Fidesz takeover of state and commercial Hungarian media causes severe imbalances

November 2, 2016

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“There are four areas we must achieve in order for domestic capital to grow in the direction of international (capital).  These are the media, banks, energy and the retailing network.  Three we’ve accomplished already, and we broke our tooth on the fourth one.  For this reason we must develop new ideas.  Unfortunately, the retailing networks are trickier with us. A few more years and we’ll reach that goal as well.” – Viktor Orbán

Translation of “Tailored Press” (“Sajtószabóság”) appearing in the October 27th edition of conservative print weekly Heti Válasz. (pp. 10-12)

Fidesz supporters believe that what is taking place in the media is the completion of the system change.  The opposition speaks about the winding up of press freedom.  The reality is that there is life in the market apart from what the government wants, although this is less and less the case.

“There are four areas we must achieve in order for domestic capital to grow in the direction of international (capital).  These are the media, banks, energy and the retailing network.  Three we’ve accomplished already, and we broke our tooth on the fourth one.  For this reason we must develop new ideas.  Unfortunately, the retailing networks are trickier with us. A few more years and we’ll reach that goal as well,” said Viktor Orbán at the beginning of October at the economic forum organized in Krynica, where he was presented with the Man of the Year award.  At the same time, reacting to the suspension of Népszabadság at a press conference held in Brussels, the prime minister put it differently: questions pertaining to the media market do not belong to the government.

So does the government play a role in changing media relations or not?  What is the situation with the so-called media balance; is it necessary to continue the fight against “the communists”?  Is there still room for manoeuvre on the market, or is every change imposed from above?  Is it true that the failure or survival of certain papers is merely a question of economics, as the governing party politicians claimed at the time of the “temporary” suspension of Népszabadság (or the earlier demise of some opposition right-wing newspapers)?

Economic question?

Were it the case that Hungarian media was not maintained by the state and various patrons struggling to achieve political goals and exercise economic influence, then there would be a point to talking about a classical media market.  In other words, if only the actual results appearing in the companies’ balance sheets counted, then most of the publishers would have shared Népszabadság’s plight.  Andy Vajna, for example, bought TV2 Media Group Ltd. using a loan from the state Eximbank, despite the company losing HUF 500 million (USD 1.8 million) in 2014 and HUF 5.5 billion (USD 19 million) in 2015.  Until last year Magyar Telekom kept Origo Média Zrt. on a “respirator” despite the portal and related products generating annual results of between -0.3 billion and -1.4 billion over the past five years.  In fact, the daily bugle, which on paper appeared to be a failure, was the subject of intense competition among potential buyers.  In the end, the New Wave group, which is close to the government, paid HUF 4.2 billion (USD 15 million) for Origo (also with the help of state financial institutions).

It is difficult to understand the business reason why Gábor Széles publishes Magyar Hírlap which runs up annual losses of between HUF 10 million (USD 35,000) and HUF 100 million (USD 350,000) despite the government being the main advertiser.  Nor is there any economic explanation for why Népszava (together with Vasárnapi Hírek, Szabad Föld, and some magazines) was purchased recently by a company supposedly owned by foreigners which is still under registration in Liechstenstein (XXI Century Invest AG).  The publisher of the left-wing daily had to be propped up over the past several years with HUF 120-300 million in annual supports (in part with funds provided by the German Social Democrats) in order not to collapse.  Liberal (print weekly) Magyar Narancs is also in an incomprehensible situation market-wise. The minority owner of the company that publishes Magyar Narancs, Media Development Investment Fund (which is not independent of George Soros), which is also an investor in 444.hu., covers 99.98 percent of the losses.

Of course, it is possible to argue that the owner of the Mediaworks publishing group who is close to the government, Heinrich Pecina, made an economic decision to suspend Népszbadság.  However, in this “market” rational business decisions are, at best, a secondary consideration in most cases.

