CNN Not Hot In Israel

But negotiations being negotiations, and hardball being hardball, that doesn’t mean it is the end of the story, but for now – at least as this is being written -- HOT has replaced CNN with arch-rival Fox on its analog system.

The Knesset’s (Parliament) Economic Committee got into the act earlier in the week in trying to help sort things out, and what was said about CNN gives some pause for thought about the influence of the cable news network within a country, indeed globally.

Knesset member MK Avshalom Vilan explained, “While the Knesset cannot force HOT and CNN to come to an agreement, it is important for them to know that this is an issue which greatly concerns the public as two-thirds of all television subscriptions are with HOT. It would make the country look bad for its largest cable provider to not carry CNN.”

The much smaller YES cable system has CNN, and the Council for Cable and Satellite Broadcasting ruled earlier this year, in a not so subtle government hardball move of its own, that should HOT not continue its CNN contract then HOT subscribers could cancel their subscriptions without penalty.

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For media business negotiators what a fabulous chess match to watch. One really would love to be the fly on the wall on both sides. On the one hand there is HOT that says it is determined to lower the prices it pays to its channels by some 30 – 40%. And in the face of either accepting much less, or getting dumped, most suppliers faced with that choice have succumbed. But not CNN, perhaps in its thinking that it has such an influence in the country that HOT would not dare ban it. So now the battle lines are really drawn.

The Knesset Committee thought it had helped things along a bit when it got CNN to agree to extend its current contract by 10 days so there could be more time for negotiations. But HOT surprised just about everybody by cutting the service Thursday morning, basically saying that CNN had indicated there wasn’t going to be any price cut so what was the point of continuing service for another 10 days. Hardball is hardball.

According to Dov Abramowitz, CNN legal representative and lead CNN negotiator, as told to The Jerusalem Post, “Last Wednesday night, HOT representatives called and essentially told us that if we didn’t immediately agree to their demands in the new contract, they were going to take the channel off the air beginning Thursday afternoon.

“CNN is disappointed as it feels that it has a special relationship with Israel and we have something unique to offer the Israeli public.”

HOT said it did make one last attempt by inviting CNN’s business boss for the Middle East to make a last ditch offer. “The decision to end our contract with CNN comes after the network’s chief executive in the Middle East region, Ron Cionne, refused to come to Israel to negotiate with us,” according to HOT’s VP of marketing.

Yossi Lubaton added, “We feel they never took seriously the negotiations and did not make an offer reasonable enough to allow us to enter into serious negotiations.”

CNN claims that it made many offers – apparently the best financial one being that the contract renews at the existing rate – but HOT made clear it was looking for at least a 30% reduction.

So, what should CNN do in such a situation? Well the government decision earlier in the year basically provides the way forward. On its web site CNN should have a notice addressed to Israeli viewers taking note that the service is no longer available on HOT but it is available on YES and it should stress the government’s earlier decision that a HOT contract can be canceled without penalty if CNN was so dropped. Hardball, after all, begets hardball. When the BBC was also under HOT threat it organized a letter-writing campaign by HOT subscribers.

None of that really costs CNN any money, but if it wanted to put some marketing funds into this campaign – and it should for the final outcome with HOT will be watched very closely by cable systems around the world – then a few newspaper ads saying the same thing wouldn’t hurt either.

There has already been so much bad blood spilt in public in Israel that CNN doesn’t really have to worry itself about “upsetting” its former client. Haaretz quoted a CNN spokesperson saying, “For years, CNN has cooperated with HOT and reduced its prices. But this has become a vicious cycle of threatening demands on HOT’s part. We’ve reached the point where we can no longer provide a service, we cannot cover costs, and are losing money. It’s simple business logic.”

The truth is that a supplier has to put a value on the product being supplied. There are always negotiations and give and take, but the supplier still has that basic value for the product and if the customer insists on not accepting that then one has to walk away. CNN, after all, recently dumped news supplier Reuters when they could not agree to its terms. Déjà vu.

There is something of a love-hate relationship with CNN in Israel. The network’s power and influence around the world is accepted so there is great sensitivity to the stories that CNN produces from the region. For Middle East audiences you’re either “with us” or “against us” – there is no middle ground so when a news organization produces reports that tries to treat all sides equally then it is in an almost no-win situation. That’s one explanation why a frequent seen Israeli bumper sticker reads, “CNN Lies”.

HOT says it has been successful in reducing prices from other cable suppliers, although those suppliers hotly dispute their reductions were in the 30 – 40% range that HOT claims, but one thing is clear for all -- no matter how much HOT has saved on supplier costs over the past couple of years none of that has trickled down to subscribers in the form of lower rates.

So maybe subscribers should sayeth unto HOT as HOT sayeth to its suppliers: “Lower our rates or you’re gone!”

CNN Not Hot In Israel

On November 2, 2007 Moshe Chertoff news addict Kibbutz Shomrat, Israel wrote: