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14.02.2019

How Hungary shrunk the media

by Gabor Polyak, MERTEK Media Monitor

Through its transformation of the media system and dissemination of hateful and scare-mongering propaganda, the Fidesz government in Hungary created a situation in which opposition views could not even reach significant portions of the electorate. 

How Hungary shrunk the media Viktor Orban. Photo:dpa

The resultant public discourse was completely devoid of rational debates.This restructuring sought to make the interest groups in Fidesz’s extremely complex economic network easier to control and finance. This kind of consolidation was most obvious in the media market, where a colossal media monstrosity was created which extends to all media segments and all media audiences. 

The end of a right-wing media empire 

The aftermath of the election was an extraordinarily eventful period in the media market. The very next day its owner shut down the leading political daily Magyar Nemzet, the only conservative newspaper that was critical of the government, and also suspended the operations of his critical rightwing news radio, Lánchíd. These media outlets were owned by Lajos Simicska, who until 2014 had been in charge of handling Fidesz’s business affairs. Until that time he was effectively the sole player in the business of controlling Fidesz’s interests in the construction and media industries. His media empire included a national newspaper and a weekly, the only freely distributed political daily, a right-wing talk radio broadcasting nationwide, as well as the largest outdoor advertising company. Until 2014, all elements of the Simicska empire had been uncritically loyal to Fidesz and the Orbán government. 

In 2017 it also emerged that Simicska held a right (an option) to acquire Hungary’s largest critical online newspaper, Index.hu. He did eventually exercise this option, but in order to ensure that the newspaper’s independence would not be jeopardised or easy to acquire, Simicska transferred the ownership rights to a foundation. The chairman of the foundation’s board is Index.hu’s former attorney, who is perceived as fiercely loyal to the newspaper and its mission to remain independent. 

After the parliamentary election of 2014 an intense conflict erupted between Simicska and Prime Minister Viktor Orbán, which was probably due in part to Simicska’s powers having grown beyond what the Prime Minister felt comfortable with, and in another part to Orbán’s increasingly Russian-friendly and populist policies. At that point, some elements of the Simicska empire went out of business or were transferred to new owners. But the remaining Simiscska media – primarily the news channel Hír TV, the daily Magyar Nemzet and Lánchíd Rádió – became key players in that segment of public discourse that is critical of the government. 

Increasingly, these media turned towards supporting the far-right Jobbik party, which was,trying to reposition itself as a centrist party. The outcome of the 2018 election was a massive defeat for Simicska. It lead to the remnants of his media empire and other business holdings being liquidated. In July 2018, Simicska sold off all his enterprises, and in several steps these were transferred to business interests with close ties to the Fidesz government. Those segments of Simicska’s former media empire that survived and continued to operate immediately switched back from critical coverage towards fawning and loyal support for the government. Talking on Hír TV, Máté Kocsis the leader of the Fidesz parliamentary fraction summed this up as “the returning to the roots” of the station which provides the feeling of “satisfaction”. 

A new ecosystem for the political media

However, in the period between 2014 and 2018 Fidesz was working on building a new media empire that is loyal to Fidesz. Yet these efforts were palpably designed in such a way as to ensure that control over key media outlets is distributed among a variety of players, to avoid the emergence of another economic and political power centre like that of the former the Simicska empire. This post-2014 period was marked by the rise of several key players. Andrew Vajna became the owner of several vital media outlets, including the second largest private television channel in Hungary (TV2), a national private radio network (Rádió 1) and a few local newspapers. Indirectly, the new national private radio station launched in 2018 is also part of his business interests. Gábor Liszkay, a former top manager in the Simicska empire who turned against Simicska when he challenged Orbán, was given the opportunity to launch a new national political daily (Magyar Idők). This became the new flagship newspaper for the government after it lost its access to Magyar Nemzet. Liszkay’s business interests also include a government-friendly talk radio (Karc-FM). After the rift between Simicska and Orbán, Liszkay became the chief executive of Lőrinc Mészáros’s media company, and then emerged as the chief manager and enforcer of the recent vast transformations which resulted in the near total consolidation of the entire Fidesz media system into a single entity. 

Heinrich Pecina took control of the newspapers that were previously owned by Axel-Springer and Ringier. It had been Pecina who, acting in his capacity as the owner, unexpectedly shut down Népszabadság in October 2016. At the time it was the largest political daily newspaper.and one of the major critical news sources in Hungary. A few weeks later, Pecina sold his media holdings to Lőrinc Mészáros, Orbán’s childhood friend, who is the wealthiest person in Hungary. Piece by piece, Mészáros bought up the entire the regional newspaper market – which is still quite significant in terms of overall circulation – and he also became the publisher of numerous magazines, in addition to operating the pro-government Echo TV and acquiring a few local radios. 

