Israel had been fiercely opposed to television advertising for years. In 1982, a commission appointed by the Ministry of Communications and chaired by attorney Yoram Bar-Sela addressed itself to the subject of TV advertising and recommended that it be banned on educational and economic grounds:

"Opening up the advertising industry to another player...will create competition with those who presently make a living from advertising and will harm them. Television advertising adds a social dimension of injustice in that it strengthens the strong."

Israel's first station funded solely by advertising began to operate in late 1993. Known as the Second Channel or Channel 2, it is operated by three concessionaires and regulated by an appointed council. After many years of hegemony by the Israel Broadcasting Authority (IBA), which operates the state's Channel 1, the TV viewing monopoly was broken. Channel 2's ratings soared and today have attained levels twice those of Channel 1. The advent of Channel 2 also revolutionized the advertising market: demand skyrocketed and the price of advertising air time increased drastically.

Today's Israeli television broadcasting market has two major distortions. The first is the funding of Channel 1 by means of a regressive tax applied to every owner of a television set irrespective of his viewing habits. Everyone who owns a TV has to pay the IBA license fee whether or not he watches Channel 1. The second distortion is the TV advertising monopoly held by the three Channel 2 concessionaires.