His Majesty’s Media: From state capture to controlled market – Hungary’s media landscape after 2014[1]

*This blog post is part of the Jean Monnet Chair of European Media Governance and Integration series

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Attila Bátorfy*

Political scientists and public intellectuals often refer to Hungary’s current political arrangement as an ‘illiberal democracy’, a ‘conducted democracy’, a ‘leader democracy’, a ‘mafia-state’, ‘Berlusconiism’ or ‘oligarchism’. They more or less agree than after 2010, the new government led by Prime Minister Viktor Orbán started to build a semi-authoritarian system eroding the democratic institutions and pulling down the framework of the rule of law. This process caused serious effects for the Hungarian media landscape, using state administrative tools and public funds to harm the freedom of press and to shrink media plurality. The result is a new, government-controlled media system similar to the Russian and the Turkish media model.

My research focuses on these main topics:

  • The tools of influence on media companies and the work of journalists
  • The political favouritism of the government-allied media

Background

In 2009, due to the global economic crisis, the Hungarian media lost one-fifth of its total revenue (200 million EUR). This loss is comparable to the loss that would occur if the then-three largest media companies, the RTL Group, the TV2 Group and Axel Springer were to vanish from the market. While the media companies of the countries of the CEE region strengthened again in the next few years, the Hungarian media companies acted in other way. The multinational owners took out their reserves and capital from their subsidiaries, and the Hungarians did not invest in product and content development. The profitability of the market was irregular and unequal amongst the companies, led by those that could produce high income with low-quality content and production costs, other business activities (for instance: business consulting, conferences) or strong political connections.

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Tools

The new Orbán government recognised the financial vulnerability of media corporations and started to reshape the market according to its aims. For that work it used a long-living myth on the right that the Hungarian media was historically and traditionally unbalanced towards the left and the liberals – Fidesz argued that they lost the elections in 2002 and 2006 because they did not have media support. For the great transformation-work the government used six basic tools:

  • Legislation
  • Regulation
  • Propaganda
  • Administrative actions
  • State advertising
  • State loans

Legislation

  • The Hungarian Media Act of 2010 was widely debated in Europe, the criticism focused on mainly the political dependence of the Media Authority and the Public Service Media (PSM), and also on the opportunities of floating regulation.
  • The modification of the Transport and Traffic Law in 2011 (Lex Mahir) prohibiting lamp-post advertising, ruined the ESMA, one of the biggest billboard companies connected to the Socialists. The law was elaborated by one proxy man of Fidesz, chief oligarch and media owner Lajos Simicska, to benefit his companies on the market.
  • The main target of the Advertising Tax Act 2014 was the RTL Group. The largest, 40% tax bracket was designed for the advertising revenue (not profit!) of RTL.
  • The Lex Átlátszó 2014 was created to increase the obstacles to requiring public interest information from state institutions. From that point state institutions could arbitrarily count the “costs” of sharing the information and charge the journalists or the media companies.
  • The Lex Garancsi 2015 cancelled the modifications of the Lex Mahir 2011. When the owner of ESMA sold the company to the oligarch, and friend of Orbán, István Garancsi, according to the old-new law, there were no problems with lamp-post advertising.

Regulation

  • The Media Authority, as the state monopolist owner of the radio frequencies, reshaped the radio market through non-transparent and arbitrary decisions in favour of government-allied radio stations and denied the applications of independent or critical radio stations.
  • The Media Authority blocked for five years the merger of Ringier and Axel Springer referencing prohibitions of cross-media, horizontal and vertical concentration. The company had to sell the largest oppositional daily newspaper and the regional newspaper portfolio to a new Austrian company called Mediaworks.
  • The Media Authority referencing the same paragraph allowed the merger of Mediaworks and Pannon Lapok Társasága (PLT). With this fusion the largest regional news publisher was created. Some days later the company was bought by Lőrinc Mészáros, who is considered the strawman of the prime minister.
  • The Media Authority rejected the fusion of the independent Central Media online portfolio with the RTL Group quoting the same paragraph again.
  • The Media Authority often punishes oppositional and critical media for the same content fouls that government allies commit, but they are not investigated.

