Gergely Gulyás is wrong on the facts

The European Commissioner for Digital Agenda, Neelie Kroes, whose portfolio includes media affairs, has once more summed up the problems surrounding the Hungarian media system. Fidesz politician Gergely Gulyás has publicly responded to Kroes’s criticisms, seeking to refute her arguments. Our own assessment, however, is that Gulyás is wrong, as our research on the subject has shown in some detail. By Gábor Polyák.

The most recent round of the debate between the European Commission and Fidesz on the state of the Hungarian media paints the situation with a broad brush, but unfortunately it fails to bring us closer to potential solutions. In tackling this problem, Europe has thus far not been able to move beyond its resolve to study in depth the first recommendations published a year and a half ago. As a result, Hungarian politicians find it easier to adopt a position of superior knowledge in their debates with European institutions.

The exchange of letters between Kroes and Gulyás touched on the advertising tax, the problems of the internet news portal Origó, the situation of the opposition radio station Klubrádió, the grant award practices of the Media Council, the regulation of the election campaign, the European Union’s scope of action in addressing these issues, and even the problem of self-censorship. Let us take a look at each in turn.

Advertising tax

Mr Gulyás argues that the advertising tax was “introduced following several years of debate” on the question. In reality, however, the proposal first came up a year ago and it was meant to serve a single purpose, namely to warn off foreign investors with a potential interest in purchasing Hungary’s second largest commercial television channel, TV2. Subsequently, the issue returned to the political agenda because even though TV2 was ultimately bought – as was originally intended – by business interests close to the governing parties, in and of itself this was not enough to fully reshape the entire media market. Hence the use of state power to completely zero out RTL Klub’s profits might offer a way for buttressing TV2’s market position.

The notion of “windfall profits” frequently comes up when Fidesz justifies regulations that are expected to exert a major impact on the economy. Thus it is hardly surprising that the idea of reining in “surplus” profits by regulation was now extended to an area in which over the past few years market considerations have increasingly been relegated to the background in business decision-making. The issue is of particular relevance to the new owner of TV2, who, in his capacity as the channel’s CEO, has been leading the company through a long period of huge financial losses. Moreover, the companies that are active in the television market have been paying “advertising taxes” for some time now, in addition to the other corporate taxes they are obliged to pay: since 1996 they have had to pay a share of their advertising revenues – currently two and a half percent – to fund the production of Hungarian films. Incidentally, this is rather reasonable, for it serves diversity. If there are any windfall profits in the system as it is currently set up, it appears in the revenues of media outlets that receive public funds through state advertising that is purchased by the government even though the market reach of the given outlets would not justify the public outlays, or at least their one-sided distribution. In fact, the daily Magyar Nemzet and the weekly Heti Válasz – which have both objected to the advertising tax despite their general loyalty to the governing parties – probably have a better sense than most of how the government’s policies tend to impact the media market.

References to foreign antecedents that presumably inspired the advertising tax appear disingenuous because the particular history of the Hungarian advertising tax and the motivations underlying it are entirely different from the logic that gave rise to the introduction of this tax elsewhere. And, moreover, both the applicable tax rates and their particular structure are unprecedented in the context of other countries. Gulyás explicitly objects to the notion that the advertising tax is discriminative or that it was designed to crowd out foreign investors. Yet if a substantial portion of the total public revenue from a tax that affects a whole industry is paid by a single entity, then it is difficult to see how the tax could be construed as anything but discriminative. Moreover, it appears specifically designed to ensure that market leader RTL Klub cannot avail itself of the write-off that its major competitor TV2 – which was recently acquired by business interests close to the government – has been entitled to thanks to an amendment that was enacted only a few days after the tax itself was adopted. The fact is that foreign investors are indeed mostly moving out of the Hungarian media market. Among the last remaining major foreign owners, Sanoma is on its way out, as is the owner of one of Hungary’s leading weekly magazines, HVG. One of the last major obstacles in the way of the full realisation of the media system envisioned by the government is RTL Klub.

