The darkest corners of state media funding

Published in Hungarian on 14th October 2015

Author: Ágnes Urbán 

The MTVA continues to be the dark horse in the Hungarian media system. There is ever more money flowing into the state media, while the latter is making a mockery of its intended function, i.e. public service. Based on documents obtained by Mérték it appears that the decision-makers themselves don’t know exactly how much money is assigned to what. By Ágnes Urbán 

Both in terms of the institution’s responsibilities and its actual output, the 71.7 billion forints of budget funding allocated to the Media Service Support and Asset Management Fund (Médiaszolgáltatatás-támogató és Vagyonkezelő Alap, MTVA) are excessive. It was recently revealed that despite major state funding for the institution, a bill to amend the Budget Act for 2016 proposes that the government also assume the MTVA’s debt of 47 billion forints. In two self-confident press releases the institution explained why this is necessary, and notes that its financial management is transparent (here and here, in Hungarian).

We do not know the details about the government’s decision to assume the MTVA’s debt, but it is hardly surprising: very little data about the MTVA’s management and operations are publicly available, and the taxpayers who fund the institution don’t know what their tens of billions of forints are being spent on. Previously, it had been up to the Public Service Fiscal Board (Közszolgálati Költségvetési Tanács, KKT) to decide about the allocations of funding for public media between individual broadcasters or individual areas of public service activity. According to an amendment of the relevant law that entered into effect on 1 July 2015, the MTVA compiles a proposal on the funds allocated to the production and procurement of media contents, and the KKT only retains a right to submit recommendations on the MTVA’s proposal. The KKT currently operates with only three members, the general manager of the Duna Media Service Corporation, the general manager of MTVA and a member delegated by the State Audit Office. Decision-making has become considerably more centralised than previously, and effectively the management of the MTVA is in the hands of a single person, while the Board only performs a very weak oversight. 

We already wrote in a previous blogpost that only after protracted litigation to this end did the Public Service Fiscal Board furnish us with the body’s agenda, memoranda of its decisions and the documents underlying its decisions. Nor has the situation improved since: We submitted a freedom of information request at the end of June, in which we asked for documents relating to KKT sessions between March 2014 and June 2015. The package of documents sent by the data manager, the MTVA, was thin, to say the least. 

In our request, we asked for “documents on the background calculations and criteria that inform decision-making, especially documentation that shows the responsibilities and broadcasting structure that underlies funding decisions”. All we received in response were four one-page documents (here, here, here and here), which contain planning data for the years 2014 and 2015; one contains graphs with expected costs for the year 2014. The graphs feature data by channel and by type of expense, but none of them reveal when they were created. Two graphs display the title Consolidated Channel Plan 2015, but the numbers are different in each, and the why remains a mystery. One of the four documents is obviously part of a longer material, since it contains a page number “36”, but the rest of the document was not sent. 

In our request we also asked for the “Notes or protocols drawn up at the KKT sessions between March 2014 an June 2015.” The MTVA sent this in a stapled 21-page document. From these it emerged that the KKT had held six sessions during this period, all of which were roughly an hour in length or slightly longer. The longest session lasted one and a half hours according to the Memorandum that particular session was held at the Kéhli restaurant rather than the customary location, one of the MTVA conference rooms. The Board approved all the reports submitted in the period under investigation. 

The memoranda suggest that the reports were basically positive in outlook, they contained observations such as for example:

  • the “the organisation’s efficiency has improved” and the “MTVA’s operations are methodical, and they project an image that leaves no reason for concern, as its operations appear efficient, goal-oriented and effective” (28 March 2014); 
  • “the MTVA has increased its revenue from the sale of television advertising airtime by 11% as compared to the previous year”, and “in the first four months of this year, radio advertising revenue has exceeded the previous year’s intake by 31%” (20 June 2014)
  • “public service channels reached the largest number of viewers” and “the trends in advertising revenue are encouraging” (29 September 2014);
  • “the content of the report is ‘brilliant’ and more comprehensive than ever before” and “[M1 – the news channel] can be considered a success story” (19 June 2015). 

The memoranda of the sessions in question contain parts that cannot be described as anything but unintended irony: one states, for example, that a review by the Nézőpont Institute (a research institute that is known for its close ties to the government and pro-government research) suggests that during the two elections held in the spring of 2014, the public service media “discharged its responsibilities in a balanced manner”. Another passage attributes data on radio audience figures to AGB Nielsen (20 June 2014). In reality, the name AGB Nielsen was changed years ago, and Nielsen Audience Measurement only performs measurements of television audiences. For radio, such measurements are performed by the TNS Hoffmann-Mediameter consortium. But this is not the most problematic point in the document by far. 

