Easy Steps To Killing A Media Market

Michael Hedges June 28, 2011 - Follow on Twitter

The perfect storm cliché falls powerfully short in describing the havoc to befall the media sector in recent years. As digital media took its place in the sun economic malaise brought turbulance. Crony capitalism and poor public policy replaced crony statism and weak public policy. Riding out this storm is infinitely difficult.

Warning bells have been ringing in Hungary for years. After the buoyancy of European Union accession wore off, its citizens voted out one weak and ifficient government for one imbibed on authoritarian populism mixed with hubris. A new attitude toward the media sector arrived, not entirely at odds with public opinion.

An early target was the public broadcaster. At first, in November 2009, the Hungarian Parliament cut the public television budget by 30%. And that was before the 2010 elections that brought Viktor Orban’s Fidesz Party to power. Laws were subsequently and quickly passed disbanding the old media regulator and creating two new Fizdec controlled agencies. Hungarian public radio and television were downsized and brought under political control. State broadcasting returned.

Another target was foreign owned media. Two national commercial radio channels with hugw audience shares and commersurate ad revenue were denied license renewals under suspicious circumstances with new licenses granted to politically connected owners. The government’s attitude wasn’t media specific, newly elected Prime Minister Orban railed against all foreign owners, attracting the attention of the Economist and the Financial Times.

By the end of 2010, with the economic downturn clearly taking its toll, a new set of media laws came into effect clarifying the governmet’s position on media control and dissenting opinion. As Hungary took the European Union (EU) Presidency January 1st, the European Commission (EC) demanded changes in the law. Media and human rights watchers OSCE and Council of Europe said the changes did not go far enough. They were roundly ignored by the Hungarian government.

The cumulative effect devastated the radio sector. The loss of two highly professional commercial broadcasters, each with more than a decade in the marketplace, and downsizing of public radio drove listeners from the radio generally. So severe was the disappearance that measurement supplier IPSOS Szonda suspended then adjusted audience surveys. Major advertisers feld to other media and have not returned. The radio share of advertising in Hungary has fallen from 5.8% in 2008 to 4.1% this year. Recovery is not in sight.

Commercial broadcasters in Hungary pay the government a fee once a license is granted. That fee has been part of a points system in license renewals, not the sole criteria but an important one. Broadcasters have complained that the fees based on market share and population coverage are too high.

The National Media and Communications Authority and the Media Council have answered that call by reducing fees for some stations deemed “disproportionately high” and issuing tenders for 19 more local and regional frequencies. It is common for even local and regional radio stations to operate several FM frequencies. “In this tender for new commercial frequencies the Media Council is applying a more equitable fee system,” said the Media Council statement (June 26). The current system differs from the previous by taking into account the reception area size and the purchasing power of those living there.”

Three local radio stations have given up in the last year. Another, Budapest station Klubradio, looks to be the next to fall. Its license is up for renewal and in issuing the tender the Media Council has demanded, among other things, more music. Klubradio is noted for its talkshows, some hosts taking positions rather different from those of the ruling Fizdec Party. With ad revenues sinking, the station asked for donations from listeners and raised about €500,000, about one-third of its needs.

Considered an “administrative” success as it was overshadowed by turmoil over media policy and civil liberties at home and the continuing saga of economics across Europe, Hungary’s EU Presidency ends June 30th.

See also in ftm Knowledge

Media Laws – New and Revised

Policy makers and politicians are writing and rewiting media laws and rules at a breakneck pace. As broadcasters and publishers grapple with changes brought about by digital development, new business models and financial distress, the new media is feeling rules tightening around it. From licensing and public broadcasting to privacy, piracy and copyright this ftm Knowledge file Media Laws – New and Revised summarizes new laws and revised laws from a media perspective. 135 pages PDF (December 2010)

Order here