More resolute foes of Orbán’s plans for Hungary come from unexpected quarters: Luxembourg and Norway

In the past four years most of the battles between Viktor Orbán and the European Union have ended with a victory for the Hungarian prime minister. Or, if the Budapest government was forced to make changes in some of its controversial laws, they usually smuggled in other equally controversial provisions while allegedly fixing the problems with the first version. Eventually, the “bureaucrats” of Brussels, worn down, were satisfied with superficial, inconsequential changes that did not matter as far as Viktor Orbán’s long-range plans were concerned. But now he is confronted with other kinds of foes: Norway, which does not belong to the European Union, and the Luxembourg-based RTL Group, Europe’s leading entertainment company which is majority-owned by the German media conglomerate Bertelsmann. Neither of them seems to be a pushover.

I was surprised to see that almost three weeks had passed since I first wrote about the war between the Hungarian government and RTL Klub, the Hungarian subsidiary of RTL Group. At that time I reported that the Hungarian government had proposed a bill that was designed to tax the advertising revenues of all media outlets on a sliding scale depending on profitability. RTL Klub is the most profitable television station in the country and hence would get hit the hardest. In fact, the proposed tax of 40% on its revenues could cripple it. Since more than half of all revenues from the advertising taxes would come from RTL, it became evident fairly early in the game that the whole bill was designed to target this particular television station.

The answer from RTL Klub was swift: the news editors decided to spend more time on political news than before, and they made sure that every day there was some story that reflected badly on the government. The government answered in kind. Mihály Varga, minister of national economy (basically the minister of finance), instructed the Nemzeti Adó- és Vámhivatal (NAV/National Office of Taxation and Customs) to examine the tax history of RTL Klub because, as he put it, “there is a suspicion that some of the transactions of Magyar RTL Klub in the past years are fictive; they don’t reflect actual business activity but are designed solely for tax write-offs.” It was at this point that an MSZP member of parliament charged that Hungary was no longer a country of law  (jogállam). The government was using the tax authorities to “punish” companies not to its liking.

The management of RTL didn’t cower. They told reporters that NAV has been after the company constantly. By now they have a department that deals only with tax matters. They have nothing to hide, and they invited NAV to come and investigate. It turned out that the “suspicious transaction” was a 2011 loss of 23 billion forints. The loss came about in the following way. RTL Klub purchased two cable companies which a year later were sold to its parent company. Apparently this transaction is a perfectly legitimate business practice. Because of this loss, RTL wouldn’t have to pay advertising tax this year. And that cannot be allowed.  Thus, the government had to come up with some other way to get to RTL.

Source: http://www.targetgdpi.com/

So came the old Orbán trick. If the law for one reason or another doesn’t have the desired result, let’s change the law. And indeed, as one newspaper put it, before the ink had even dried on the bill came an amendment according to which a company would be exempt from the tax this year only if its profits were either zero or negative in 2013. Clearly, this amended bill targets only RTL Klub. As László L. Simon, the man who presented both the original bill and its amendment, said, Hungarian newspapermen were the ones who called attention to this loophole. Since the government wants to make sure that everybody pays an equal share of the tax, they decided to change the bill.

Yesterday L. Simon for a solid 17 minutes tried to explain the intricacies of his amendment to the audience of ATV while a helpless young reporter sat and listened without interrupting him. He was less lucky when he made the mistake of giving an interview to RTL Klub. As a result of this interview it became evident that L. Simon doesn’t know what is in his “own” amendment. So much for law making in Hungary.

The RTL Group refuses to throw in the towel. Only yesterday a long interview appeared with Andreas Rudas, the director responsible for South-Eastern Europe, who as you might suspect from his name has a Hungarian background. He made it eminently clear that what is going on right now “is not a question of money” as far as the RTL Group is concerned. The firm is ready to stand by media freedom and to go to the highest courts to win against the Hungarian government.

During the course of the conversation we learned that Lis Mohn, the widow of Reinhard Mohn who was the owner of the media conglomerate Bertelsmann, serves on the supervisory board of the firm. And what is also important is that she is a good friend and supporter of Angela Merkel. Rudas revealed that he knows that the topic of what is going on with RTL Klub in Hungary is being discussed in Berlin as well as in other European capitals. RTL Klub is prepared to sue and they don’t care how much it will cost or how long it will drag on. It seems that Orbán has found his match in the business world.