Árpád Habony, Orbán’s political communication advisor publishes a free daily newspaper, Lokál, which replaced the Metropol newspaper that had been published by Simicska. Additionally, Habony’s media company operates the online newspaper 888.hu. Habony also recently appeared as a media investor in Slovenia and Macedonia where Orbán nurtures close ties with politicians who share his political outlook. The political media outlets he owns in those countries  cultivate a similar tone as his Hungarian media holdings. Origo.hu, which was previously owned by Magyar Telekom (a subsidiary of Deutsche Telekom), is the largest online newspaper in Hungary along with Index.hu. It was acquired by the son of the president of the Hungarian National Bank, a strong Orbán ally who previously served as a key member of Orbán’s cabinet for years. A formerly prestigious business weekly, Figyelő, was taken over by Mária Schmidt. She is responsible for shaping the government’s politics of remembrance, a crucial dimension of Fidesz’s ideological outlook. Other investors with close ties to Fidesz have also appeared in the market for tabloid and online newspapers, as well as other segments of the media market. 

This new political media ecosystem was based on the same instruments that had been previously deployed to create and consolidate the Simicska empire: the unlimited use of state advertising and other sources of state funding (e.g. generous credits by state-owned banks); radio frequencies that were generously awarded by the media authority; information that was only shared with media that are loyal to the government; and efforts aimed at discrediting critical media and journalists. 

This fragmented ownership structure did not impede the smooth dissemination of government messages by the Fidesz-linked media outlets, nor for that matter their campaigns to discredit the governing party’s opponents. The owners and newsrooms continuously consulted with one another, often publishing exactly the same content. Sometimes it was even given to them by the political figures in a final form ready for publication. 

At the same time, however, maintaining this fragmented structure did consume a lot of money. In addition to their political loyalty, the individual owners were also motivated by profit. The main source of funding in this media system was state advertising. Through the ongoing propaganda campaigns and the advertisements for state-owned companies – which were often utterly pointless and pursued no discernible business goals whatsoever – the state spent roughly 25-30 billion forints (ca. 80-90 million euros) annually in Fidesz-friendly media. 

By 2018, the state had emerged as the biggest buyer in the Hungarian advertising market. In trying to assess the total funding for Fidesz media, one must add to the amount disbursed through the aforementioned channels the entirety of the budget spent on Hungarian public service media – 70-90 billion forints (ca. 220-280 million euros) annually. After all, the public service media outlets do not perform any public service information functions at all. They operate entirely as fervently loyal mouthpieces of the government. During the election campaign, for example, they failed to invite any opposition MPs or candidates as guests on the morning television talk shows until a court verdict obliged them to do so; even at that point they merely allotted the absolute minimum amount of time specified by law for opposition politicians.

Media consolidation beyond the law

In the aftermath of his third victory with a two-thirds majority, Viktor Orbán rightly felt that he no longer needed to be concerned about another Simicska, that is a power centre within Fidesz that could limit his influence within the party and the government. Under these condition, the need to operate these media economically and efficiently moved into the foreground, and the time came to send the new media owners a clear message: the media that had been entrusted to them were not their own, and they had to operate them in line with Fidesz’s interests. 

In the summer of 2018, news began to circulate about some kind of impending centralisation in the Fidesz-affiliated media empire. Despite the early warnings, what actually happened stunned public opinion: on 28 November all Fidesz-friendly media owners except for Andrew Vajna transferred the ownership rights of their media holdings to a non-profit foundation, the Central European Press and Media Foundation. On the same day, 13 media companies joined the foundation, all of them without any type of compensation for the owners. Only Andrew Vajna’s TV2 and Rádió 1 network stayed out of this merger. The foundation had been created in August 2018 by a stock corporation that is owned exclusively by the aforementioned Gábor Liszkay. The foundation is registered at Liszkay’s holiday home. The foundation’s board is made up of a former and a current Fidesz MP, as well as the CEO of a Fidesz-friendly think-tank. Its mission is to “promote activities that serve value creation and strengthen Hungarian national identity in the print, radio television and online media platforms that make up Hungarian mass communication.” The total net revenue of the media companies that became part of the foundation was 55.7 billion forints (ca. 175 million euros) in 2017, which meant that with one fell swoop the foundation consolidated 16% of the entire Hungarian media market revenue under its aegis.

