Hungary: Western Investors Damaged Our Free Press

November 25, 2014 • Media and Politics • by

Recent stories about Hungary in the western press have given the impression that Budapest, the capital, has been descending into a totalitarianism not seen in Europe since the invading horsemen of Genghis Khan. Criticism of the centralizing policies and authoritarian style of Viktor Orban, the prime minister, usually includes a comparison to Vladimir Putin. Orban is depicted as a ‘Victator’, engaged in a full scale war against press freedom. But let me offer you a different news angle. A story about how western investors stifled Hungary’s free press for decades after 1989.

‘Viktor Orban Steers Hungary Toward Russia, 25 Years After Fall of the Berlin Wall’, proclaimed the New York Times recently. This was only one of many articles suggesting that Hungary is on the verge of becoming a Russian satellite state.

If Hungary’s news industry is drifting towards the Putinist model of a controlled state media it has a long way to go. The most popular online news sites in Hungary, and around half of the main newspapers and broadcasters, are vehemently critical of the government. Something you cannot really call a totalitarian media landscape. However, they are all struggling with vanishing advertisers and are financially overexposed to their owners’ business interests and government PR spending.

This story is about how foreign media ownership distorted a small market and left it highly vulnerable when search engines hijack ad revenues, and social media demolish traditional news distribution.

The New York Times headline was right to refer to the fall of the Berlin wall. The year 1989 was exactly the time when a newly emerging free press in Hungary was put on the wrong course by western investors. It was a course that led to at least some of the current troubles here.

How did it happen?

Western media conglomerates bought up Hungarian newspapers like cheap candy in 1989 and 1990, before, during and immediately after the first free democratic parliamentary elections. For example, in the very final hours of Hungarian communism, in 1990, the German company, Axel Springer, the WAZ group, an Austrian and an English investor struck hasty deals with the communist party (or its successor, MSZP), to buy regional newspapers (with a combined daily circulation of at least 1.2 million people at that time).

These papers were technically owned by the state party, but of course constituted national property. Still, cunning apparatchiks allegedly channeled the money into party and private bank accounts. But what was really clever was that the deals included terms to ensure the survival of the old guard editors and staff.

The ‘grocers’, new corporate media investors, profited after 1989

That was the original sin with which the new, “free” Hungarian press was born in many other cases, too. The “grocers” — as Nick Davies, the Guardian journalist, called the new corporate media investors that bought and brought down big family papers in the West — rescued the old journalists with their new newspapers.

In Hungary, genuine local news or newly-founded, independent national outlets were not able to build up their operations at a time when the news business was still a highly profitable endeavour (how could you compete with the grocers?). It is a telling story how the most influential national newspaper, Népszabadság, a flagship party mouthpiece before 1990, like Pravda in the Soviet Union, ended up in the hands of the German conglomerate Bertelsmann (later sold to the Swiss Ringier) in the same way.

This was a Muscovite heritage that did not bother western analysts.

Western investors are now restructuring or selling up and leaving Hungary

Since news publishing is no longer a profitable business, and in the face of falling circulation, these very same grocers have recently been seen “restructuring their portfolios” or fleeing their Hungarian  investments altogether.

They are leaving behind a news industry with no real reserves, such as charitable funds or backers, (a politically motivated George Soros does not count), and the political class will not shed tears about it.

As a 21st century political power, Orban’s party is probably losing interest in shaping the press landscape in Hungary anyway.

News  outlets are being bypassed by social media and public service broadcasting

Public broadcasters are on a short leash, and thus the governing party is increasingly able to bypass new and old news outlets with its messages, and address voters (or consumers) either by social media or its own third party “independent civic” group campaigns. Or with the help of sophisticated computer data bases that enable political parties to reach voters directly in their homes.

None of these techniques being an invention of Mr. Putin, but rather trends adopted from the United States.

A lot is simplified here. A recent, controlling Hungarian media law and a special tax on media advertising are of course things to deeply worry about. It is telling however that they have not triggered the wide-scale protests in Budapest that the recently planned (since withdrawn) internet tax did.

