Mária Vásárhelyi on the “media octopus” in Hungary

Yesterday I talked about the state of the Hungarian media. In today’s Galamus, Zsófia Mihancsik, who is a very good journalist, suggested to her colleagues that it would be a good idea if they learned to read. But, as some of you suggested, the slanted reporting on certain “sensitive” topics might be the result not so much of careless reading or writing but of a willful distortion of the facts. This is definitely true about media under the direct or indirect control of the governing party.

So, I think it’s time to look around a little in the world of the Hungarian media. Here I’m relying heavily on Mária Vásárhelyi’s essay “The Workings of the Media Octopus–Brain and Money Laundering” that appeared in the Bálint Magyar-edited volume, The Hungarian Octopus.

According to Vásárhelyi, Viktor Orbán’s psyche was crushed in 1994 when he  managed to lead his party with a 40% chance of winning the election into almost total ruin with 7.7% of the votes. Before that fiasco Orbán was the darling of the press, but subsequently he became the pariah of the then still mostly liberal Hungarian media. He decided right then and there that the goal is not to be liked by the existing media; rather, a smart politician should strive for a loyal media he can easily influence. In Vásárhelyi’s estimate Fidesz had the lion’s share of responsibility for the 1996 media law that turned out to be neither liberal nor democratic.

Once Fidesz won the election in 1998 Viktor Orbán made a concerted effort to build a media empire with the use of private and public money. Billions of public money were spent on establishing Heti Válasz and on the “rescue” of the heavily indebted Magyar Nemzet. And right-wing oligarchs like Gábor Széles, Tamás Vitézy (Orbán’s uncle by marriage), Zoltán Spéder, István Töröcskei, and Lajos Simicska put large sums of their own money into media outlets that were anything but profitable. They were hopeful that their investments would serve them well one day when Viktor Orbán again returned to power.

Between 2002 and 2010 the preponderance of media outlets shifted to the right. Moreover, by 2008 the liberal media’s financial situation was dire. Companies strapped for funds cut their advertising budgets, and the liberal media outlets had no rich oligarchs who could ensure their continued existence during the hard times. Since 2010 the lopsidedness between right and left in the field of media has only become worse. According to Mária Vásárhelyi, “only those messages which the government party wants to deliver reach 80% of the country’s population.”

octopus

Studying the changes in the political orientation of radio stations is perhaps the most fruitful and most telling because it is here that the Media Council, made up entirely of Fidesz appointees, can directly influence the media. It is in charge of allocating radio frequencies. As the result, in the last five years the radio market became unrecognizable. Every time existing radio stations had to reapply for frequencies, the frequencies were given to someone else. The new stations were owned by companies or non-profits preferred by the government party, and in consequence government advertisements immediately poured in. Between 2010 and 2012 some 50 local and regional radio frequencies changed hands. Of these Mária Rádió (Catholic Church) got seven frequencies all over the country and Lánchíd Rádió (also close to the Catholic Church) got five. Európa Rádió, which is close to the Calvinist Church, by now can broadcast on three frequencies. Magyar Katolikus Rádió has two local and two regional frequencies. All these stations are considered to be non-profit and therefore they don’t pay for the use of the frequencies.

Zsolt Nyerges has built a veritable media empire: he is behind “the three most valuable radio frequencies in the country.” During the same time the liberal stations have been disappearing one by one. Radio Café, very popular among Budapest liberals, lost its frequency in 2011. So did another popular liberal station called Radio1. Of course, Klubrádió is the best known victim of Viktor Orbán’s ruthless suppression of media freedom. Klubrádió began broadcasting in 2001 and could be heard in a radius of 70-80 km around Budapest. By 2007 the station had acquired eleven frequencies and could be heard in and around 11 cities. Soon enough Klubrádió was the second most popular radio station in Budapest. Today, Klubrádió after years of litigation moved over to a free but weaker frequency that it already had won before the change of government in 2010. Out of its 11 provincial stations there is only one left, in Debrecen, and we can be pretty sure that as soon as its contract expires Klubrádió will no longer be able to broadcast there either.

As for the public radio and television stations, let’s just call them what they are: state radio and television stations as they were during socialist times. But then at least the communist leaders of Hungary didn’t pretend that these media outlets were in any way independent: the institution was called Hungarian State Television and Radio. They were at least honest. The only difference was that in those days state television and radio aired excellent programs, especially high quality theatrical productions and mini-series, all produced in-house. Now I understand the programming is terrible and only about 10% of the population even bothers to watch MTV, and most likely even fewer watch Duna TV. Their news is government propaganda: on MTV more than 70% of the news is about government politicians and the situation is even worse at Magyar Rádió.