Such an enormous merger is obviously problematic both in terms of competition and media law. As in any other situation involving a merger of such value, the Hungarian competition authority would have been obliged to examine whether the merger substantially reduces competition in the relevant market, especially in terms of creating or reinforcing a dominant market position. As was noted above, this fusion of companies significantly increased the level of ownership concentration in numerous segments of the media market, while it created a portfolio in the advertising market that allows advertisers to reach all target groups. 

At the same time, the Hungarian Media Act also provides that the media authority needs to review how the merger affects the right to diverse information. The previous decisions of the Media Council on this issue manifestly exhibited political bias: the mergers of Fidesz-friendly media were greenlit without fail, whilst acquisitions aimed at boosting critical media were blocked by the authority. Still, in the case of a market concentration of this magnitude and composition, it would have been a tall order to show that it does not impinge on the right to diverse information.

The government however moved to relieve the competition and media authorities from the burden of having to decide this. A 2013 amendment of the Competition Act – adopted by a Fidesz majority – gives the government the authority to exempt certain mergers from the obligation of a review by the competition authority if they are declared to be of “strategic national importance.” On 5 December 2018 the government exercised this prerogative in the context of the new media merger. It issued a decree declaring that the consolidation into a single foundation of the pro-Fidesz media enterprises is of “national strategic importance” and is thus exempt from reviews and approvals. This is an acknowledgment that even in the legal framework created by Fidesz, the creation of such a vast media empire could not have been implemented in compliance with the existing laws. 

Narrowing space for the independent media

Apart from the creation of the Fidesz media foundation, the most disconcerting change affected Index.hu, the most important independent online newspaper. Private persons with close ties to the government acquired the company that exercises the founding rights to the foundation that publishes Index.hu. They also acquired stakes in the company that has an exclusive right to sell all the advertising on the website. The founding rights allow the new owners to amend the foundation’s governing statutes. This could ultimately deprive Index.hu of its independence. But even without implementing such changes in the near future, a manipulation in the sales of the newsportal’s advertising spaces could massively undermine the success of its operation. For the time being, no changes have been observed in the content published on Index.hu, but its operations have become extremely vulnerable. A transformation of Index.hu or its disappearance from the market would be a devastating blow to what little remains of independent journalism in Hungary.

And there have also been other menacing developments since the April elections in that segment of the Hungarian media that is not affiliated with Fidesz. One of the critical weeklies, Vasárnapi Újság, was shut down by its owner in December 2018; in the future it will be published as a supplement of a daily newspaper, Népszava. The newspaper is owned by László Puch, who was previously a financial operator for the opposition Hungarian Socialist Party (MSZP). Puch also controls the last left-wing political daily, Népszava. Puch struck a deal with Viktor Orbán back in 2016 in which he pledged that his media would not cover certain issues in return for receiving state advertising revenue for  Népszava. In November 2018 Puch sold another weekly, Szabad Föld, which is popular among rural readers, to the media corporation owned by Lőrinc Mészáros. Szabad Föld was then duly transferred to the foundation that controls the Fidesz media conglomerate. 

In 2018 the last critical TV news channel, ATV, commissioned a new sales house to sell its advertising time. The sales house in question also distributes the advertising time for a significant portion of Fidesz-friendly media and its owner is known for his affiliation with the Fidesz-friendly business circles. What this means is that the funding of one of the last critical media platforms with a substantial audience reach is now also in the hands of a company with close ties to the governing party. 

Even as Viktor Orbán continues to talk about a left-liberal media dominance, there are hardly any players left in the Hungarian media market that are not in some way connected to the Fidesz media empire. Apart from a few independent online newspapers and weeklies, the only major independent media that remain are the news show of the private television channel RTL Klub and the talk radio station Klubrádió, whose coverage is limited to Budapest (and the internet) since the media authority stripped it of all its rural frequencies. Most of these media are not viable on a market basis alone because in the prevailing advertising market, which is subject to ongoing manipulation through state advertising and other sources of pressure, commercial advertisers consider carefully where they publish ads. These days, all independent online newspapers are soliciting donations, and Klubrádió also relies to a substantial extent on crowdfunding, which is  - to put it mildly - not an adequate guarantee of stable and sustainable financial operation.

By creating its media foundation and fusing the pro-Fidesz media in such spectacular manner, Viktor Orbán has also sent the European Union a clear message: he can now afford to take such striking measures and even this level of unprecedented media ownership concentration in Europe will not elicit any noteworthy resistance. While the critical media in Hungary struggle to survive, the political and civil opposition are gradually left bereft of tools with which they can fight Fidesz’s dominance. In the meanwhile, Fidesz continues to be a proud and strong member of the European People’s Party.