Netanyahu and Kahlon
Netanyahu and Kahlon Flash 90

Prime Minister Binyamin Netanyahu said Thursday he had reached an agreement with his Finance Minister in a long-simmering dispute over a new public broadcast corporation that had raised the possibility of snap elections.

Netanyahu said in a statement after a series of meetings with Finance Minister Moshe Kahlon that he "believes that the crisis is over."

A compromise was said to have been reached between them that would allow the new corporation to move forward as planned, while including a series of changes sought by Netanyahu.

Despite initially backing it, Netanyahu has since opposed the creation of the new broadcaster once he saw the results of its inception: it was as overstaffed as the original, creating it would cost millions in severance pay, and it did not have a politically balanced newsroom crew as opposed to the original left-leaning one.

Kahlon, whose Kulanu party forms a crucial part of Netanyahu's coalition with 10 seats in parliament, committed himself to reforming Israel's public broadcasting.

However, the coalition agreement signed by parties in the cabinet included a clause that the prime minister has the final say on media and communications issues, and Netanyahu has been acting head of that ministry since the coalition was formed.

Earlier this month, Netanyahu reportedly threatened to dissolve the government unless the new broadcasting corporation was derailed before its scheduled start on April 30.

The new corporation is officially meant to reinvigorate Israeli public broadcasting in an age when private channels have an increasing share of viewers.

But it is also expected to lead to layoffs in Israel's existing public broadcasting service, one of the issues Netanyahu has used to attack the plan. Employees who received letters ending their contracts have been demonstrating and, unsurprisingly, getting expanded media coverage.

Under the deal announced Thursday, the new corporation would be split into two separate corporations. The new broadcast authority will cede its news division to another broadcasting authority.

The deal also stipulates that the Finance Ministry would be responsible for the retirement arrangements of the current employees of the IBA who will not continue after the new corporations are formed.

In addition, the Communications Control Law will be frozen and will not be promoted at this stage.

Attorney General Avichai Mandelblit approved the compromise. At his request, the start of the new broadcasting authority's broadcasts will be delayed by two weeks.

AFP contributed to this report