These state radios and television stations have a budget of over 70 billion forints, a good portion of which ends up in the hands of Lajos Simicska. How? MTV and Duna TV no longer produce shows in-house but hire outside production companies. Thus, public money is being systematically siphoned through MTV and Duna TV to Fidesz oligarchs. The programs are usually of very low quality and complete flops.

Most Hungarians watch one of the two commercial stations: RTL Klub and TV2. Both are foreign owned but as Orbán said not long ago, “this will not be so for long.” And indeed, a couple of weeks ago TV2 was sold, allegedly to the director of the company. Surely, he is only a front man. An MSZP politician has been trying to find out who the real owner is. Everybody suspects the men behind the deal are Lajos Simicska and Zsolt Nyerges.

And finally, the print media is also dying, which is not surprising given the worldwide trend. But right-wing papers are doing a great deal better than liberal and socialist ones for the simple reason that public money is being funneled into them through advertisements by the government and by state-owned companies. Even free newspapers are being brought into the right-wing fold. There was a very popular free paper called Metro owned by a Swedish company. But Orbán obviously wasn’t satisfied with its content. So, the government severely limited the locations where Metro could be stacked up, free for the taking. Thus squeezed, the Swedish owner decided to sell. And who bought it? A certain Károly Fonyó, who is a business partner of Lajos Simicska. The paper is now called Metropol and, in case you’re wondering, is doing quite well financially.

Napi Gazdaság was sold to Századvég, the think tank that was established by László Kövér and Viktor Orbán when they were still students. As I mentioned earlier, Népszabadság was sold recently to somebody who might be a front man for Tamás Fellegi, former minister of national development who had financial interests in the world of the media before he embarked on a political career. The paper was owned by Ringier, a Swiss company that wanted to merge with the German Axel Springer, which owns a large number of provincial papers in Hungary. Although in many European countries the merger was approved with no strings attached, the Hungarian government set up an obstacle to the merger. The merger could be approved only if Ringier first sells its stake in Népszabadság.

Fidesz hasn’t been so active online. Most of the online newspapers are relatively independent. What keeps the party away from the Internet? Vásárhelyi suspects that it is too free a medium and that it doesn’t comport with Fidesz’s ideas of control. Surely, they don’t want to risk being attacked by hundreds and hundreds of commenters. Index, howeveris owned by Zoltán Spéder, a billionaire with Fidesz sympathies. After 2006 it was Index that led the attack on Ferenc Gyurcsány and the government. Vásárhelyi predicts that Index will turn openly right sometime before the election.

The scene is depressing. There is no way to turn things around without the departure of this government. And even then it will require very strong resolve on the part of the new government to stop the flow of public money to Fidesz media oligarchs. The task seems enormous to me.

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64 comments

  1. @An: sorry if I hardly make myself clear… Of course Fidesz should issue a program, of course the opposition should hammer this point until they do.

    However, as incumbents they don’t need to be first – in fact it’s better if they’re last – and they don’t need to be as comprehensive as the opposition. Needn’t nor shouldn’t, for too many new proposals would make them vulnerable to ‘why didn’t you do it before’ criticism.

    PS: the GoP 2012 platform was 62 pages (though I admit a word count would be more relevant).

  2. Jean P :
    Here is the history of the Courbet nude.
    http://www.artnews.com/2008/02/01/the-mysterious-journey-of-an-erotic-masterpiece/

    Very interesting article.
    “Hatvany survived the Holocaust in hiding, but his collection suffered. The paintings in the bank vaults disappeared, and his villa was looted, first by the SS and then by Hungarian Nazis, before being destroyed by bombs.” That cannot be. The Hungarian government just about to erect a memorial that will show the whole world that it was all the Germans who did the bad things, no Hungarians were involved in looting, deporting Jews and so forth. Orban would not erect a memorial right that if it would not be true. Just ask Dr. L. PETROVICS Ofner. I am sure he will tell you that Orban is not lying.

  3. Marcel Dé (@MarcelD10) :
    @An: sorry if I hardly make myself clear… Of course Fidesz should issue a program, of course the opposition should hammer this point until they do.
    However, as incumbents they don’t need to be first – in fact it’s better if they’re last – and they don’t need to be as comprehensive as the opposition. Needn’t nor shouldn’t, for too many new proposals would make them vulnerable to ‘why didn’t you do it before’ criticism.
    PS: the GoP 2012 platform was 62 pages (though I admit a word count would be more relevant).