Equally resolute is the Norwegian government. On June 25 a letter was sent to the Prime Minister’s Office which was brief and to the point concerning the suspension of the Norwegian Grants. No lifting of the suspension can take place until the demands of the Norwegians are met, which include the immediate cancellation of “the on-going audit by the Government Control Office.” The letter added that the “audit of the Hungarian NGO program is the responsibility of the Financial Mechanism Office in Brussels.” Well, that is clear enough. No answer has come yet from János Lázár’s office. As Népszabadság commented on the situation: “Lázár and Co. ran into a cement wall.”

In both cases we will see who will break his head first on that cement wall.

The war is on: The Hungarian government versus the media

During the Antall-Boross administrations after the change of regime (1990-1994), the government launched a full-fledged war against the media. At that time practically all Hungarian journalists were liberal. The right of center, which the government considered itself to be, was not represented in the print media or on television and radio. (At that time there was only one television station, MTV, and one radio station, MR.) The government tried to establish pro-government papers, but they were not financially successful. So, in the early months of 1994 the decision was made to get rid of all those journalists whom the government found objectionable at MTV and MR. Over one hundred journalists were fired just at Magyar Rádió. The government’s triumph was pyrrhic because a few months later MDF lost the election and the fired journalists triumphantly returned on the very day of the socialist victory.

The Orbán government’s “handling” of the media has been both more subtle and much more ruthless. It is true that the public television stations were again cleared of undesirables and by now these organs are no more than propaganda machines of the government, but there is no longer the need to establish pro-government newspapers because Fidesz in the last fifteen years or so managed to acquire a full-fledged media empire. It seems, however, that this is  not enough for Viktor Orbán, who wants to completely eliminate all independent and critical voices. The best way to achieve this is to strangle them financially and, if that is not enough, to intimidate them. And if that doesn’t work, the Hungarian government is ready to put pressure on media outlets via their owners as was the case in the Origo affair.

This latest war on the media has a new element. It looks as if the Orbán government wants to get rid of foreign owners of media outlets. Mysterious Hungarian owners managed to buy TV2, originally owned by the German media giant Prosiebensat1, and it looks as if the decision was made to kill off  the foreign-owned RTL Klub, the most popular commercial television station in Hungary.

I covered the beginnings of the RTL story but, since then, the war between the firm and the Hungarian government has only escalated.  In order to understand what’s going on we must understand that RTL Klub might be the most watched television station, but it is not known for its high quality programs. On the contrary, the level is quite low. People call the station “trashy.” Personally I don’t think that all TV networks should satisfy highbrow audiences and, if the Hungarian public enjoys the RTL Kub’s offerings, who are we to criticize. What, on the other hand, people rightly objected to was RTL Klub’s news programs. Almost as if there had been a tacit understanding between government and management concerning the choice of news items. Stories that cast a bad light on the government or its members were conveniently left out or underemphasized and hidden. In this way, the argument goes, RTL Klub hoped “to buy the goodwill of the government.” But, critics point out, there is no way to appease this government. If Viktor Orbán wants to get rid of you, sooner or later he will succeed. RTL Klub right now is in the way of the government. Why? Perhaps because it is a fierce and successful competitor of TV2 and its new owners, who are apparently close to Viktor Orbán and Fidesz. Hence, the advertisement levy seems to be designed to kill off RTL Klub.

So, what was the station’s answer? They decided to bring up all the dirty linen of the government that until now they had studiously ignored. It is funny to hear an old story from years or months back being dredged up suddenly. They also decided to report truthfully on the important stories of the day, including those they would have left out in the past.  RTL Klub is only doing now what any self-respecting television news program should be doing, and they should be ashamed of themselves for not having done the same in the past.

