Politics and the airwaves: The case of Sláger and Danubius

Back in 2009 there was quite a scandal in the Hungarian media world. The licenses of two powerful radio stations were up for renewal. Both were owned by foreign companies. Sláger was owned by Emmis Communications Corp., Danubius by Accession Mezzanine Capital, an investment fund based in Vienna. These two stations were powerful enough to cover the whole country and therefore much coveted.

At the time I wrote a detailed account of the events: “Fight over the Hungarian airwaves or more than that?”. In order to understand the current law suit against the Hungarian government by the Indianapolis-based Emmis International Holding B.V., a unit of Emmis Communications Corp., and the Bermuda-registered venture capital fund Accession Mezzanine Capital LP one should read the background post.

The most important information I managed to glean at the time was that Barbara Brill, senior vice-president of Emmis Communications’ international subsidiary, claimed that they “were approached by a political party and it seemed clear that a deal was being offered in return for the party’s support in the tender.” The Economist at the time was convinced that the party that approached Emmis was Fidesz, then in opposition, which “has stoked discontent with privatization, foreign investors and, to an extent, free-market capitalism in general.” The Economist concluded that “outsiders must hope that Fidesz can contain the genies it has so casually unbottled.”

Because of the law suit that was brought against the Hungarian government by the former owners of Sláger and Danubius, we now know a little more about this murky affair. The plaintiffs claim that the tenders for the frequencies were “seriously flawed”and actually “amounted to the expropriation of investments.” Those who received the two frequencies were “politically favored persons.”

Airwaves

The plaintiffs allege that representatives connected to Orbán’s Fidesz party and the leadership of MSZP urged the investors to “reach an accommodation” with the political parties “to have a chance” at renewing their licences. One of these mysterious visitors from Fidesz was none other than Tamás Fellegi, former minister of national development and currently minister without portfolio in charge of the still non-existent IMF/EU negotiations.

Once Danubius lost its bid because it refused to make a deal with Fellegi on behalf of Fidesz, a brand new Hungarian company received the frequency. The company was owned by–you guessed it–Tamás Fellegi and Zsolt Nyerges, his business partner of long standing about whom one can read a lot in the Hungarian media lately. Fellegi naturally denies any wrongdoing.

Emmis, which had operated Sláger Rádió for twelve years prior to the tender, said that it “received overtures” from MSZP’s chairman, Ildikó Lendvai, and László Puch, the party treasurer at the time. Or at least this is what the court documents claim. Puch denies ever meeting the investors or conducting talks with them. Lendvai describes her meeting with Emmis’s representative as a discussion of the investors’ concerns that local bidders may outbid the incumbents. As it turned out, the locals offered exorbitant and totally unrealistic licencing fees. However, Lendvai denies that she held “talks with Fidesz or any other political party regarding any sort of political deal.”

Advenio, the company Fellegi and Nyerges set up, won the tender for Danubius’s frequency by offering to pay 200 million forints ($907,700) and 55 percent of projected net sales each year after July 2011. The other company, FM1, a consortium more closely allied with MSZP and the winner of the Sláger frequency, offered to pay 200 million and 50 percent of expected sales.

However, these two new companies had to pay the fees they pledged for only six months. After that, the fees were cut because of “challenges stemming from the economic crisis” and “unfair price calculation.” The new  Media Authority refused to disclose the amounts currently being paid by Advenio and FM1.

Emmis and Accession turned to the International Center for Settlement of Investment Disputes based in Washington because they claim that “the media law precluded any meaningful remedy” in Hungary.

So, Tamás Fellegi and Zsolt Nyerges again.

Yesterday Viktor Orbán proudly displayed his senior paper on his website. And who do you think his senior advisor was? Tamás Fellegi! And what is the connection of Nyerges to the Orbán family? Nyerges is from Szolnok, as is Anikó Lévai, Viktor Orbán’s wife. Moreover, after the Orbáns got married they lived in Szolnok for two years. The connection between Nyerges and the Orbáns most likely goes back quite a number of years.

After HVG managed to uncover Pál Schmitt’s plagiarism the Hungarian media became somewhat emboldened and is making a more serious effort at investigative journalism than previously. I have managed to collect quite a folder on Nyerges et al. that I will share with you soon.

