Idea Hub

This article originally appeared in the MIPTV 2014 issue of TV MEA.

The creativity of the Israeli television market is capturing the attention of broadcasters and producers worldwide.

It’s a studio like any in the world about to broadcast a live talent competition show. The excitement is palpable: crew members scampering about, a floor manager running down camera movements and the placement of talent on stage. The audience, comprised mainly of young girls, cheers when the judges take their places but goes wild when the host Assi Azar steps onto the stage. The studio is outside Jerusalem and the show is Rising Star, Keshet’s new hit. What sets it apart from other talent shows is the innovative app that viewers at home use to vote in real time during the live performance, helping to determine which contestants advance in the competition and which go home. (Take note of the words “new” and “innovation”; they will come up again.)

Rising Star ended its run on December 24 and averaged a 47-percent share, with its final episode hitting 58 percent. As huge as that number may seem to programmers in other markets, 40-percent shares are almost run of the mill in Israel. This season, rival broadcaster Reshet scored a 47.8-percent audience share with The X Factor Israel.

The main broadcasters in Israel are attracting big audiences with more than just entertainment shows. Reshet’s original comic-drama Irreversible averaged a 42.9-percent share and its satire show State of the Nation draws huge audiences. At Keshet, host Assi Azar is also the creator of the romantic comedy She’s with Me, whose first season averaged a 40-percent share and was recently renewed for a second season.

The world has taken note of the Israeli market in a big, big way. Rising Star has sold to major markets, including the U.S. and the U.K. Keshet’s groundbreaking drama Prisoners of War served as inspiration for the critically acclaimed Homeland and shows like Deal with It and Face 2 Face are selling internationally. Keshet has offices in the U.K., Australia and Canada, and has formed Keshet DCP, a joint venture with dick clark productions’ parent company, DC Media, to develop unscripted shows in the U.S.

Armoza Formats has sold the game show Still Standing to NBC and around the world. The psychological crime thriller Hostages originally aired on Israel’s Channel 10 and its format was sold to CBS, where it aired in prime time. Armoza has been working with the Chinese broadcaster Jiangsu Broadcasting Corporation, with whom it developed the prime-time format I Can Do That.

Dori Media Group was one of the first Israeli companies to export its programming with BeTipul, which became In Treatment for HBO. Now Dori Media is distributing formats from Israel’s Channel 10, including the scripted comedy Magic Malabi Express, which was commissioned for a pilot by FOX, and Little Mom, another scripted comedy that was commissioned for a pilot by CBS. Japan’s Nippon Television Network has asked Dori Media to tailor its format AHA! Experience to the international market. Most recently, Dori Media teamed up with Charlie Ebersol’s The Company to jointly produce and distribute scripted and unscripted programming.

Major media companies are also investing in Israel. Endemol acquired Kuperman Productions, which became Endemol Israel, and also took a 33-percent stake in the broadcaster Reshet. ITV Studios set up a joint venture with Reshet, The Lab. Red Arrow Entertainment acquired a majority stake in July August Productions.

GLOBAL AMBITION
Why the focus on Israel? As Tim Hincks, the president of the Endemol Group, points out, Israel, like Holland before it,  has emerged as a hothouse of creativity. “People in these smaller markets feel they can just take on the world with their formats and ideas. It’s become very clear that Israel is exactly that [type of market]. I’m in the business of creating ideas and of working with creative people, but I am also a viewer of content, and everyone has noticed some of the shows coming out of Israel. Homeland is perhaps the most obvious example, but there are entertainment formats and game shows, too, like Still Standing. So you begin to notice that the market is really doing something.”

That something is the continual search for the new and different. “We believe that if we keep coming up with great ideas, at the end of the day, the P&L will also be OK,” says Avi Nir, the CEO of Keshet Media Group. “So for us, it’s really about constantly looking for creative people, for new ideas and for how to get—and this is our goal in Israel—50-percent audience shares with our shows. How do we achieve this? What are the innovative ideas in drama or unscripted shows? Clearly we have many talented people here but we are constantly looking for more and encouraging them to try new ideas.”

“We are very creatively driven,” says Sharon Gelbaum-Shpan, the executive VP of corporate development and international at Reshet. “This is an extremely competitive market. Our audience is extremely sophisticated. They are aware of everything that is going on in the market. We can’t let ourselves lag behind. So either you stay on top, which is the most exciting thing, or you are left behind.”

