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Hungary’s Damaging Media Market Distortion

A new study, featuring interviews with advertising and media market figures, offers the clearest picture yet of the skewed media advertising market. From the International Press Institute.

A new study, featuring interviews with advertising and media market figures, offers the clearest picture yet of the skewed media advertising market. From the International Press Institute.

by Marton Bede 22 October 2018

The gradual decay of media freedom in Hungary and other Eastern European countries is, by now, a very well-documented story. But the foreign press tends to focus on the most visible and easy-to-explain stories: the passage of a new law, the closure of a newspaper, or the acquisition of large media companies by government-friendly businessmen. These are all important developments, to be sure, but this coverage doesn’t always bring to light the subtler ways in which media freedom is strangled and ultimately extinguished in these countries.


Mertek Mediaelemzo Muhely (Mertek Media Monitor), a Budapest-based NGO, is one of the few organizations concentrating on the less visible forces shaping the Hungarian media landscape. Their regular reports on soft censorship in Hungary are an invaluable source of background information for anyone interested in what lies behind the decay of media freedom in the country.


Mertek’s most recent report, which focuses on illiberal media markets, includes a seminal study called “ ‘You start from a position where you take a distorted market as given’ – Advertising Market Stakeholders on Media Financing.” The study details the considerations that Hungarian advertisers take into account when deciding how to distribute their advertising spending in the media.


The author, Leonard Marias, explained in a recent interview with the International Press Institute (IPI) that there had always been rumors in Hungarian newsrooms about advertisers letting political considerations influence their decisions. He said he had personally experienced the drying up of ad money when working at newspapers critical of the Hungarian government.


But Marias decided to use the methods he learned as an investigative journalist to find out exactly what was happening. His study, which is the result of interviews with nearly a dozen current and former advertising and media market figures, all of whom requested anonymity, offers the clearest picture yet of the media advertising market in Hungary.


Market Distortion and Self-Censorship


All the sources consulted said that politics had always influenced advertising decisions in Hungary, a view with which Marias agrees.


“In Hungary, the media market was always distorted by politics. Some of the businesspeople lurking around political parties were always able to influence where advertisers spent their money,” he told IPI. “But things changed after 2010, when [Prime Minister] Viktor Orban came to power. Many people I interviewed were almost nostalgic about those good old times.”


One of the first changes concerned state-funded advertising. According to the study, after 2010 “the government poured massive amounts of money into the advertising market through its successive communication campaigns. Over 40 billion forints of the total 241-billion advertising pie (about 740 million euros) in 2017 came from state advertising spending, which has been growing in volume each year at a rate that exceeds the market growth rate.”


It goes without saying that this amount is almost exclusively spent in media directly owned by government-friendly businessmen, which already puts the few remaining independent outlets at a considerable disadvantage.


“In 2018 we are at a point where it’s practically impossible to operate a profitable, independent media company in Hungary,” Marias said.


But this disadvantage is further increased by private companies that spend their advertising money according to political considerations. (The study also notes, as a caveat, that by 2018 such a big share of the Hungarian media market became government-friendly that “even if these advertisers focused mainly on business logic, they would still mostly advertise with pro-government media outlets.”)


According to the study, private companies in Hungary can be divided into different groups based on “how far they take political factors into consideration in allocating their advertising spending.” Marias said that while “multinational companies tend to follow their commercial interests when deciding where to advertise,” even some of the largest Hungarian companies are forced to take politics into account.


But, in fact, there is almost no company in Hungary, large or small, domestic- or foreign-owned, which can completely disregard real or perceived political interests when buying advertising space. Some economic sectors are less vulnerable to political blackmail and less of “a target of government-affiliated investors,” but in 2018 there is probably no company in Hungary that is completely immune to some form of government pressure.


As examples of sectors vulnerable to government pressure, the study mentions retail, where “market players depend on the government because they need permits to open new branches, and pharmaceutical companies, where the provision of state drug licenses may hinge on a conflict with the government.”


