Nearly a year after the spectacular and very public falling out between Hungarian Prime Minister Viktor Orbán and Fidesz oligarch, construction and media mogul Lajos Simicska, government agencies and bodies continue to remind Simicska how vulnerable his economic interests are now that the former Fidesz economic director has fallen out of his party’s favor.
On September 30th, 2015 the Fidesz-controlled Budapest City Council voted to terminate the contract with Mahir Cityposter Kft. as of October 31st of this year.
The original contract concluded in September 2006 awarded Simicska’s company the right to erect and maintain 621 advertising columns and 140 other kiosks in Budapest. In exchange for the City agreeing not to permit any other advertising within 50 meters of each advertising column, Mahir agreed to remit 15 percent of its revenues to the City, but not less than HUF 45 million annually. Mahir reportedly also agreed at the time to erect a number of air quality monitoring installations around the city as well as a certain number of public wifi terminals–contractual obligations the City now claims Mahir breached.
Not known at this time is whether prior to terminating the contract the City advised Mahir that it was in breach of contract and, if so, whether the latter was given the opportunity to rectify the breach of contract.
In addition to terminating the contract, Budapest City Council also modified an ordinance so as to make it possible for the City to remove at Mahir’s expense any advertising installations not removed by the end of the year.
One reason offered by the City for terminating Mahir’s contract is that it allegedly put serious limits on the City’s rights and responsibilities. According to a report prepared by the city mayor’s office, in exchange for some HUF 45 million a year the city was actually foregoing up to HUF 125 million worth of annual advertising revenues.
An equally compelling explanation is that this is just the latest development in the ongoing battle between Lajos Simicska and Viktor Orbán since February 2015, when key members of Simicska’s media empire resigned en masse to take jobs with state television or other pro-government media outlets. The “poaching” of key members of his media empire was allegedly instigated by Orbán after Simicska refused to divest himself of pro-government daily Magyar Nemzet, the cornerstone of his media empire.
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