II.  Is there free movement?

Although when speaking about opposition papers, the end of press freedom is often mentioned, it is not true that the government is behind every media acquisition or merger.  Especially as there are some exceptions which prove the rule. Some papers managed to stand on their own two feet without state advertising or sources from political parties or Soros.  Among them are two, the German Bertelsmann-owned Hungarian RTL Zrt. and the Central group owned by Hungarian businessman Zoltán Varga, which recently announced that “that which belongs together, grows together.”  In other words, RTL acquired a 30 percent interest in the company that publishes Central’s digital media (24.hu, startlap.hu, hírstart.hu).  Well, this script was certainly not written in the Fidesz workroom.

According to our information, those on the side of the government have already calculated with obtaining the media family owned by Zoltán Spéder, including index.hu.   The recent renewal of Lajos Simicska-owned (print daily) Magyar Nemzet and its online edition, as well as the sale by former socialist government spokesman J. Zoltán Gál of the Népszava-Vasárnapi Hírek-Szabad Föld trio to the Liechstenstein company also appear to be independent of the will of the government.

III.  Balance or imbalance?

The Fidesz regime of 2010-2014 believed the task of creating media balance was left over from the earlier 1998-2002 Fidesz regime, and for this reason attacking the entire field was left to the Fidesz regime after 2014.   “Unfortunately, there is mass democracy, and we have to resort to tabloids,” said Árpád Habony, main advisor to the prime minister, on getting a mandate to create a commercial quality portfolio.  Today TV2, Lokál, ripost.hu and 888.hu and origo.hu essentially work as one media center, and according to our information the Class FM frequency has also been earmarked for this group.  This year may also see the launch of the large-format, printed version of Ripost on the sample of German tabloid Bild.  And our sources familiar with Habony’s endeavours do not exclude the possibility that, in place of a greenfield project, in the end the purchase of Bors will be the solution.  Ferenc Pallagi, the father of Hungarian tabloids, has already announced that he will leave the Bild competitor at the beginning of the new year, as well as from Lapcom, the company that publishes Kisalföld and Délmagyarország.   Our sources believe this period change could lead to a sale if the foreign owner also desires it.

The majority of the county papers were already collected under the Mediaworks umbrella for the court of Felcsút mayor Lőrinc Mészáros. So everything is given for these countryside papers printed in the tens of thousands to continue on as a mutation of Magyar Idők under the leadership of Gábor Liszkay, the former editor-in-chief of Magyar Nemzet.

According to our sources, the Mészáros-Liszkay-circle will soon purchase Gábor Széles’s Echo-TV.  In this way, after the anti-Magyar Nemzet (Magyar Idők) and the anti-Lánchíd (Karc FM), an anti-Hír TV may also be created for the purpose of annihilating the Nemzet group (of which Heti Válasz, the print weekly in which this article appeared, is a member-tran.)

From our table it can be seen that, if everything planned comes to pass, then the government official (public service) and semi-official (under the influence of Habony-Mészáros-Liszkay) will have a great numerical superiority over other media.  Of course, media projects exist which are independent from the top levels of power, but which are clearly governing party publications (blogstar.hu, PestiSrácok.hu, Magyar Hírlap, Magyar Demokrata).  Last but not least, there are rumors that the publisher of print weekly Figyelő will be acquired by a right-wing owner.  Those who talk about a Fidesz-supported left-wing media imbalance probably are not living in the present.

IV. Domestic or Fidesz?

From this it follows that essentially strengthening domestic capital in the media market involves the government setting up various entrepreneurs in business.  This spring there was, for example, a 24-page Lokál edition, only one-quarter of which featured its own content.  Most of the rest of the paper consisted of state advertisements and government PR material.  Those responsible for government propaganda are not engaged in ensuring that the main message reaches as many readers, listeners or viewers as possible, having targeted few groups other than those consuming TV2, Origo, Lokál, 888.hu, Magyar Idők and public media.

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