Analysis: And they said the print media era was over!

Who says newspapers have no future? Over the next few weeks, we will be seeing the launch of two new daily newspapers in Israel, perhaps even three.

Who says newspapers have no future? Over the next few weeks, we will be seeing the launch of two new daily newspapers in Israel, perhaps even three. For the last decade, the accepted wisdom in the media industry was that only three papers can survive in the mainstream Hebrew-speaking market: Ha'aretz, Yediot Aharonot and Maariv. They were the only ones with a large and faithful readership sufficient to ensure cash-flow from subscriptions, news-stand sales and, crucially, advertising. One by one, the old party-owned papers like Davar and Al Ha'mishmar closed down, their readerships slowly dying out. The one serious attempt to create a new alternative, Hadashot, set up in the early Eighties as a sassy tabloid with an attitude designed to hook in the new generation, fizzled out after less than a decade, incurring heavy losses on its owner, Ha'aretz proprietor Amos Schoken. The big three remained, along with complaints of a virtual monopoly, a closed mind to alternative voices and a monolithic way of thinking. Meanwhile local radio stations sprung up and the commercial television industry, released from the shackles of regulation, burst into bloom with hundreds of satellite and cable channels, and especially the news teams of channels 2 and 10, who rebuilt the landscape dominated so long by government-owned IBA. With the arrival of the internet and the success of Israeli news-sites, everyone already agreed that we'd never again see another new paper-paper; all that was left was to wait for the gradual decline of the obsolete medium. But a new player is walking the land. The richest Jew in the world, casino magnate Sheldon Adelson, has decided to spend a rumored $180 million on a new daily paper that will rival the big three. There are two crucial questions to be asked about any new media organization: What need is it coming to fulfill and is it commercially viable? On the first, the answer seems to be that Adelson wants a greater degree of influence on Israeli politics and public opinion. Over the last few years he has given tens and perhaps hundreds of millions of dollars to various Israeli philanthropic causes, mainly in the field of medicine and academia. But a newspaper represents influence of a totally different order. Various spokesmen for his newspaper, to be called Yisrael Hayom (Israel Today), have denied reports that it is being set up to support the Likud leader Binyamin Netanyahu's campaign to regain the premiership, but a number of key senior employees on the paper are known to be close the Netanyahu, as is Adelson himself. He can hardly be interested in the paper for financial reasons; even in the most optimistic forecasts, it won't make in a year what his casinos rake in daily. Which leads us to the second question on economic viability. Nobody, not even a billionaire, enjoys losing money, but the financial basis of Yisrael Hayom looks pretty shaky. It is to be a free, give-away newspaper, 300,000 copies of which are to be distributed nationwide in letter boxes. How these costs are to be offset by sales of advertising alone is still unclear, especially as the market hasn't responded favorably until now to the first freesheet newspaper, Israeli, which was set up a year and a half ago by publisher Shlomo Ben Tzvi. Adelson joined Ben Tzvi as partner, but the two fell out after a few months amid accusations of misuse of funds; the matter is still being fought over in court. Meanwhile, Israeli is meandering on with a skeleton staff, constantly being cut back, and has as yet failed to make any significant mark, either on the news agenda or in the media business. The sheer scale of Adelson's investment guarantees that his new newspaper will make a splash. Yisrael Hayom has also recruited a substantial news team, and on Monday even announced the signing on of its first star writer, veteran journalist Dan Margalit. But it's still unclear what kind of an impact it will have on the agenda, especially as freesheets around the world, while being in many places successful financially, haven't been taken seriously as news sources. In the end, much will probably hinge on the degree to which Adelson will be prepared to subsidize what, for the first year at least, will certainly a money-losing concern. His willingness to pay the price will indicate the ideological value the paper has for him. The established papers, meanwhile, are bracing themselves for war. Yisrael Hayom could bite both into their readerships and their advertising incomes and it would seem particularly to threaten the two tabloids, especially Maariv, which has been hemorrhaging money over the last few years and is currently on sale. It was offered most recently to Adelson himself, who preferred to start out afresh. Even before Adelson launches his new paper, there are others who are also planning to plunge into the freesheet pool, including the Jerusalem Post's owner, Eli Azur, and market leaders Yediot Aharonot, toying with the idea to launch a printed version of their successful Ynet Web site. Few industry observers believe that all players - three paid-for newspapers and potentially four freesheets - can survive in the cutthroat market; the advertising pie is simply not big enough. The two perceived most vulnerable are Maariv and Israeli, both of whose owners are desperately searching for new investors or buyers. In one contest at least, Adelson is already the winner: he has the deepest pockets. But how much is he willing to spend to outlast his rivals?