Hungarian government decree hinders antitrust inspection of giant right-wing media holding

Hungarian government decree hinders antitrust inspection of giant right-wing media holding
Gabor Liszkay, the man who will oversee the giant right-wing media holding.
By bne IntelliNews December 6, 2018

The Hungarian government declared the establishment of a media holding controlled by pro-government loyalists as an issue of national strategic importance on December 5, citing the "public interest of saving print media". The government decree hence blocks any potential antitrust investigation into the single largest media transaction in the country's history.

The Central European Press and Media Foundation (CEPMF), run by people close to Prime Minister Viktor Orban, became the largest media holding in the country on November 28, after taking over some 476 pro-government outlets from 15 publishers, including print, online, radio, and television. 

Their combined revenue reached HUF55bn (€170mn) last year or 16% of the entire media market. The media outlets controlled more than 50% of the entire advertisement market in the print segment last year.

Analysts say the establishment of the centralised media holding will further strengthen the government's control of the media, whereby independent news outlets will remain under financial and political pressure. 

As in other cases, a merger of this magnitude would have required the approval of the competition watchdog GVH. The state administrative authority, which reports only to parliament, remains independent of the government although local media report that in some cases pressure was applied, when transactions linked to businessmen close to the ruling Fidesz party came under scrutiny. 

The GVH used its power to block deals it considered to impede market competition. In 2017, the largest commercial broadcaster RTL Klub was prevented by the competition authority from gaining a 30% share in CEMP, which owned a handful of online sites. 

The law prohibiting unfair market practices and restriction of competition enable the government to give certain companies the status of national strategic importance, the government communication office said in a statement. 

The status has been granted 21 times, generally involving large-scale acquisitions by state-owned companies. This was the case when local companies took over foreign gas utilities.

The decree practically relieves the GVH and the media authority from conducting an inspection, even if the deal leads to the creation of a player with a dominant market position.

The plan to centralise right-wing media into a single holding company was devised by Orban last year, local media reported. The concentration would allow a more efficient and transparent operation. Orban has been reportedly upset by the large outflow of money from media companies, the bulk of which rely on state ads to survive. Over the years, tens of billions were channeled to pro-government media. 

CEPMF, which will operate on a non-profit basis, will be run by Gabor Liszkay, an Orban loyalist. He was the chief editor and owner of the company that published conservative daily Magyar Nemzet, which served as the only voice for Fidesz during its years in opposition between 1990 and 1998 and between 2002 and 2010. He was bought out by Lajos Simicska, the former cashier of Fidesz, after the oligarch’s salty burst out against the PM in February 2015. 

After seeing his former roommate turn against him, Orban empowered a handful of loyalists to build up a media portfolio, which reshaped the entire media landscape.

Lorinc Meszaros, the former gas fitter from Felcsut who is often cited as a proxy for Orban, became the largest media owner in a couple of years. Step by step, his company Mediaworks bought out regional daily newspapers from their foreign owners and by November 2018 he owned all 19 of them. 

He also owns a commercial television channel, several national dailies and dozens of internet news sites. Gaining the upper hand in the media was a crucial factor for the supermajority win by Fidesz in the 2014 and 2018 elections. 

State news channel operator MTVA has been under the direct control of the ruling party since 2010, but its ratings are still very low even though in some rural areas MTVA is the only available choice.