This is Zuckerberg’s generation in the streets of Budapest, and I guess even Viktor Orban has now understood: over-regulation and absurd taxes will not kill the free press in Hungary. It is already dying of something else. Not Moscow’s trickery, but shrinking news budgets and a lack of new investments, surely the best scenario for a government wishing to control the news.

Any independent and free press in a democracy (and Hungary is still one, contrary to popular assumptions in the western media) needs sound financial foundations, a viable business model of quality journalism. This is something that the news industry does not have any more, not only in Hungary but in the whole western world.

 Photo credit: Flikr: Habeebee 

 

 

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  • György Iványi

    Just like in any other industry of a country characterized by capital shortage after decades of a planned economy incapable to generate reserves, western investors were rather key players in creating autonomous entities than challenge to press freedoms in Hungary. The crippling of the press is rather a result of the appearance of politically motivated domestic investments, and specifically a result of public money spent directly in public service, and indirectly (i.e. advertisement expenditure) in the commercial media.
    International media investors might be motivated to leave by selective taxation and other out of market arrangements but, that would just deepen and not consolidate the present controversies.

  • Attila Bátorfy

    Dear Szabolcs,

    I think there are some interesting questions here to be discussed. I agree with that the privatisation of the Hungarian media landscape wasn’t healthy at all, and the further development was full with corruption. I’d worth to analyze the coming of the western media outlets not only on print media but also on TV és radio. It would be a honorable and good job.

    However you are talking about that Western investors damaged our free press. This is a very harsh statement and you should underline with hard facts not with only your opinion. This is a business thing and at the time – what a lame – wasn’t any strong right wing media outlets in Hungary. That’s why the first Orbán administration between 1998-2002 started to manipulate with the state advertising following the counsels of István Elek, and then merged the Napi Magyarország with the biggest then conservative daily, the Magyar Nemzet. And they found the Heti Válasz weekly paper by public money. In 2002, when the Fidesz lost the elections, started to blame the „liberal” media landscape. And from this time you should make a huge disclaimer.

    The businessmen behind your lovely party, Fidesz, established the Hír Televízió, bought out Hungary’s second biggest outdoor media company, the Europlakát (now Publimont), launched the now biggest commercial radio station, Class FM in a very corrupt authority led public competition process and bought out the only freemium daily nationwide newspaper, the Metropol. So now, the right-wing media portfolio linked to Fidesz and the government is the same: Magyar Nemzet, Heti Válasz, Class FM, Metropol, Publimont, Mahir Cityposter, Lánchíd Rádió, EuroAWK, Music FM – all of them in the same businessmen’s ownership: Lajos Simicska (your owner), Zsolt Nyerges, Károly Fonyó, Gábor Liszkay (your other owner). The allied media: Magyar Hírlap, Echo Tv, Demokrata, TV2, Helyi Téma. And Orbán’s government biggest propaganda sponsor: the Public Broadcaster.

    Regarding the topic you should mention the following:

    – The 65-70% of the state advertising goes to your media empire. This is fact.

    – The National Media and Infocommunications Authority led now by your former lawyer at Magyar Nemzet, Monika Karas helped to end with your Class FM’s main competitor Neo FM.

    – The same Authority started to give radio frequencies to right-wing radios, especially to Lánchíd Rádió in a very intransparent way. This is fact.

    – After the change of government this media portfolio became really, but really profitable for your owners thanks to state advertising revenues and market distortion. Fact.

    – The „Lex Publimont” elaborated by Lajos Simicska’s former employee punched out one of the biggest competitors, the ESMA prohibiting advertise on candellabras. Fact.

    – I’m sure as a journalism expert you’ve heard about chilling effect. The question is not just about what you can write, but what you can’t. The sources now are afraid of that nobody will defend them because almost all of the jurisdictional system is in the hand of the government. Fact.

    – I’m also sure that you know ehat is floating legislation. I’m just helping you refreshing your knowledge: when you don’t get the same punishment for the same press guilt than the others.

