The Orbán government and RTL Group: a cease-fire?

Soon enough it will be a year since the Orbán government decided to levy an exorbitant tax on the largest and most profitable commercial television station in the country, RTL Klub. I wrote extensively about the tug of war between the Hungarian government and the German-owned station. According to rumors, the government plan was to squeeze the station’s owners into selling and then have the station be purchased by some “well-deserving,” meaning pro-government, individual or individuals whose newscasts would be as lopsided as those of HírTV and the state-owned MTV. Apparently, RTL was not ready to sell, so the government had to settle for the second largest commercial station, TV2, which was eventually sold to a shadowy group of people. The special levy that specifically targeted RTL Klub was intended as a form of punishment. Knowing Viktor Orbán’s warped psyche, I’m sure that this story is more than mere rumor.

So, the war began. RTL Klub coughed up the money. What else could they do?  But they paid the government back many times over. Their newscast, which used to consist of short, mostly tabloid items and police reports, was extended to an hour with a heavy emphasis on political news. Suddenly the dirt that emerges daily around this government could be seen on a commercial station’s evening news, watched by 1 million people as opposed to the state television’s propaganda news with its 400,000 viewers. The people who in the past had watched RTL Klub for its “entertainment lite” programming suddenly were confronted with the kind of news that earlier had never reached them. The result was stupendous. Although some commentators wondered whether RTL Klub’s viewers would be turned off and would switch to TV2, exactly the opposite happened. RTL Klub’s viewership grew substantially. Political analysts are convinced that Fidesz’s tremendous loss of popularity is due, at least in part, to RTL Klub’s newscasts.

From the beginning RTL Klub planned to take its case to Brussels because, while RTL Klub’s share of the Hungarian advertising market is 13.5%, it is obliged to pay 90% of all revenues received from taxes on advertising. Indeed, last October RTL Klub lawyers turned in an official complaint to the European Commission. Yet for months we heard nothing. Then, on January 19, Népszava reported that some Fidesz politicians would be very happpy if Viktor Orbán “made peace” with RTL Klub. The paper added that “according to some sources, the Orbán government is counting on ‘a cease-fire’ before the arrival of Angela Merkel” in Budapest on Monday.

RTL Group headquarters in Luxembourg

RTL Group headquarters in Luxembourg

A week later 444.hu learned that János Lázár had already had several conversations, not with the Hungarian CEO of RTL Klub but with Andreas Rudas, director of East European operations, and Guillaume de Posch, CEO of the international RTL Group. Earlier they met in Munich and last week in Budapest. 444.hu claimed to know that they will meet again in Berlin sometime this week. The government allegedly wants to end the war with the German firm, which complained about its treatment in Hungary to Angela Merkel herself. The paper also seemed to know that the top management of RTL Group was ready to make a deal but that Dirk Gerkens, the man who is heading the Hungarian RTL Klub, refuses to compromise. Gerkens was indeed outspoken and combative, which raised the ire of some true believers. Gerkens told Bloomberg that he received threats of violence, delivered via friends and e-mails. He added that he moved his family out of the country, left his apartment for a hotel in central Budapest, and hired bodyguards.

After the report of 444.hu about the ongoing negotiations, rumors began to circulate in the media, especially after Népszava yesterday came out with the alleged details of the deal. According to the paper, the 50% tax on RTL Klub will be reduced to 5-10% but only if the station “tones down” its newscasts and fires Dirk Gerkens. Not surprisingly, journalists are up in arms. FSP (Péter Földes), whose blog regularly appears on Népszabadság On Line (NOL), summarized the sentiment. If what 444.hu and Népszava reported is true, then “RTL is preparing to commit public suicide combined with betrayal.” I agree, and that’s why I think such an outcome is unlikely. It would not only be ruinous for the RTL Group’s reputation but would also make the Hungarian government’s interference in the media, which they steadfastly deny, blatantly obvious. I don’t think it is in the interest of either party to cut such a “dirty deal.”

Meanwhile, in the last few hours HVG learned that the Orbán government’s decision to retreat on the 50% levy on RTL Klub resulted from diplomatic pressure: both the German chancellor and the prime minister of Luxembourg, where RTL Group is headquartered, strongly suggested to Viktor Orbán that he settle his dispute with Europe’s largest media firm.