Several of Marias’s sources pointed to a well-known story in Hungarian media circles, involving a pharmaceutical company that was reportedly told that unless it placed some advertisements in the pro-government media, one of its products would not be available for purchase without a prescription, and it would have difficulties obtaining future licenses. Companies are also said to adjust their short-term advertising spending to curry government favor. According to the study, Hungarian car importers tend to advertise more in pro-government media outlets when they are trying to win a major commission from the government.


Following a question from IPI, Marias conceded that many of these advertising decisions may be based more on the perceived possibility of commercial disadvantages than on actual threats from politicians.


“It’s a bit like the self-censorship some journalists impose on themselves,” he said. “The people making advertising decisions at these companies feel the immense power of Hungarian politicians that could be used against them, and just don’t want to test the waters. The market is very tactical, very timid.”


End of a Friendship


Lajos Simicska
Marias added that the Hungarian advertising market was shaken up in 2015 when Orban fell out with his former college friend, Lajos Simicska (pictured), who was not only Orban’s most important “money man,” but also the owner of a large, government-friendly media conglomerate. “Everything had to be reorganized, not just the media outlets, but their advertising background, too,” Marias said.


The aftermath of the falling-out saw a minor sales house, Atmedia, receive huge government support and grow to become one of the two large sales houses dominating the Hungarian market. The other major player, R-Time, is owned by the RTL Group, which remains the largest thorn in the side of the government’s media plan that, since 2010, has focused on strangling independent media in the country.


Atmedia’s clients today include MTVA, the public television behemoth, and TV2, the second- largest private TV channel after RTL Klub, as well as many smaller clients. The company also owns a sales house specializing in radio advertisements, and has recently taken steps to enter the online market, too.


Atmedia has now reached a size where it can effectively compete against R-Time. Even advertisers that tend to ignore political pressure spend some of their money with the company, since that is what their business interests dictate. And, as one of the study’s interview subjects said, “the political environment is such that it takes courage to spend the entirety of a major corporation’s advertising budget on the RTL channels.”


Real or perceived political pressure also guides the media agencies that advise advertisers on where and how to spend their money. According to the study, these agencies have always been notoriously corrupt in Hungary, but they mostly operated on kickbacks, not political favoritism. Now they also take political factors into consideration – often not necessarily on their own initiative, but because their clients ask them to.


Sources within media agencies offered telling examples of political influence on advertising. The study highlights one case in which a company became scared when it saw the media plan proposed by the agency and asked the latter to include fewer “liberal” outlets. In another case, a major Hungarian company – contrary to all logic and against the advice of the media agency – decided to advertise products geared toward young, urban consumers on public television programs watched by elderly viewers. It should be mentioned, however, that one of Marias’s sources also alluded to a company that was “only willing to advertise with television channels that are not affiliated with the government.”


It is difficult to tell what the ultimate goal of the government is in regard to the skewing of the advertising market. For his part, Marias struck a pessimistic tone.


“Nobody knows what the plan is, if there is a plan at all,” he said. “None of my sources indicated to me that they were preparing for total annihilation. Some people said that Atmedia doesn’t expect advertisers to spend all their money with them, just most of it. Maybe they’ll settle at an 80/20 [solution], and some of the independent media will still get advertising money. But many of us working as journalists thought that they would stop at this with the media too, but that’s not what we are thinking now.”

Marton Bede is an IPI correspondent.

The International Press Institute, where this article was originally posted, is a global network of editors, publishers, and leading journalists dedicated to defending press freedom and promoting quality, independent journalism. TOL has done some minor editing to fit our style. Republished with the permission of IPI.

Marton Bede is an IPI Correspondent.

The International Press Institute, where this article was originally posted, is a global network of editors, publishers, and leading journalists dedicated to defending press freedom and promoting quality, independent journalism. TOL has done some minor editing to fit our style. Republished with the permission of IPI.

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