    Sure, they have time till April 6. I’d suggest April 1st for publishing it. It would be fitting.

  4. tappanch #38:

    Every quarter there is a huge surprise that the construction of new homes n Hungary is at an all time low (lower than in year 1944).

    The reason is, however, very straightforward.

    Hungary’s population has been decreasing by about 50,000 annually (though there is some immigration too) and in the last 3-4 years another 100,000 people per annum left Hungary to look for jobs abroad. As a result, already in 2010 (when the last census was carried out) there were almost 500,000 (!) pieces of empty real estate in Hungary.

    A huge contrast to the mid-1980’s when people heard about lakáshiány (lack of housing) all the time in the media, so that there was even an organization established (more like a media stunt) called LOFASZ (lakásnélküli otthontalan fiatalok szövetsége or something like that; the abbreviation sounds like the sexual organ of a male horse, not in a polite way).

    Consequently, this construction trend will have to continue and the new home numbers will remain very low in the foreseeable future.

    This will hold until economy will grow again measurably (not by 1.1%) and a lot of people will decide to upgrade, probably to single family houses from their current condo apartments. But that can happen only via new loans as real estate construction never takes place from cash only; it is unrealistic to imagine that people in the tens of thousands would suddenly come up with 30-40m forints in cash. (Even the last construction boom prior to 2008 was purely a loan-driven bubble). Having said that the surplus of almost 500k units is so enormous that I think it is unrealistic to expect a significant upsurge even in such an – unlikely – scenario (ie. abundant loans and big, sustained GDP growth).

  5. M Corvin :
    Seinfeld balogh you are the most disgusting liar I have ever encountered on the net. You are talking about freedom and you are erasing any comment that Mr. Szaros (soros?) don’t want to see? Or you are afraid he won’t pay you for your spreading hatred?

    Mr. Soros does not pay Eva, but certainly paid for Orban’s education, and see what good did that do.
    I understand that the truth hurts you, so I suggest to visit any of current Hungarian Government portals for a brighter, and sunny Truman’s Show.

  6. boris :
    tappanch #38:
    Every quarter there is a huge surprise that the construction of new homes n Hungary is at an all time low (lower than in year 1944).
    The reason is, however, very straightforward.
    Hungary’s population has been decreasing by about 50,000 annually (though there is some immigration too) and in the last 3-4 years another 100,000 people per annum left Hungary to look for jobs abroad. As a result, already in 2010 (when the last census was carried out) there were almost 500,000 (!) pieces of empty real estate in Hungary.
    A huge contrast to the mid-1980′s when people heard about lakáshiány (lack of housing) all the time in the media, so that there was even an organization established (more like a media stunt) called LOFASZ (lakásnélküli otthontalan fiatalok szövetsége or something like that; the abbreviation sounds like the sexual organ of a male horse, not in a polite way).
    Consequently, this construction trend will have to continue and the new home numbers will remain very low in the foreseeable future.
    This will hold until economy will grow again measurably (not by 1.1%) and a lot of people will decide to upgrade, probably to single family houses from their current condo apartments. But that can happen only via new loans as real estate construction never takes place from cash only; it is unrealistic to imagine that people in the tens of thousands would suddenly come up with 30-40m forints in cash. (Even the last construction boom prior to 2008 was purely a loan-driven bubble). Having said that the surplus of almost 500k units is so enormous that I think it is unrealistic to expect a significant upsurge even in such an – unlikely – scenario (ie. abundant loans and big, sustained GDP growth).

    Where are the 500,000 empty pieces of real estates? I doubt that they are in Budapest or in the larger cities. The migration of workers to larger cities were discussed a few months back on the blog. Mainly how people are moving out from the small villages and leaving everything behind. Even though there are a lot of properties on the market in Budapest, the prices did not seem to come down drastically. At the mid 90s when the Toronto housing market crashed prices went down an average of 25%, but at many instances 40-60%.

  7. Some1: they are all over Hungary. Budapest is full of them. I can assure you that there is no bigger condo which would not have an empty apartment or two, or more.

    But the pricing issue is not as straight-forward as you imagine. Prices will not come down because Budapest is not Las Vegas or Miami or Toronto.

    In the US, the mortgage loan is secured only by the real estate, so a house securing an underwater loan may be left behind easily and then it gets sold by the foreclosing bank, which process can create a glut on the market driving down the prices significantly.

