising market.

Even before the final approval, changes were underway at Channel 13, including the departure of CEO Emiliano Calmazuk and the appointment of Idan Elrom to management, along with shifts in the board of directors.