Gulyás complains at length about RTL Klub’s response to the advertising tax, that is the channel’s decision to air more political news shows than previously, an effort that has resulted in news that is also more critical of the government. The Fidesz politician’s point appears to be that corporations ought not dare speak out against punitive measures imposed by the government, for that is not the way things are done here. It is true that the owner of RTL Klub, the Bertelsmann Group, is a formidable opponent indeed. Yet the government’s attack on a media outlet for the latter’s criticism of the government is symptomatic of its general idea of the media’s role, and the particular point regarding RTL Klub’s allegedly one-sided criticism appears hypocritical. Hungarian politicians of all colours regularly display a lack of appreciation for what their own role ought to be in the scheme of things – and also for what the media is supposed to do. The point is not that the media has the right to criticise the government; the point is that if there are reasons to criticise the government, then any media worth the name is in fact obliged to do so. And of course by the same logic the opposition is also subject to criticism, though the assessment of its actions must necessarily be informed by the fact that it has no power to implement actual national policies. Nevertheless, RTL Klub has not skirted its obligations and has duly reported about the controversy involving the left-wing opposition parties’ decision to nominate a mayoral candidate in the town of Miskolc who had, as a former police chief in the town, made controversial comments about Roma (unfortunately, otherwise the opposition parties offer little in the way of news worth reporting).

However, Mr Gulyás is right in asserting that “in the almost 17 years that have passed since it was established [in Hungary], RTL Klub had never devoted great attention to political issues until the point when the advertising tax was adopted.” Though I have raised the same complaint elsewhere, it bears emphasising once again: RTL was not active in informing citizens about politics or in providing them with the information necessary for maintaining a democratic discourse; until the channel’s own financial interests dictated otherwise, that is. This does not imply that RTL Klub’s news shows propagated lies or false information. All it had to do to divert attention from politics was to suggest that tabloid items were the most important news each and every day. As the most-watched television channel, RTL Klub shares in the responsibility for the prevailing political situation, including the two-thirds majority that the governing parties wield, as well as all political goings-on since the channel was first launched in 1997. The country would indeed look very different today if RTL Klub had decided from day one to consistently produce and air news of the kind that we see on the channel today. At this point another statement of Mr Gulyás is also worth pondering. The politician asserts that the advertising tax “has little to no impact on those major media outlets that play a decisive role in forming political opinions.” As sad as that may be, on account of their ratings the most important media in terms of shaping political opinions are the two commercial channels, RTL Klub and TV2. Their news shows are watched by all demographics and for a majority of the public the news on these channels serve as their exclusive source of information. Media services that are primarily focused on reporting political news reach only numerically insignificant segments of the public.

European values, European instruments

There is unfortunately also another point on which I feel compelled to agree with Mr Gulyás, and that’s his criticism of the European Union. The EU was not resolute enough in the debate on the media laws and failed to make clear to the Hungarian government – just as it had previously failed to make this clear to the Italian, French and Bulgarian governments – that a media system can only be European if it is transparent and operates with players that are economically and professionally autonomous, subject only to a predictable and reliable public oversight. Instead, the European Commission only asked the Hungarian government to enact some minute refinements to ensure compliance with European laws, and did not even attempt to assess the effective regulations on the basis of press freedom by invoking the Charter of Fundamental Rights. The EU farmed out the sensitive issue of the Media Council’s independence to the Council of Europe, which for its part acquiesced to an impotent and nonsensical compromise concerning the nomination of the Media Council’s president. As far as the public service media is concerned, no one checked whether the non-transparent financing scheme is compliant with EU laws, and as a result the public media have expended billions on government propaganda. Despite the aforementioned problems with the Hungarian media system, Mr Gulyás is essentially right in asserting that the EU has effectively given its seal of approval to the prevailing situation in the Hungarian media.

Klubrádió, frequency tenders

In his response, Mr Gulyás omits to mention, however, that in order to be able to continue operating at least within Budapest, Hungary’s only opposition radio, Klubrádió, first had to win a victory against the Media Council in court. The protracted legal battle, which lasted years, has manoeuvred the station into dire straits financially, and has forced it to abandon its rural network. Mr Gulyás suggests that Klubrádió is the only station that is exempt from paying for its frequency. This statement is inaccurate, however. Lánchíd Rádió and Inforádió, which also operate as political talk radios, have received the same allowance from the Media Council already years ago. It is also dubious to point out that in one of the suits concerning Klubrádió the court was inconsistently lenient when it ruled to dismiss the Media Council’s – rather absurd – decision to invalidate Klubrádió’s frequency application on the grounds that the station had failed to sign the back cover of its application. Other judicial decisions, Mr Gulyás argues, had ruled to the contrary in the case of other applicants. In the impugned ruling, the court emphasised repeatedly that the Authority’s calls for applications were of such low quality that they practically made it impossible for the applicants to compile a flawless application. Still, if one were to argue that the judiciary should have held Klubrádió’s application to a stricter standard, then what light would such a decision shed on the Media Council’s original choice to award Klubrádió’s frequency to an applicant which submitted an application that was only half filled-out?