Well, this is not exactly how the Hungarian government sees it. The counterattack began already on June 14 when the prime minister’s office objected on its website that RTL Klub’s news mentioned the fact that Viktor Orbán’s father’s business has flourished despite the bad economic figures of the last few years. It was pointed out by the news editors that the elder Orbán’s business relies exclusively on state orders. This was translated by the prime minister’s office as an act of revenge because they have “to pay taxes in Hungary.” Antal Rogán, the whip of the Fidesz parliamentary delegation, continued the attack on the station. The fact that RTL Klub’s headquarters are in Luxembourg comes in handy for Fidesz politicians because, as we know, there are several politicians from Luxembourg who are not to Viktor Orbán’s liking: Viviane Reding and Jean-Claude Juncker, for example. And now here is this Luxembourgian firm that uses its news “as a political weapon.” Rogán complained that it “intimidates and insults public figures,” even the prime minister’s father. It is sad, he continued, that “these billionaires from Luxembourg think they can do anything.”

This foreign media conglomerate looks upon Hungary as if it was its “colony,” János Lázár charged in Napi Gazdaság, another government mouthpiece recently acquired by Századvég. Moreover, he called RTL Klub a “corrupt firm.” After all, why didn’t it broadcast negative news items about the government and government politicians in the past? “If there is no tax there are no discrediting items; if there is, then come stories about Viktor Orbán’s father, daughter, or friend, Lőrinc Mészáros. This is unimaginable in any other country of the European Union,” he declared. He added that it was a mistake to let foreign companies own television stations in Hungary because  “they don’t possess the national point of view.” They are interested only in profit.

RTL’s management was not intimidated and rejected all accusations, while reiterating their belief in democracy and freedom of the press. They also stressed “the patriotism of  their employees.” RTL’s answer pointed out that freedom of the press is “a national treasure whose defense is the duty of all of us.” And the accusation that RTL Klub doesn’t pay taxes is a lie: just last year they paid 8.9 billion forints in taxes and other dues to the central budget.

Meanwhile the less than pleasant but true news items continue to be aired. 444.hu found at  least ten items in today’s news that reflect badly on the government, starting with the very questionable allocation of gambling concessions and ending with the U.S. statement on intimidation of civil society and media in Hungary, published also on Hungarian Spectrum. 

I have no idea who will win this fight. Most people think that it will not be the RTL Klub. But then all three television stations that can be watched nationwide without a cable subscription will be in Fidesz hands in one way or the other. That will mean that the government will control practically 90% of all the electronic media. Back to the good old days of the Rákosi and Kádár regimes.

The war is on: RTL Klub and the Orbán government

Yesterday Freedom House published its latest report on the post-communist countries, “Nations in Transit 2014: Eurasia’s Rupture with Democracy.” Freedom House lists the countries by geographic region: the Balkans, members of the European Union, and Eurasia. It measures the performances of these countries by something it calls the “Democracy Score” (DS), which represents the average of a country’s seven democratization indicators: electoral process, civil society, independent media, national democratic governance, local democratic governance, judicial framework and independence, and corruption. In addition, it calculates an NIT rating for each country on a scale of 1 to 7, with 1 representing the highest level of democratic progress and 7 the lowest.

According to the report, the DS in all three regions has been steadily declining since 2010. As far as the NIT ratings (civil society) are concerned, only the Balkans countries show considerable progress between 2005 and 2014.

Among the new post-communist EU members (Bulgaria, Czech Republic, Estonia, Latvia, Lithuania, Poland, Romania, Slovakia, and Slovenia) the country with the lowest DS score is Romania (3.46), followed by Bulgaria (3.25), but right next to it comes Hungary with a score of 2.96. Quoting the Orbán government’s slogan, one of the local newspapers wrote: “Hungary is performing better,” yes, better than Bulgaria!

The report states that the case of Hungary is “the most poignant reminder that democratization in post-communist Europe is neither complete nor irreversible.” By the end of 2013 Hungary’s DS score was one full point worse on the 1-7 scale than it was in 2004 when the country entered the EU. The report warns: “Any further deterioration in governance, electoral process, media freedom, civil society, judicial independence, or corruption under Prime Minister Viktor Orbán’s recently reelected government will expel Hungary from the category of ‘consolidated democratic regimes’ next year.“ 

And I’m afraid that given the events that have taken place since the national election in April, the likelihood of such an eventuality is almost guaranteed. The destruction of democratic institutions had been rapid even before the last election, but since then it has only accelerated. Two of the categories considered by Freedom House, civil society and the media, have been especially targeted in the last  few weeks.