Lacking transparency of funding 

It does not emerge from the documents and it appears that the KKT members also do not exactly know how much money is allocated to individual areas and genres. It has also emerged that there is a connection between the media authority’s so-called Mecenatúra (patronage) programme, which funds the production of media contents, and the MTVA’s budget. At one of the sessions the statement was made that “the Mecenatúra’s [media funding] programme plays an important role in providing public media services” (29 September 2014), and then later, in the context of media production units in the ethnic Hungarian regions across the border, the following was said: “the Mecenatúra [programme] and the MTVA’s network of correspondents provide direct support to the producers of broadcasts across the border, which is also not included here” (18 December 2014). Even more revealing is the following explanation provided for the reduction in allocations to cover the production costs of films: “It is precisely in the areas of culture and film that Mecenatúra’s activities have disbursed two billion forints among independent producers, which is why it is possible to realise savings in direct production costs” (6 March 2015). And to complete the picture, there is also a comment on the radio budget which states that “there will be radio play grants in 2015 as well, which will to some extent compensate the insufficient funding complained about” (18 December 2014). 

It is readily apparent that the funding is now conducted in a matrix system of sorts, where the costs allocated for the production of shows are not all disbursed from the MTVA’s budget but also from external sources of funding. Indeed, the management already factors in these “supplementary” amounts. The Hungarian media have already written about the whiff of corruption involving the National Media and Infocommunications Authority’s Mecenatúra programme, and it is undeniable at this point that in the interest of transparency, funding for the MTVA should be comprehensively separated from the Mecenatúra grant scheme. 

An especially ironic and poignant point in the memoranda of the KKT sessions is that after years of operation someone realised the lack of online activity. In this day and age, it is downright funny to read one participant saying that “it would be timely to also have plans for the internet presence in these documentations”. This is all the more surprising since the same document also contains the following statement: “[T]he online area is a distinct chapter in the public media’s budget” (6 March 2015). It appears that even though the Public Service Fiscal Board has been approving the budget of the public media for years, said budget did not include a reference to online content services, and the KKT did not know how much money is being spent on this nor how effective that spending is. 

This is also relevant because the European Commission’s Communication on the application of State aid rules to public service broadcasting clearly states that financing must be transparent. In Hungary, however, the problem is not only that the wider public has no access to information about the financial management of public service media, or that the MTVA is not willing to release such information even in response to a freedom of information request, but that it is obvious that even decision-makers themselves have no idea how spending is actually allocated. And then we haven’t even mentioned the Commission’s expectation that public service and non-public service activities ought to be separated, of which there is not even a hint in the KKT’s documents. 

Public value test 

The Hungarian media law has adopted the concept of public value test. Article 100/B of the media law stipulates that “[t]he detailed rules concerning the examination of public value must be laid down in the form of a code, which is to be adopted at the initiative and with the coordination of the public service media provider jointly by all organisations and bodies involved in the proceeding.” This section has been in force already since 1 January 2015. This is striking considering that since then both the M1 news channel and the M4 sports channel have been launched, without a public value test being performed by the MTVA. This issue was also raised at the KKT’s sessions, and already in the spring it was mentioned that “[w]e are in the process of designing the system” (6 March 2015). It is mid-October now, and there isn’t even the remotest sign that a technical concept for the public value test has been created, or that even the interested stakeholders have been informed about the details of the work on this issue. 

This is all the more regrettable since we do not know what the goal of restructuring the channel was and what results the management expected from this process. This question is especially acute in the case of the M4 sports channel, which basically broadcasts entertainment content. It is thus not clear at all where the public value lies that would justify the need for this channel. Recently Péter Banai, state secretary in the Ministry for National Economy, noted in a news report on RTL Klub that the roughly 10 billion HUF (ca. 33 million euros) spent on the copyright fees of sports events are justified if the audiences desire such content. Apart from the fact that this was the first time that this vast amount was publicly mentioned, the very idea of the public value test is to prevent such comments the point is that there should be a well-designed method for deciding what types of new services public media may launch, rather than a situation in which a government official just throws around some vast figures. Naturally, the question is what kind of audience rating figures it takes to legitimate 33 million euros in copyright spending: is 5% of all viewers not enough yet, but 10% is? And if the share of viewers goes up to 15%, would it then be okay to spend twice as much? And in any case, who decides what is still an okay level of spending and on the basis of what? 

All considered, the way the public media operate is one of the darkest stains on the entire Hungarian media system. After the limited success of our freedom of information request from the KKT, we turned to the National Authority for Data Protection and Freedom of Information, which failed to respond to our request. It appears that there is no one in Hungary who is interested in the goings-on at the MTVA. What I would like to know, however, is when someone in the European Commission will finally take notice of the fact that Hungary is violating the European regulations at practically every conceivable level. 

The documents sent by the MTVA in response to Mérték’s freedom of information request can be found here (memorandum, aggregate data for all channels 2014-2015, aggregate data for all channels 2015 Plan 1, aggregate data for all channels 2015 Plan 2, aggregate data for all channels 2014) (all in Hungarian).