This can-do attitude is similar to the entrepreneurial spirit in Israel’s well-developed high-tech market. In fact, many people from the tech industry have moved to the television industry. That’s why “new” and  “innovation” are the key words in the Israeli TV market. However, so are “limited resources.”

SIZE MATTERS
Just like Israel’s national security, its future as a nation, and even its access to a resource as vital as fresh water, the Israeli tele­vision market is shaped and influenced by geography. Only some 8,500 square miles (22,000 square km.) large, Israel is about the size of the state of New Jersey. It is surrounded by the Mediterranean Sea on one side and by political enemies on all others. The always-present possibility of an attack and the consequent mindset of living on borrowed time influence the thinking of viewers and producers alike. Life is tough in Israel, and when viewers get to sit down and watch TV, they are impatient and very demanding. Thanks to cable and satellite, they see a multitude of imported shows and are used to seeing them in their original language with subtitles. So, Israeli homegrown shows have to be high quality to match shows from the U.S., the U.K. and beyond. But because the Israeli market is small, advertising revenues are limited and programming budgets are lower than those in larger markets. The challenge, therefore, is to give viewers the level of quality and sophistication they expect, but to do that with limited resources.

“We look at productions in the U.S. and the U.K. and ask, Why do you do that?” says Reshet’s Gelbaum-Shpan. “We know how to do that in fewer days. We know how to do that with fewer people. We know how to do that with fewer cameras. We work through editing more than we work through other ways. When we use the word “creativity” it isn’t necessarily only related to content, it’s also about finding creative solutions for producing very high-quality content with very limited resources.”

Israel’s population is about 8 million, but the Hebrew-language TV market is even smaller—only about 5.5 million.

BY THE NUMBERS
There aren’t many Israeli channels. Channel 1 is a public channel, fashioned on the BBC, financed by a license fee and run by the Israel Broadcasting Authority. There are two commercial broadcasters, Channel 10, which has been experiencing significant financial difficulties, and Channel 2, which is programmed by two franchise holders: Keshet and Reshet. In a unique setup, they both program Channel 2’s schedule. Since January 1, 2014, Reshet has been programming Sunday through Tuesday and Keshet is responsible for Wednesday through Saturday. They have been swapping those days every two years. As of 2015, however, both are expected to have their own channels to program.

Other services include an Arabic-language channel; The Knesset Channel that broadcasts proceedings from the Israeli Parliament; and a music channel.

The two nights that garner the biggest ratings are Saturday and Sunday. Television still grabs the lion’s share of the advertising market. After two years of general ad market decline, ZenithOptimedia saw a small recovery in 2013. While newspapers and magazines saw a loss of advertising of about 10 percent, television held its own. In fact, the commercial broadcasters Channel 2 and Channel 10 saw stronger demand during the first six months of the year. In 2013, of the total advertising expenditures of $948 million, television garnered $358 million, compared to newspapers’ $239 million and the Internet’s $228 million. In a nation with a mature high-tech industry, it’s not surprising that 70 percent of the Israeli population is wired.

On the pay-TV side, the cable operator HOT and satellite provider Yes offer a mix of international and domestic channels. Yes has 578,000 subscribers, about 39 percent of Israel’s multichannel market, while HOT has 900,000 subscribers, about 60 percent.

Television in Israel started in the late 1960s. With the outbreak of the Six-Day War in 1967, Israelis started to demand television news to see what was going on in their country, and news has remained an extremely important part of the television diet ever since. 

Commercial television has been on the air only since 1993. Many outsiders ask, half-jokingly, what’s in the drinking water in Israel that is inspiring so much creativity? The average Israeli will quip in return, it’s not the water, it’s our wine! Whatever the elixir, Israel’s TV market is drawing a lot of attention.

WHAT’S IN THE WATER? 
Last year, Endemol bought Kuperman to become its producer in Israel. “That was our first step,” says Hincks. “It’s really interesting to take a territory like Israel and say, maybe we can grow with the experts and build new properties and brands, which can start small and very quickly become global blockbusters. It was a short jump then to thinking that maybe we should do a bigger play in Israel and form a partnership with a platform.”