Apparently, contrary to Népszava‘s claim, negotiations have not yet ended and the deal has not been sealed. Lázár, who is negotiating for the Hungarian side, admitted that his job as negotiator has been very difficult because “the prime minister insists on upholding the advertising tax.” For Orbán “this is a question of principle.” But it looks as if principle will have to be sacrificed in the face of diplomatic pressure and the hopelessness of Hungary’s case if the RTL Group actually sues. It seems that the prime minister will sketch out changes in the advertising tax tomorrow morning during his regularly scheduled radio interview, with details about the exact figures to be revealed later.

So, another defeat, another retreat. These are hard times for Viktor Orbán. Moreover, I suspect that the newscasts of the Hungarian RTL Klub will not change substantially in the future. RTL Group cannot afford it. Neither can Viktor Orbán.

Advertisements

33 comments

  1. But Eva, why should the RTL group not be able to affort a deal with Fidesz about ending this “media war”? I understand that media have a function in an open society, but what can one TV station change in a country where people do not believe in their own strengths in political terms? There will be no magical change, not even if OV collapsed from one day to another, as long as people do not start to participate themselves and organise collective action. It is interesting to learn about the shady deals and dubious business but the whole thing is useless if watching such news just ends in gloom that “nothing can ever change”. Of course not if people believe that it is because of “moral failures” and not because of confused ideas about modern society. For me it sounds as if RTL simply do not wish to engage in some battle that has nothing to do with their prime activity. Hungary is still in the EU and in this case apparently Fidesz is prepared to cave in. It might then even be easier to sell the Hungarian branch to some other investor. Pressure from outside is certainly helpful when it comes to regime change in Hungary, but without some more preparedness within the country, it cannot achieve much.

  2. RTL is very aware of international trend for TV news programing, overall the audience is shrinking. In the USA 71% of those 18-29 cite the internet as a main news source, more than the percentage that cites television (55%). Among those 30-49, 63% say the internet is where they go to get most of their news, matching the percentage who say television is their top news source for the first time.

    The trend is very clear major TV news evening programing worldwide is losing its younger audience and will in the future become less important. RTL will invest less and less on nightly news shows as the audience fades away. There is one very bad aspect of this trend and that is internet news can be highly ideologically driven, meaning a young Jobbik supporter could get most of their news from Jobbik supported sites. The nightly news shows created a sort of common major news framework in many countries whether ideologically for the better or worse. But that seems to be collapsing fast. Fidesz and the Hungarian state has no hope of controlling news on the internet, Eva’s blog is testimony to that.

  3. OT but upbeat:

    Finally something to again be proud of Hungary about. Bravo to Andras Holl and the Library of the Hungarian Academy of Sciences for adopting one of the world’s best and strongest Open Access policies!

    Wonderful progress since the historic Budapest Open Access Initiative started it all, globally, in 2001 (published in Feb 14 2002).

    This does not erase the Academy’s shame of 2012, or all the other depredations of the Orbán years, but it’s a glimmer of hope that better years (and better natures) may still return.

  4. Even if the global trend is for a scaling down of TV news in favor of the Internet, and a graying of its viewers, in Hungary the Fidesz faithful outside Badapest are still mostly TV-viewers, and RTL-viewers.

    So even if it is not an economic basis for RTL’s global programming policy, I hope RTL will realize (and I hope Gerkens, his eyes opened by his mistreatment, will help make RTL realize) that it has been playing a unique historic role in helping to reverse Fidesz’s foul winning streak. It has increased RTL’s viewership. It has spooked Fidesz. The extended, critical news coverage should on no account be scaled down — rather the contrary.

  5. Other Topic:
    !!444!!! broke Chatham House Rules and announced that they do not care about it. This shows no difference between Fidesz and the !!444!! team, same culture , same moral. Shame on them. Boycott !!444!!! and show that you care about an honest Hungary!

  6. I totally agree with Kirsten. RTL at the moment has to pay 50% taxes over their revenues. Over the long term there is no doubt they will go bankrupt like this. This means they cannot affort NOT to make a deal. There were only two options, either a deal was made or the Hungarian population was financially supporting RTL…but there was nothing organized. I am surprised to read also on this blog so many reactions that RTL was obliged to show this kind of reports. Surely because they are western and have money for that reason and they are supposed to fulfill their duty to save the Hungarians. Of why were they obliged to do this as only station in Hungary?
    RTL has shown that it is possible to fight back and not immediately give in. They cannot do more, the real change has to be done by Hungarians and being prepared to get politically involved and start a new political party would be the absolute minimum.