Communication

  • The government’s communication campaigns often target oppositional and critical media and their owners. The owner of Index, the largest critical news site, Zoltán Spéder, and the owner of Central Media, Zoltán Varga, were attacked by the government-allied media with soviet-type kompromat-articles ordered by the Prime Minister’s Cabinet Office led by Antal Rogán.
  • Some of the independent media, Átlátszó, Direkt36 and 444, are also part of the propaganda-campaign against the American billionaire, George Soros.

Administrative actions

  • The Government’s Control Office and the Tax Authority regularly investigate oppositional and critical media companies and NGOs.
  • According to a new plan, foundations and media companies which receive money from abroad (especially from George Soros) shall detail their revenues and incomes publicly.
  • Secret surveillance of journalists.

State advertising

  • From 2010 the significance of state advertising increased remarkably. By 2016 20% of the market’s total advertising revenues came from public money in a stagnant market.
  • State advertising is the most effective tool of political favouritism. Between 2010 and 2014, under the second Orbán administration, 65% of state advertising was channelled to Lajos Simicska’s media companies. From 2014, after the fallout of Orbán and Simicska, 70% of state advertising goes to the new government-allied media.
  • State advertising is also a tool for chilling oppositional or critical media on a weak market. This happens with ATV and Népszava.

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State advertising between 2006-2016, Source: Mérték Media Monitor, Attila Bátorfy-Ágnes Urbán, Forthcoming (red: companies allied with socialists and liberals, turquoise: independent or multinational companies, orange: Simicska’s companies, black: new Fidesz media

State loans

  • After the rupture of oligarch Simicska and Orbán, the prime minister started to build a new media empire controlled by himself. Many of the new companies (TV2, Origo, Mediaworks) were bought with state owned bank loans.

Consequences

  • 4 large multinational companies with 133 million EUR revenue quit the Hungarian market after 2015: Pro7Sat1, Deutsche Telekom, Mediaworks, Funke. These companies were bought by oligarchs close to the government and the prime minister. The transactions were financed by state bank loans.
  • The Fidesz media empire now has 14 owners, 11 companies and more than 100 titles (including the PSM).
  • 6 of the owners are total newcomers in the Hungarian media.
  • 24 titles did not exists before 2015.
  • Their revenue is 157 million EUR, 22% of the total market.
  • More and more “independent” or “oppositional” owners start to negotiate with the government in exchange for state funds. See the cases of ATV, Népszava, 168 Óra and Project029.
  • The remaining oppositional and independent owners and editorial staffs are under permanent attack.

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Viktor Orbán: ‘In Hungary it is worth to work’ – Front pages of regional online newspapers after oligarch Lőrinc Mészáros, a close friend of the prime minister, acquired them, Source: 444.hu

 

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 Conclusion

Orbán’s vision of the “good media” could be a dangerous example for European countries, especially for those which have weak democratic traditions. Orbán does not want to eliminate oppositional and critical voices, he wants to control them and lay  down their boundaries of how far they could go. Hungary is a member of the European Union, so Orbán needs at least statistical data on how many critical media are in Hungary. On the other side, Orbán doesn’t need to chill them completely, because the constantly growing Fidesz-media financed by public money created a totally isolated alternative world for their consumers where Hungary is in blossom, lives a new renaissance era, where there is no unemployment and poverty, where Putin is the man’s best friend, and where the corruption and scandals hit just the oppositional parties and politicians controlled by ‘foreign interests’. The facts and the reality stay outside their walls.

Before 2010 2010-2014 After 2014
Regulation Low Medium High
Independence of media administration Independent Semi-independent Dependent
Independence of media regulatory bodies Independent Dependent Dependent
Independence of ownership Most of them independent from political parties and the government Most of them partly independent from political parties and the government Most of them depend on the government
Governmental influence on business transactions Decisions based on business targets Decisions based on business targets Decisions based on governmental influence
Level of state advertising/funds Low High High
Direction of state advertising/funds Equal Pro-government Pro-government
Commercial advertising transactions Rational Mostly rational Mostly irrational based on lobbying aspects
Business targets Profitability, high incomes Profitability, high incomes, safety Safety,
Relationship between the actors of the market Peaceful Respectful Hateful
Censorship No Chilling effect Chilling effect

*Journalist; research fellow, Central European University, Budapest

** This blog post appears as part of the Jean Monnet chair programme of @mediagovlab head Prof. Katharine Sarikakis

[1] Note: Forthcoming: ‘From state capture to controlled market: Viktor Orbán’s and the government’s media model after 2014’ In Médiakutató, Summer, 2017

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