Prima facie, that's good news. It means that the intense efforts to dissolve the 'mystic chords of memory' that tie Jews to Jerusalem, have failed.
The bad news is that the Naomi Shemer's paen of love and longing to our people's heart beat out the competition by only one vote. The competing song was 'Horef '73' (Winter of 1973). The song describes the anger of the children sired in the wake of the Yom Kippur War that they are still obligated to serve in the army. Why? Because their parents failed to live up to their promise, to turn 'an enemy into a friend or lover' (להפוך אויב לאוהב). In other words, the on going war with the Arabs is their parents' fault. It's Israel's fault. Thus, this song is the ultimate expression of the moonbats of peace, who remain convinced that it's all up to Israel, and that if we only gave the Arabs what they want ('legitimately'), there would be peace and the army could be disbanded.
If the voting was fair, then the song contest indicates the deep divide within the Israeli psyche between its Jewish roots and its tendency to fantasy. More to that, the voters came from the Israeli Pop station, Reshet Gimmel. If so, one needs to carefully consider to whether the youthful glass is half empty or half full.