  7. @Marcel Dé

    This apparent diplomatic pressure on RTL to “negotiate” is insane.

    It’s like a message from Merkel to abused women:

    For the sake of European-style civilized coexistence please sit down with your rapist, you might have something in abundance he badly wants.

  8. Miki,

    did Raiffeisen, MKB, CIB etc. go “bankrupt” when they were taxed by Orban?

    No, because behind them were big multinational corporations. RTL Klub will not go bankrupt either. For a long time it had been a money-making machine. Why can’t it be that RTL Klub’s mother company – in one of the many markets it operates own – endures a few years of losses?

    Is it absurd to ask that if RTL is the only, the single non-Fidesz controlled forum in the qausi-dictatorship country which could reach undecided voters?

    RTL is in a very special media position given the Hungarian media scene in which foreign owners sold literally everything to Fidesz-related businesspeople and fronts. Orban forced them to sell and made sure that nobody else dared to buy.

    TV2, the regional newspapers, Nepszabasag, glossy magazines, vs.hu are all owned and controlled by Fidesz-related oligarchs. Origo.hu – owned by Deutsche Telekom – is now clearly supporting Fidesz and regularly denounces the opposition. And these are those which were sold, agreed upon recently. There are many channels and media which were always partizan pro-Fidesz media.

    The local media scene, the municipal papers, Helyi Théma and the county dailies are all Fidesz controlled now. In this election system rural, outside Budapest voters are the most important, who use much less internet etc. but watch a lot of TV. They currently have no possibility to get independent news from other sources than from RTL.

    Broadcast TV has always been treated specially and I am surprised that nobody remembers that. It’s a heavily regulated industry and for a reason. RTL knows this very well. It’s not just any business. Hell, a nipple of Janet Jackson a few years ago on American broadcast TV earned a huge fine.

    Big corporations have obligations too, towards the public (aka stakeholders) not just towards the tax authority. If they want to dominate a market for decades then they have to be really committed and not shit into their pants after a year or two of loss-making years. Actually they know that well, but who likes to give up their bonus for a year or two?

  9. To those who argued that RTL was fulfilling its legal obligations by providing balanced news – let’s not even go there. You who made that argument know very well that there are laws and there are laws in Hungary.

    When did Hír TV, or Echo TV ever have balanced coverage? Since 2010, when has any publicly owned television station – TV2 or Duna – ever given balanced coverage?

    There’s a law in Hungary against jaywalking too.

    (n.b. The requirement for “balanced coverage” was pointed out as a hidden method of control the day that law was drafted, and denounced as problematic immediately. Who should decide what is balanced, and by what criteria?)

  10. @koeszmoed – Boycott !!!444!!!?? Why?
    I know perfectly well what Chatham House rules are. They are violated all the time. Show us what great crime 444 has committed. Please give us links, so that we can judge for ourselves.
    According to you the tiny internet news service !!!444!!! is just like a sovereign government that uses state powers to crush the opposition?
    That sounds a bit off balanced. Please give us examples of the great damage !!!444!!! has done to democracy.

  11. Istvan, with all due respect I disagree.

    Hungarians watch the most TV in Europe — owing to the ratio of participation in the workforce which is one of the lowest in Europe and because people are poor, there’s nothing to do in rural places. It will take decades until this 6-7 hours of daily TV watching will decrease. Note also that Hungarians don’t speak foreign languages, especially not the rural, the older, the uneducated folks (but the younger people who do are much less inclined to vote and that’s quite universal, look at the recent midterms) so they will continue to watch Hungarian TV channels for years to come. DVD or the VCR didn’t kill the movie business and internet which became popular in 1996-1997 didn’t kill TV.

    Fidesz – meanwhile – controls the cheapest TV cable channel package (by law it will have to contain 6 channels and in a few month all of them will be state channels). MTV, the main state channel already made up “news” by actors. But Fidesz also controls TV2.

    The internet media works totally differently from TV. People can choose what they read but that’s also a problem. They actively look for a site which caters to their political taste.

