Partners Shuffle at Israels Yes

Tel Aviv, Israel -- A long-running feud in the country's
multichannel industry appeared to be resolved last week, when the Hertzikovitz Group
announced a deal to sell its 30 percent stake in start-up direct-to-home platform Yes: DBS
Satellite Services to Eurocom Communications.

Another outstanding issue -- the terms under which Israel's
cable operators will be allowed to renew their licenses -- may be resolved by months end.

Eurocom will pay the Hertzikovitz Group -- which includes
local investors Ispar Co., Clal Investments and U.S. businessman Ronald Lauder --
$11million for the stake in Yes. In addition, Eurocom will be required to pay another $8
million in loan guarantees and an already agreed-upon investment in the start-up.

Prior to the deal with Hertzkiovitz, it owned 10 percent of

Other Yes partners include national telco Bezeq Ltd. and
Israeli firms Kardan Telecommunications, Lidan Business Enterprises and Poalim

The sale comes following the Hertzikovitz Group's
long-standing criticism of Yes management and several failed attempts to sell its stake.

"This is a very positive move for Yes. There were too
many shareholders in disagreement for Yes to get anywhere," said Avshalom Shimei, an
analyst at Nessuah Zannex Securities. "In terms of the decision-making process, it
gives Yes a push forward.

"Also, the Hertzikovitz Group was anxious to see a
return on its investment in the short term. Eurocom has all the patience in the

But the regulatory issues that contributed to the departing
investors' frustration are still some way from resolution.

The $600 million satellite venture, due to launch in May,
may be forced to postpone its start if an agreement covering the purchase of content from
the cable operators cannot be reached.

Last week, the three cable companies -- Golden Channels,
Tevel Israel International Communications Ltd. and Matav-Cable Systems Media Ltd. --
notified the Antitrust Court that they will continue to object to a sales agreement.

Said Shimei: "This issue is crucial to Yes. It will
have to be resolved before anything else can move forward. If Yes does not get the
content, it simply will not be able to compete in the market."

The cable companies may be persuaded to sell the foreign
programming they snapped up in return for an extension of their licenses, up for renewal
in 2002, and permission to enter the high speed-Internet market.

The issue of license renewals has provoked such a bitter
dispute between the Finance and Communications Ministries that Prime Minister Ehud Barak
was forced to intervene this month.

Finance Minister Avraham Shohat has demanded fees of $1.5
billion following a new tender process. Communications Minister Binyamin Ben-Eliezer
contends that this demand is holding the cable operators back from reaching a
program-sales agreement with Yes. Instead, he has proposed renewing the licenses without a
tender or fee demand.

Barak has compromised by offering a "yes" to fees
but a "no" to a new tender in order to speed up Yes's launch and the provision
of Internet service via cable.