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Ex-President Professor Dr Schmitt Pál PhD (withdrawn)
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Ex-President Professor Dr Schmitt Pál PhD (withdrawn)

I’m a little confused here – what exactly was the ‘deal’ the political parties were offering the radio stations?
Are we talking straightforward ‘donations’, or is it more complicated than that?
If it is ‘donations’, then surely that’s pretty open and shut corruption and bribery, which, even in Hungary, would have been a bit obvious?

Ex-President Professor Dr Schmitt Pál PhD (withdrawn)
Guest
Ex-President Professor Dr Schmitt Pál PhD (withdrawn)
PS – forgive the pedantry, but, unless these stations broadcast on AM (medium wave), it wouldn’t be a question of a station’s “power” as to where it could be heard. AM signals travel a long way and aren’t bothered by hills, buildings, etc, so a single transmitter in a small country like Hungary could easily cover the whole country, if it was powerful enough. But I was under the impression that these stations were FM (VHF), in which case they would need a series of linked, lower powered transmitters, spread over the whole country (each broadcasting on a slightly different frequency) to offer national coverage. A single powerful transmitter wouldn’t be as effective. So, I think what is at stake here is not so much the “power” of the station, but the coverage permitted (or given) by the licence. A few licences will be national, but most will be regional or local. (I say “given” because in most cases the transmitters are not owned by the station, but are provided – directly or indirectly – by the State as part of the licence.) Presumably, the Sláger and Danubius licences were national, whereas Klubrádió (for instance) has only a local licence… Read more »
Kingfisher
Guest

I find it a little disconcerting to see what was fairly clearly a case of collusion between Fidesz and MSZP back in 2009 being headlined as “Fidesz and the airwaves.”
The Fidesz and MSZP members of the ORTT colluded in this matter and the estimable Majtényi resigned in protest at was clearly a fix.
The fact that the MSZP owned radio and the Fidesz radio are both now benefiting from the reassessment of their license tells us something far more interesting, I would suggest.
I do admire your blog but I feel this piece is being way too favourable to the MSZP in this wretched business.

Member

@Ex-President Professor Dr Schmitt Pál PhD (withdrawn)
“Are we talking straightforward ‘donations’, or is it more complicated than that?”
This is Planet Hungary. Everything is more complicated …
They were threatening the stations (the investors) with arranging in the media authority that they loose their bids if they don’t cooperate.
What is disturbing is that both the MSZP and the FIDESZ are implicated (well, according to the stations). This sounds like a secret deal between the parties to split the prospective mouthpieces. Oh, well Orban, didn’t have 2/3 at this time.

GW
Guest

Sláger’s musical choices were not my favorites, but they were genuinely popular (witness the ratings and advertising income) and the required news and public service offerings were studiously factual and non-partisan. Placing such a station into a back room deal between MSzP and Fidesz in which it had no interest whatsoever is the worst sort of abuse of power and now, to learn that the fees bid by the winning firms in the tender were magically made to disappear and are not now available for public inspection, is corruption plain and simple. Can’t one sue to have this information made public?
Both parties are clearly guilty of collusion and I’d sure like to know who, exactly in the MSzP got a share and I’d like to see them prosecuted ASAP, but the direct stake in the deal held by Tamás Fellegi and Zsolt Nyerges, given their present positions, ought to disqualify them from any position in either government or in the leadership of any party. Unfair practices in government bidding, inaccurate and untruthful bidding, conspiracy to defraud a government agency… it’s all corruption.

Member

LOL. You type “Nyerges Zsolt” into Google, you get 4 images, one of them is Lajos Simicska … Google knows something.

Guest

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Kingfisher
Guest

GW, Nyerges doesn’t have a position. Fellegi sold his business to Nyerges before taking office. Then again, Pintér magically disposed of his company before he was appointed. And Gyurcsány did the same.
OF course, it is all a sham. But on paper (which is what is important) they don’t own companies once they are in office.