The Media Council’s tender practice is indeed “biased and lacks in transparency” and it does appear designed to help market players aligned with the ruling party to gain ground in the market. The expansion of right-wing Lánchíd Rádió’s market appears to be facilitated by official practices that contravene even the effective media regulations. The headway made by ecclesiastical stations ends up eroding any chance that local radio markets might play a role in local political affairs. In the meanwhile, the Media Council protects the positions of market leader Class FM, which is also owned by business interests close to Fidesz, by slicing up into tiny pieces the market for local commercial stations. The result of this tender practice is that applicants for frequencies have practically vanished over the past few years, leaving only those in the race who are certain of victory. Consequently, legal remedies against the authorities’ frequency decisions are essentially hollow, for there is no one to turn to the courts to appeal the decisions.

Political advertisements

Mr Gulyás is right in asserting that political advertisements are subject to restrictions in many other countries as well. Yet one would be hard pressed to find instances of foreign regulation that limit much of the campaign to a single form of advertising, in fact to a single company, in this case to the outdoor advertising media owned by the company of Lajos Simicska, Fidesz’s former treasurer. And while newspapers are required to publish the prices of political advertisements – which is very laudable –such transparency rules do not apply to outdoor advertising. It also took a judicial ruling to make clear that the government had no right to engage in propaganda for the governing party. These problems all prevail in a media environment where one of the national commercial television channels is already in the hands of business interests close to the government; where the public media are already used as instruments of political communication by the governing parties; where a significant portion of print media not currently controlled by Fidesz-aligned corporate interests is in the process of being sold off; and where even audience ratings in the radio market are measured by a company within Fidesz’s sphere of interests. Mr Gulyás claims that the public information of citizens during the campaign period could not have been an issue as the opposition parties did not turn to the Media Council with complaints concerning the violation of the balanced coverage requirements. Mertek has often criticised both the regulation of balanced coverage and its application, and the fact that the opposition parties did not expect the Media Council to safeguard diversity of information does not at all imply that the information available is indeed balanced.

Origó

Concerning the case of one of Hungary’s leading news portals, Origó (where the editor-in-chief and a reporter were fired after reporting on the unusually expensive travels of a senior government official and Fidesz politician), Gulyás says that “no one has been able to present any evidence to show that any of these took place in response to political pressure.” Indeed, there is no audio recording of the politician in question, the minister in charge of the Prime Minister’s Office, János Lázár, raving about the reporter, András Pethő, or his editor, Gergő Sáling, demanding that they be fired. But is there anyone who can recall any similar instance in the history of the Hungarian media, when ten journalists, a deputy editor-in-chief and two managing editors simultaneously quit a media outlet? Their claim that they “cannot continue to work as they did until now” is a reasonable indication that journalists are subject to intense political pressure. Mr Gulyás would be right in interpreting this episode as an indication that Origó’s owner, Deutsche Telekom, is more concerned with winning public contracts amounting to hundreds of billions of forints and winning some mobile phone frequencies than the issue of Hungarian press freedom.

Self censorship

Mr Gulyás claims that there is no self-censorship, but journalists perceive that indeed there is. The Civil Code’s new provisions on the protection of public figures – some of which have since been found unconstitutional –, the so-called lex Gavra (a law that penalises the public dissemination of forged or manipulated audio or video recordings if they are liable to slander or libel someone, even if the entity disseminating the recording was only guilty of negligence rather than an active party in the manipulation), the several millions of forints in fines that the media law proffers for certain “transgressions,” all serve the purpose of discouraging journalists from trying to ascertain where exactly the law draws the line of free speech.

The intense political reactions to RTL Klub’s recently politicised news show; proceedings initiated by politicians in response to internet comments; and invectives and disparaging remarks about journalists – see for example the “good-for-nothing pen-wielding terrorists” – have clearly revealed that press freedom in Hungary is not primarily delimited by legal interventions but by cultural deficits. Europe has and continues to repeatedly fall into the error of talking about European values as if those were easily intelligible qualities that need no further explanation. In the meanwhile, European institutions continue to gloss over minor or major infractions against these values in member states, in order to minimise political risks. This will inevitably lead to situations wherein politicians tell European officials that it is they who get European values all wrong.