    But as a politician you would want to reach undecided, media voters and that’s very hard to do.

    Given their size perhaps index.hu (owned by a fidesznik oligarch and which is an informative site but which is refraining from discussing certain topics) or origo.hu (owned by Magyar Telekom, and which now seems to be edited out of the Fidesz HQ) has those undecided readers but the rest don’t. It’s great that HVG (loss-making) or 444.hu (also struggling financially even with a very lean staff) provide independent news but they are read by users anyway not Fidesz-leaning and of course read by mostly, urban, sophisticated voters whose importance in the election system is much smaller.

    Fidesz essentially controls access to uneducated, rural folks and it is only RTL Klub which as an independent media reaches them in great enough numbers.

    Internet, while growing in importance, will continue to be useless in reaching the out of Budapest, uneducated, retired, close to retirement folks (who decide the elections, not the compartmentalized Budapest liberals) for several election cycles.

  12. @Porkolab:

    Come on! The banks were taxed, yes, but this RTL-tax (50% on total revenue, not on profit, as I understand it) is obviously crazy or meant to destroy the company!

    Now why would RTL Germany accept this – because they have an “obligation to Hungary”?
    Many companies have already left Orbánistan and more will follow. I’ve written about this here that smaller German companies are unwilling to invest here and looking for other countries like Slovenia, Slovakia for a present in the “East”. Just read this:
    http://www.politics.hu/20150128/merkel-visit-could-help-clear-up-questions-says-chamber-head/

    PS and totally OT:

    We don’t watch RTL channels aka Trash TV, neither in Germany nor in Hungary – with very few exceptions, like my wife enjoying the Hungarian news right now and laughing all the time …

  13. I totally agree with Horvath!
    When we travel around the country I’m always fascinated by the run down houses in the villages, the smell of burning wood, coal and whatever, cracks in the unpainted walls, windows that haven’t seen a painting since WW2 etc – but everywhere there’s a little satellite dish …
    And when we visit our neighbours in the afternoon (to buy eggs or potatoes or bacon …) the tv is always on!

    My wife got a new smartphone for Xmas from me and her youngest son has already programmed several of the (still …) independent news channels so she can have the (bad) news whenever she wants …

  14. @Istvan re TV v. Internet. This is certainly true about the US but not at all about Hungary. Incredible amount of TV watching goes on there and most Hungarians get their news from TV.

  15. Do not assume poverty will hold back the coming wave of Internet media to even countries like Hungary. Capitalism is highly dynamic, for example who would have believed that wireless coverage would sweep vast areas of Africa that are enormously poor.

    Universal Internet acess will ultimately be required in order for almost any commerical enity to function in a market economy. For poor countries the state will be forced to absorb some of those costs which they will recupe with time. Internet TV is like a wave that sweeps away much of what is before it in time. Moreover, the interactive marketing capabilities of Internet TV are vast and include making purchases using a TV remote. RTL like all dynamic companies will ride the wave when it arrives, it’s just a matter of time.

  16. @Istvan

    I respect your enthusiasm, but look the internet in China, Russia or Turkey. It’s not as though internet is about to make these countries soon very democratic. In fact since the start of the wide spread usage of the internet, at the end of nineties, early 2000’s Russia and Turkey became decidedly more tyrannical, and less free in every sense. China’s “Communist” Party’s control over the minds of Chinese folks is as strong as ever (citizens react well to the jingoistic discourse).

    Internet is also a great tool for control and survaillance and autocrats are extremely adaptive when it comes to finding new ways to control their populace. Orban and his folks are no exception, if they could control the also distributed traditional print and electronic media, they will learn to control the internet too.

    By the way is suspected by several Hungarian journalists that just like in the above countries, in Hungary too there exist full time government paid trolls. Perhaps not 6,000 as Erdogan recently wanted to hire, but given the size of the country, a few dozen can work wonders. At several non-Fidesznik sites analyzing their traffics and the comments, they came to that conclusion.

    TV is king in Hungary and will be for decades, until then Fidesz will find a way to control the internet too (purchase sites, co-opt others, intimidate others, hire trolls, the opportunities to control are just endless).