Earlier I touched on Origo‘s encounter with János Lázár, who apparently pressured the owner of Magyar Telekom, a subsidiary of Deutsche Telekom, to keep the popular online paper’s journalists in line and refrain from any overt criticism of the government. The firing of the paper’s editor-in-chief caused a greater uproar than the CEO of Origo anticipated. Fairly large demonstrations and mass resignations of editors and journalists followed. But that was not all. Simultaneously with the upheaval that followed the Origo affair, the government decided to levy very heavy taxes on the media based on their advertising revenues. It looks as if the government specifically targeted the German-owned RTL Klub, a subsidiary of the RTL Group, which is Europe’s leading entertainment company. It has interests in 54 television and 29 radio stations in 10 different countries.

It seems, however, that RTL Group is not going to take Viktor Orbán’s attack lying down and that it is ready for an extended war with the Hungarian government. Earlier there had been talks that the Orbán government put pressure on the German firm to sell the station but was rebuffed. Thus Orbán and his minions moved on to the second nationwide commercial television station, TV2. There the pressure worked because the station was actually losing money. In any case, the government’s extra levies on advertising will hit RTL Klub the hardest. More than half of all taxes will come from this one station. It looks as if this tax is a punishment for the RTL Group’s refusal to sell the station.

Dirk Gerkens. Photo MTI / László Baliczay

The CEO of RTL Klub, Dirk Gerkens, a German-Spanish businessman who has been running the Hungarian subsidiary for the last thirteen years, is a combative type who is well prepared for the “war.” As he said not so long ago, “if there is war, there will be war strategy too.”  Since “the war” between the government and RTL has apparently been going on since the fall of 2013, the RTL management was well prepared for its latest counterattack.

A few hours after the announcement of the proposed advertisement tax RTL issued a sharply worded statement. Since then RTL reacts every time a government official says anything about the advertisement tax or RTL. The management indicated that if the financial squeeze of the station continues, they might have to take off some of the most popular programs: “Among Friends,” “X-Factor,” and “Budapest Night and Day.”

Lázár called RTL’s reaction “blackmail” and suggested to Gerkens that they should go back to Germany and blackmail the German government. Gergely Gulyás, chairman of the parliamentary committee on legislation, complained about the low quality of the two commercial stations, RTL Klub and TV2. As he put it, one should look upon this new tax on media advertising as a variation on the newly introduced tax on unhealthful foods, the “chips tax,” because these stations have a harmful effect on society. It didn’t take long for RTL to reveal that Gulyás at one point asked for and received a free ticket to the finals of X-Factor. Yesterday RTL Klub aired a fairly long segment on Lőrinc Mészáros’s billions, which was delivered in a decidedly sarcastic manner.

We don’t know what else RTL Klub has in its arsenal, but a journalist of 444.hu gave its management a few ideas. For example, in the very popular show, “Among Friends,” they can put in a few lines about politics. Someone asks “Uncle Vili” what he thinks of the decrease in utility prices and Uncle Vili responds: “They try to fool the plebs.” Other members of the team can be transformed into people who are suddenly very interested in politics and who make snide remarks about the government. In the other hit, “Budapest Night and Day,” the chimney sweeps no longer come to the apartment on Margit kőrút because they went bankrupt. A few characters die of smoke inhalation because Hungarian health care is in ruins. There is no garbage pickup because of utility price decreases, and dysentery spreads among the inhabitants of the apartment house.

But jokes aside, the Orbán government has been very dissatisfied with RTL Klub’s news even though liberal old timers in the media complain bitterly that one of the great sins of the two commercial stations is that their news covers almost no important items, with most of the airtime spent on tabloid and police news. The station naturally disputes this and points to RTL II’s newshour that caused friction between the Orbán government and RTL management in the past. Fidesz leaders complained that RTL II’s news was too critical of the government party, especially during the election campaign.

It will be interesting to watch the developments. It is possible that RTL Klub will be a great deal more forceful and effective than the European Commission has ever been when it comes to media freedom and the destruction of democratic norms.