    In Europe, by contrast, the real estate is only the *primary* security, but if that is not enough to cover the loan then the debtor needs to cover the difference anyway. So he/she has an incentive to stay because he/she would be hooked anyway, so it is then better to have at least a roof above her head — especially as banks do not dare to foreclose due to political/public relations pressures (which, as a practical matter, do not exist in the US as they always find their ways in DC) and because they could not sell the real estate anyway.

    While in the US people will move from one state to another if real estate is cheap enough (e.g. for retirement) or just invest in another state and these generate extra demand for any local market, that is not the case in Hungary. French or Germans will not buy Budapest apartments to retire in great enough numbers (among others because they anyway only rent their apartments and they do not have as much savings or own pieces of real estate which they can trade in, and also note that ownership of real estate in Hungary is one of the highest in the world, comparable only to the US).

    If Hungarian banks would start foreclosing on the loans, there would be no demand (as evidenced by the historic low number of new constructions) so the banks will not even foreclose but rather renegotiate the contracts (aided by the fact that the banks have already written off hundreds of billions anyway, essentially foreign banks swallowed the losses).

    So if you read about foreclosure in Hungary in most cases they do not happen because of the bank loan, but because of the non-payment of utility bills (which accrue and then after a couple of months the amount encumbers the real estate as a separate mortgage).

    The conclusion is that since there is obviously no aggregate demand, people try to hold on to their property and not sell for cheap (they can also use them so when they come home for xmas, they do not have to go to relatives). The psychological anchor is always the highest price ever paid and they would hate to “lose” selling now (ie. to sell lower than their neighbor sold a similar piece six years ago at the height of the frenzy).

    In any case, unlike in the US, in Hungary real property is much more than an asset class or an investment, it always has a pretium affectionis attached to it, especially as most people have no idea of valuing investments, so they treat their homes, assets differently from Americans

  8. One more thing, in the US there is real estate tax, which is a serious incentive for the owner to rent the property or even sell it after a while if he can’t generate an income to offset the tax burden.

    In Hungary, although there is a kind of real estate tax, but it is not widely levied by municipalities (though they are levied by the Buda-side municipalities II, III and XII) but the amount is based on the size of the property and not on the value of it, and it is a couple of hundred USD a year, unlike in the US where it is a substantial amount. But this communal tax does not exist in Pest in many places so there the costs associated with holding the property are much lower.

  9. Boris is right, even in and around Hévíz where we live there is an unbelievable amount of eládo signs – not only for old farmhouses but also for apartments, bars, restaurants and hotels, some of which have been standing empty for several years and are roting away …

    There are of course new houses being built – but only very expensive ones by people who have enough money (lke Russians …)!

    Anyway if Fidesz really cared for the people they would offer cheap loans to modernize the older, not well insulated buildings.

    When we walk our dog through the village, we see also a lot of houses in disrepair, horrible old windows, large cracks in the walls – at first I thought they were empty, but then some old néni or bácsi appears, they maybe still use one or two rooms.
    Together with the empty houses their number must be at least one third!

    And the smelll from whatever they burn for heating is abominable!

  10. boris :
    One more thing, in the US there is real estate tax, which is a serious incentive for the owner to rent the property or even sell it after a while if he can’t generate an income to offset the tax burden.
    In Hungary, although there is a kind of real estate tax, but it is not widely levied by municipalities (though they are levied by the Buda-side municipalities II, III and XII) but the amount is based on the size of the property and not on the value of it, and it is a couple of hundred USD a year, unlike in the US where it is a substantial amount. But this communal tax does not exist in Pest in many places so there the costs associated with holding the property are much lower.

    Interesting. I see your point. When you buy a property in Hungary although you have to pay a tax, but there is no yearly property tax for sure.

  11. SOme1, There is indeed a stamp duty, but it is a one-off thing related to the transaction (and such taxes, duties exists everywhere in the world).

    In most locations there is no annual property tax.

    In some places there is kommunális adó and another one which I can’t remember, which have to paid after the size or based on the fact you own a garage or something like that (flat fee in this case). But these taxes are anyway rare overall and do not amount to more than a couple of hundred USD per year where applicable.

    But the US-style property tax does not exist anywhere in Hungary.

    Gyurcsány wanted to introduce a value based tax but only with respect to very big real estate, but the Constitutional Court killed even that the law (and a general value based property tax was absolutely out of the question). The decision was ridiculous, but it nicely underscored the approach of the CC to any leftist government. And this was in a time when the court more or less still functioned OK (although it had a consequent anti-leftist, pro-Fidesz jurisprudence), now it is really just a Fidesz/KDNP party chapter (especially at the level of the clerks), party commissioners playing a game of judges and enjoying having personal chauffeurs.

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