  17. I would argue that the Chinese Communist Party has adapted and it is interactive with commerical trends inside of China. I make no assumption that greater Internet access will result in a more democratic society. But ideological control of the masses is based more on perceived self interests than on total media hegemony in a society. These perceived self interests can be delusional when examined empirically,

    Overall broader access to information is positive for more democratic structures, but there is no assurance that will take place in any particular nation. As is the case will Fidesz supporters who post occasionally on this blog access to information can be used selectively as in the argument relating to the decline of the west and the supposed dynamic rise of Russia. But because capitalism and technological innovation are intertwined over time in a global economy trends are universalized unless surpassed by new innovations.

    Hungary can not sit fixed in time and place in this world, in good part that is why so many younger Hungarians participated in the Internet tax protest. They are part of a dynamic process and they feel it’s vitality.

  18. @Webber

    Orban’s system is a police state, we knew that much.

    But the end of this game is far far away and Orban can afford to wait, unlike those NGO employees who would be reserving their summer vacations soon. He has all the time in the world, do “the Norwegians” and their Hungarian protegees too?

    I imagine that soon there will be a pressure to “negotiate” as every civilized European (well, at least the Swiss, the German, the Luxembourgish etc.) apparently does with its aggressor.

    “There is a concern that the Norwegians are not cooperative enough. They are apparently aggressive ideologues. This is not how people behave in Europe. Let’s sit down and in the spirit of cooperation and mutual respect, let’s strike a pragmatic compromise. Isn’t pragmatism a Scandinavian virtue?”

    I guess the game is still on.

  19. @Inorderto

    Allow me to think this is absolutely different.

    Wether their objectives are to stay or to leave, companies abused by a government can sue, negotiate, or both. It’s business, especially when the company’s footprint is rather light.

    Should the negotiation be confirmed, it would mean among other things that RTL intended to stay in Hungary, thus needing all the help it could get.

    Of course, the whole affair is another proof of the total unreliability of the Hungarian gov’t in business matters – which isn’t limited to Foreign companies. I recommend reading the Transparency Hungary report on the subject.

  20. Orban holds background talks with “non-friendly” (ie, at least until now non-friendly) media. HVG (now in Hungarian ownership and struggling financially terribly) was there and come to think of it HVG actually wrote about current issues referring to unnamed government sources (spreading government spin) quite a few times lately.

    Oh, there are so many ways to control political opponents (readers) and the media.

    http://panyikapitany.tumblr.com/post/109514301171/szoval-orban-viktor-hatterbeszelgetest-tartott

  21. @Taltos – The “game” is always on.

    Orban and crew are losing internationally, as they have for a long time now, and domestically – they are not losing power (I didn’t say anything of the sort), but they are losing just every match they have started in the recent past: the internet tax match; that with the Russian gas pipeline; with the US embassy/govt.; with RTL; with Ökotárs. They are modifying the road fees, because of protest within their ranks. I daresay they’ll lose the Paks game too, when the EU finally gets through all the details.

    They have lost other matches – before European courts, repeatedly (sad for Hungary that Brussels serves as a constitutional control – the Hungarian courts should, but can’t). Pál Schmitt’s resignation is another example. Students in higher-ed now commonly call plagiarism “Schmittelés” (Pálgiarism would be a nice English trans.)

    When Gyurcsány and crew were forced to back down on certain laws, such as the medical “visitation fee” (just one of many things he had to backtrack on), the Hungarian press and public saw that for what it was – Gyurcsány lost.

    NOBODY praised Gyurcsány’s great wisdom or strategic brilliance for backing down.

    I really do not understand why people now are buying the government spin that backing down and accepting the fact that they have lost fights is a sign of great wisdom.
    It was risible when Fidesz-loving acquaintances said Schmitt’s resignation showed great responsibility and wisdom. It is ridiculous to the extreme when people portray government losses as victories.

    Fidesz is a loser on the international stage. Full stop.
    Multiple election victories in Hungary can’t hide that fact.