    – The advertising tax is against the RTL Klub. Only against them. Fact. But calm down, I’m not a big fan of them, and I think we share the same feelings with you. But the advertising tax is disgusting.

    – You should not mention the name Pravda as synonim of the Népszabadság. Because the only community think that your media portfolio is the Pravda now. Do you know this gif? http://m.cdn.blog.hu/or/orulunkvincent/image/PRAVDA.gif

    – I wonder you don’t have any problems with the reports of the National TV, which fails all of the minimal ethical requirements. Don’t you have any comments that how the National Broadcaster became the main tool of propaganda of the government you love? Is it okay to finance it by public money such a shame?

    – And here’s some other thing. You think that now we can talk about press freedom after 2010 because the right-wing media portfolio is big enough and the social media is strong enough. But the press freedom is not about that we can hear another type of lies and fake news. The freedom of press means not fearing of to write the truth because you trust in the whole jurisdictional and law system, and you can defend your sources and documents in legal way. But Mr. Orbán’s system failed several times after 2010 in many aspects of life.

    Best regards,
    Attila Bátorfy, journalist, Kreatív Online

  • Szabolcs Toth

    Attila,

    Thanks for your detailed comment though I must admit I have a feeling you payed too much attention to my bio and less to the things I wrote in the piece.

    First of all if you had read it carefully you must have noticed I criticized Orban’s party, I expressed a strong dislike on how public broadcasters are run now and certainly did not praise the ad tax, the scrapped internet tax and the new media law. Fact.

    Second, Fidesz is not my beloved party. My memory can trick me, but I do not remember if I wrote a single line in their praise in the last ten years. A fact you can check.

    I also have to disappoint you with another fact: Lajos Simicska is not my friend. I never met him and he would very likely deeply disapprove my piece if he cared to read it (probably he didn’t).

    It is also a fact that my piece was intended to be an opinion and on a story you would not read articles in the western press about on Hungary. And though I did not use animated gifs in the article (something I think is a painful heritage of the last decade), it was intended to be provocative. 1000 words is certainly enough for that, but I am afraid it is bit of a constrained space for a detailed book on Hungarian media history you expected it to be.

    I understand though why my lines have hit a nerve at some places in Hungary (among others at your paper) and why it has angered those who like to paint themselves as heroes of the free press. Heroes who willingly forget about the dark times during which many of the problems we are facing now were created.

    You detailed some of the efforts to balance a seriously crippled media scenario in which virtually no national or local investors and owners of media existed even ten years after the change in the political system (a very scary situation bringing the word ‘colony’ to my mind). Yes, I do agree efforts and tools to change a scenario like this are always almost as ugly as the problems they try to solve. But it’s a harsh world out there, as harsh as my headline is about press freedom and western investors.

    Of course you did not mention in your comment how Postabank financed mainly left wing or liberal media in the 90s, technically using tax payers’ money for years. I am bringing up the name of a bank now from the collective unconscious of your colleagues here that was led by a criminal figure some editors and journalists and many politicians were very comfortable with. So comfortable in fact that they had lucrative bank accounts at his bank. (Yes, Magyar Nemzet was also run by Postabank for a brief period of time, which only makes this story more frightening.)

    You write that there were no right wing investors and media at the time when the grocers came in, but of course you lie. Or you just don’t not know the story of Pesti Hirlap which was a heroic effort by a Hungarian businessman who believed in a free press and capitalism to create an independent daily in those turbulent times. Heroic because it went against too many interests and therefore its operation was hindered and sabotaged in every possible way. So it failed.

    But this is only one of the chilling stories that led to a practically intolerable situation crying out for change.

    Why, I would not suggest it was changed in the right way and for so much the better. But the result is still more agreeable than the situation had been in the late 90s. As a result the Hungarian press is more plural now and more voices can be heard than before. (And again, to put it mildly, I am not a big fan of how the government handles press issues now and am very critical of the public broadcasters, too. In fact so critical that I think that they should not exist in Hungary at all – but that’s a different story.)

    Now I understand you say these new voices are all lies, but I am afraid this is your opinion.

    And not a fact.

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