In December, Endemol acquired a 33-percent stake in Reshet. “It’s an incredibly exciting adventure for us, but what that represents is not Endemol getting into the broadcasting business—I wouldn’t see it like that at all,” adds Hincks. “It’s actually about Endemol using its scale and network to get behind its own IP and creativity. This partnership with Reshet is one way we can do that. We are investing our own money and taking some risks to ensure that we can create local hits for the Israeli market. And that’s the most important thing: to first of all create local hits for Israel, because that is the way Endemol works. Once we’ve got a local hit, there is every chance that it can travel very quickly around the world. That is a really exciting model for us.”

“Because of our commitment to creativity and our strong belief in the Israeli market’s ability to serve the whole world, partnering with Endemol opens a wealth of possibility for us to create and produce and to distribute shows around the world,” agrees Reshet’s Gelbaum-Shpan. “We are very excited.”

Reshet has also partnered with ITV Studios to form The Lab, a content developer and IP holder. “We’ve been working with Reshet for about a year, and there is a real desire from them to take risks and develop very good shows,” says Mike Beale, the director of international formats at ITV Studios. “They’ve got their business models very right, but because their market is so small, they need to get onto the worldwide stage to make real money. That is what has driven them to create a format that can work globally.”

The Lab came about, as Beale explains, because two like-minded companies were looking for opportunities to expand their businesses. “We were looking around the world at where we were growing and where we should be. Israel was definitely one of those territories where we needed to be active. We weren’t entirely convinced that we wanted to be a production entity there, but there was great creativity there. The question was how could we tap into that great creativity.” Reshet was looking for a global partner that was strong in the U.K. and the U.S. and that could help develop their shows internationally.

The first show to come out of The Lab is Game of Chefs, a prime-time competitive cookery format, which will be launched at MIPTV. Other shows are My Dream Wedding, which is being produced by ITV Studios America for TLC, and Secret Matchmaker for Reshet.

BEYOND BORDERS
One Israeli company that has been looking to the international market for a long time is Dori Media. Years ago, Nadav Palti, president and CEO, saw the tremendous success of telenovelas and began producing in Spanish.

“As we managed to penetrate more new territories with our telenovelas, we understood that we had to be different, more sophisticated. We needed to include international elements in our productions,” says Palti. The result was Lalola, which sold to more than 150 territories.

Then, the worldwide economic crisis of 2009 impacted all markets and Dori Media diversified its production slate to accommodate budgets of all sizes, with reality and game shows as well as daily and weekly scripted dramas that have been doing brisk business around the world. Dori Media also owns or programs channels: telenovela, movie and general-entertainment in Israel; and one channel dedicated to tele­novelas and another for toddlers in Indonesia.

THAT’S ENTERTAINMENT!
Armoza Formats’ founder and CEO, Avi Armoza, is seeing continued demand worldwide for entertainment formats. The first was The Package, which sold to the BBC; it was followed by Still Standing, which aired on NBC, and Connected. “Everyone is looking for the next big hit,” he says, and he is confident his catalogue can satisfy varying budgets and time slots. China’s CCTV has picked up the game show Upgrade, a deal that came on the heels of the co-development pact with Jiangsu Broadcasting Company for I Can Do That. Armoza offers a broad range of scripted and unscripted formats.

Following the success of Prisoners of War and Homeland, Keshet’s Nir wants to increase his scripted business. He continues to look for new formulas for getting ideas to the small screen, as was the case with the thriller Dig. “Gidi [Gideon Raff, creator of Prisoners of War] wrote the story first and then Tim [Kring, creator of Heroes and Touch] joined, and they worked out the pilot together,” explains Nir. “We have been fortunate enough that [NBC­Universal Cable Entertainment’s] Jeff Wachtel and Bonnie Hammer took this on with great enthusiasm and it went straight to series. For me, it’s a great example of how we can come up with an idea, get an Israeli writer, get the collaboration of [U.S. talent agency] WME, get a great American writer and move forward with the help of BermanBraun [now Whalerock Industries] and USA Network. I would love this to be the prototype of how we work.”

“You should think out of the box,” says Dori Media’s Palti. “You have to have something that no one else thought about. When we discuss a new project, people at my company always tell me, Nadav, this is not doable; nobody has done this in the past. And I answer, Then this is what we should do, because if somebody else can do it, we will not have any advantage. So if no one has done it, we should find a way to do it. We should think of how we can do it very economically, like In Treatment. It is very sophisticated and smart, but very inexpensive to produce.”

As long as Israeli producers and broadcasters continue to think out of the box and come up with innovative ideas, the world will continue to take notice.