  22. @Webber
    I am not going to link !!444!!, because I am boycotting them. But I copy their explanation here. Well it is an uneducated journalist who did not know what does Chatham House Rule mean. That is OK. The problem is that he and the editors of this site refused to pull the article after they were told about their mistake. This shows the same arrogance, we usually identify this kind of behavior with Fidesz, but this is a classic case which shows, that it is not only Fidesz, the whole society behaves like that.
    “UPDATE:

    Nem tartottam be a Chatham House szabályt

    Nemrég hívtak a CSS-től, hogy le kell szedni a cikket, mert nem tartottam be a Chatham House szabályt. Ennek az a lényege, hogy a vita nyilvános ugyan, de a résztvevőit nem lett volna szabad név szerint idézni. Sajnos mostanáig nem ismertem ezt a szabályt, így hiába említették az elején, hogy “a beszélgetésre a Chatham House szabály vonatkozik” nem tartottam be, mert nem tudtam, hogy mit jelent. Ezért a szervezőktől elnézést kérek.

    Cikket viszont általában nem veszünk le a 444-ről, és ezt sem fogjuk, ha csak bíróság nem kötelez rá. Képtelenség lett volna úgy írni erről, az egyébként nyilvános, előre meghirdetett beszélgetésről, amire ~100 ember ment el, és amin tudható volt, hogy Andre Goodfriend és Lánczi András vesz részt, hogy ne legyen teljesen egyértelmű, hogy melyikük mond mit. Akkor is teljesen világos, hogy Lánczi vagy Goodfriend szerint van összefüggés a melegházasság és olimpiai síkfutás joga között, ha nincsenek nevek. Ez nem egy minisztériumi háttérbeszélgetés volt, annak meghirdetve, hanem egy nyilvános vita.”

    And when you hear Chatham House Rule, you do not write about the event. At least not in London or Washington DC.
    Shame on !!444!!!
    Join the boycott until they pull the article.

  23. Fidesz have been really losing their mind! Just consider this article:
    http://www.bbj.hu/economy/tax-experts-tell-us-what-to-expect_91745
    Interviews with tax advisers who of course have to keep their tone low, but look at this:
    “In 2014, some 777 new acts (laws, regulations) were introduced. That means about 18,214 pages, which is 12 times the size of Leo Tolstoy’s War and Peace (1,488 pages in the Hungarian language).
    This is a remarkable amount to read and understand, and requires practical experience to implement. ”
    And the beat goes on …

  24. The journalist of !!444!!! is lying. He signed that he understands Chatham House Rule
    See photo below with his signature

  25. I guess the whole RTL affair underscores once more just how important communication is in politics.
    Unfortunately none of the (former) opposition parties ever managed to grasp, let alone utilize the fact, while the whole Fidesz empire depends on it.

    When the Orbanists managed to acquire the TV2 in Hungary, they pretty much felt that they have it all, only some little nuisance in the way: they have to get rid of their strongest competitor, in order to rule the mindset of the wast majority of Hungarians.
    As we know it didn’t worked, but backfired wonderfully. Since Orbán don’t know reason, only will and force, they strong-armed a while more, increased the pressure, still no way.. Oh, damnation!

    Then the result of the work of the suddenly political RTL started to show, more and more people started to see trough on the smokescreen and turned away from this unholy bunch, and the good boys of Fidesz must have started to recognise their mistake what called upon them more wrath than the entire so called “opposition” in the whole country.

    In spite what the final outcome might be, the proof is there, loud and clear: If someone (the people) don’t know and don’t really understand things (facts, events, ideas and so on), they just don’t have a chance to make reasonable choices.
    Then the only thing remains, blind faith, or go with the loudest, if nothing else.

    Indeed, a mere TV channel managed to deliver a well placed kick at the Almighty Ruler where it hurts most, while his political opponents couldn’t even scratch him.

    Obviously quite a few people in the wrong line of business, won’t you say?

  26. I’m with koeszmeod, this is shameful behavior from 444.

    The worst part of it all in my opinion is that Erdélyi thinks he is taking some sort of ethically principled stand by standing by his story. In fact, he should be ashamed of himself.

    I was just talking with one of my journalist friends about this website a few days ago. His opinion is that 444 has very low ethical standards. They will write a story about anything sensational, even if it’s from a dodgy source, without checking first to see if it’s true. If they turn out to be right, then they’ve scooped everybody else. If they’re wrong, then oh well, just move on. He says that they’re bringing down the whole profession in Hungary.

    I think it’s easy for us to justify the corrupt behavior of the government, “hey that’s the way politicians are, whaddya gonna do??”

    But if Hungarian journalists believe that it’s a virtue to be dishonest, what kind of future does Hungary have?

Comments are closed.