Odin's Lost eye
Guest

Nothing about Hungarian business surprises me. Some 10-11 years ago I used to sort out a company’s computer system. These folk made and distributed animal food stuffs to farmers. They knew I knew a little about Hungary and asked me for my opinion about buying Maize from Hungary. I told them I could not help them about price/quality with which they agreed.
They asked me would the Hungarian suppliers try to cheat them. My reply was not would the Hungarians try to cheat them but when. I also said that they should impose their own inspection rather accept quality certification from Hungary, even Government Certificates.
Ok they invited the Hungarians over and my wife helped translating. Nearly everything was agreed except the final price. What killed the thing was that the Hungarian negotiators wanted to be paid a ‘reverse discount’ (a kickback to them personally) for supplying the goods.
The meeting broke up at that point. Exit Hungarians clucking like chickens.
Needless to say the Hungarian outfit was ‘black listed’ by the company. Ok it was not a large contract; initially it would be for three 32 Tonnes loads every week.

Member

Meanwhile on Planet Hungary …
The police commisioner of Budapest, Tamas Toth, banned the 2012 gay pride parade.
http://www.fightdiscrimination.eu/news-and-events/hungary-authorities-must-lift-ban-2012-pride-march

Member

Mutt Damon: “The police commisioner of Budapest, Tamas Toth, banned the 2012 gay pride parade.”
“The resolution of the Budapest Police justified the ban on grounds that the Pride march would have negative consequences on traffic, which could not be diverted to alternative routes. The resolution highlights that the exercise of the right to freedom of peaceful assembly by participants of the Pride march would affect the freedom of movement of those who are not taking part into it.”
SHAME ON TAMAS TOTH, and shame on the Hungarian government (again) if they allow this. I did not see that the “peace March” had any problem obtaining any permits, although I believe they used the same route. WHat a backward country HUngary became because of the bozos who run the show there.

Kingfisher
Guest

When it comes to gay rights, it is not the “bozos who run the show” that make Hungary backward, it is pretty much everyone. My own acquaintances are largely liberal thinking, liberal voting and intellectual and yet they are nearly all extraordinarily hostile. Friends with different backgrounds are as bad, if not worse. I once remember talking to an educated group of gypsies, thinking they would have some sympathy and yet they were pathological hateful about gays.
I’ve never really understood why. But I’m sorry to say that the police are simply reflecting a consensus.
ons and political orientations are just as bad. So I’m sorry to say that in this case, the police are bowing to the consensus.

Member

@kingfisher “the police are bowing to the consensus”
No. Law enforcement in Hungary is following the political, ideological path the FIDESZ set for them.
Political support and effective police protection would be a huge factor to help the country to move away from homophobia. The commissioner is the government in Hungary. Especially under Orban the 5th. They are acting on a political decision.
The whole thing is baffling. The courts will not let them ban the parade as it happened last year. So why is this political statement? We don’t care about the law. We just want to hate?

Member
Kingfisher: ” But I’m sorry to say that the police are simply reflecting a consensus.” And this is where leadership should step in. Orban should support all Hungarians, notwithstanding their religion, gender, political stance and sexual preferences. THis situation also shows how backward Hungary is becoming without a leader who is not looking back to the past but looks forward to the future. My parents were squimish about gay people, until they meet a few. I made sure that they have chances to get accounted with my gay friends here in Canada and back home in Hungary. Now, this is not even an issue about someone. If they come across someone who is gay, maybe they make a comment matter of factly but they could care less. Many Hungarians have the same attitude toward Jewish people until they find out that the next door neighbour who picks up their kids from school when they cannot make it home in time is actually Jewish. THis is the moment when they see that Jews are not any different. THe responsibility of a government does not end with “big plans”, financing, or the renewing of a city, it is the difference that they… Read more »
I love Hungary
Guest

Eva,
The Socialists got the other station.
This was a Hitler/Stalin carve-up.
You are only reporting on Hitler.

Eva Balogh
Guest

I mentioned the socialists too.

nimh
Guest

I love Hungary:
Originally Eva called this blog post “Fidesz and the airwaves: The case of Sláger and Danubius” – you can still see it in some Google cache pages of the site.
But since then, possibly after Kingfisher’s comment above, she’s changed the title to “Politics and the airwaves: The case of Sláger and Danubius”. Which seems a lot more accurate, considering that both parties were equally up to their necks in this piece of corruption.
In response to “Ex-President Professor Dr Schmitt Pál PhD (withdrawn)” (heh), I was talking with someone who’s involved in the case, and yes, it seems that they simply wanted money – a question of plain bribing.

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