Tag Archives: pro-government media

High-stake battle for the ownership of Hungary’s TV2

I have waited more than a week before tackling the extremely complicated, contested sale of TV2, Hungary’s second largest commercial station. Initially there were just too many questions about this bizarre affair, but in the last few days more documents have become available and a more or less comprehensible story has emerged.

People not familiar with the Hungarian political scene could justifiably ask why the sale of a commercial television station, which airs a lot of soap operas, is such a significant, controversial event. The answer, of course, is that the Orbán government considers the mass media to be of the utmost political importance. Ever since 2002, when Viktor Orbán narrowly lost the election, he has been diligently building, through his oligarchs, a network of pro-government media outlets. From the point of view of the government, TV is critical because this is how most people get their news.

The three biggest stations, the only ones that can be received in the whole country without a cable connection, are MTV, RTL Klub, and TV2. After 2010 the state-financed MTV became a government propaganda station, pure and simple. The two commercial stations were initially “persuaded” to provide as little political news as possible and to concentrate instead on tabloid items. But when the Orbán government came out with a steep advertising tax in the summer of 2014, RTL Klub decided not to play ball. Its fairly lengthy evening newscast now devotes more time to political news, including stories critical of the government. Moreover, RTL Klub’s viewership soared. And it has successfully taken up a fight with the government over the advertising tax.

Already by 2013 RTL Klub was starting to look like a lost cause, which left only TV2 in play for the government. In 2013 TV2’s German owner, ProSiebenSat.1, decided to sell its Hungarian company, which had accrued heavy losses in the previous few years. To everybody’s amazement the station, at least on paper, was sold in December 2013 to CEO Zsolt János Simon and Yvonne Perla Dederick, the financial director. The two executives announced at the time that ProSiebenSat.1 had given them a loan that they were supposed to pay back in five years. The news of the purchase immediately raised questions. Surely, a loan of about 25 billion forints–that was the estimated price of the station–had to be guaranteed by somebody with deep pockets. Although at the time there was no proof, some people suspected that Lajos Simicska, who was still friends with Viktor Orbán, was behind the deal.

The suspicion was pretty accurate. Károly Fonyó, a close business associate of Simicska and owner of Megapolis Média Zrt., was the one who signed the contract with Zsolt Simon and Yvonne Dederick. One of its clauses stated that Fonyó’s Megapolis Média Zrt. had an option to purchase TV2 at any time Fonyó desired.

At this point Simon and Dederick established two companies of their own: D6D Kft. and CCA Vízió Kft. These two companies then created a third (CCA-D6D Kft), which was supposed to run all companies related to TV2. In March 2014 they decided on a new business model: all these companies were merged into one called TV2 Média Csoport Kft. By the time this new company was registered it was July 2014.

Let’s pause for a second and recall what happened in and around July 2014. This was the beginning of Lajos Simicska’s dispute with his old friend Viktor Orbán over the advertising tax. Critical articles appeared in Magyar Nemzet, Simicska’s paper, and Cink.hu described Magyar Nemzet as the new RTL Klub. Most likely it was at that time that Orbán decided to go after Simicska. He no longer trusted his old friend, and he wanted to make sure that Simicska would not, sometime in the future, be able to do with TV2 what he was doing with Magyar Nemzet.

To achieve his aim, he needed the help of Zsolt Simon and Yvonne Dederick, the nominal owners of the station. In addition, he needed someone willing to buy the television station. His choice was his new friend and confidant, Andy Vajna, the former Hollywood producer. During the summer of 2014 Vajna, who already owned a Budapest casino, was in the process of negotiating with the government concerning the ownership of the largest and most profitable casino in the country, which until then had been owned by the Hungarian state. He didn’t seem to have any difficulty convincing the government to part with its casino. The Orbán government was ready to pass on this business venture to Vajna under the most favorable conditions: unlike other businesses, Vajna’s casino is not wired to the Hungarian Tax Office. The price for this fantastic business opportunity may well have been Vajna’s agreement to purchase TV2.

"Will the real owner of TV2 please stand up?" / Budapest Beacon

“Will the real owner of TV2 please stand up?” / Budapest Beacon

On October 15, 2015 Vajna fulfilled his end of the bargain and purchased TV2 Media Group from Simon and Dederick. Simon and Dederick presumably figured that they had structured the new company in such a way that it had nothing to do with the company that Károly Fonyó had an option to purchase.

The only problem was that Fonyó’s company had already exercised its option on October 13, two days earlier. Fonyó therefore announced that Vajna’s contract was null and void since his company had not authorized Simon and Dederick to sell TV2. He also announced that the two executives had been fired and that he was anticipating lengthy litigation.

Meanwhile the politicians of the opposition don’t seem to realize that the fight over TV2 might have political consequences for them. They look upon the struggle between Orbán and Fonyó/Simicska over the station as irrelevant. Who cares, they said (at least initially), which oligarch becomes the owner of TV2, Simicska or Vajna? But as things stand now, if Simicska wins the fight, TV2’s news will most likely become more like RTL Klub’s. Magyar Nemzet and HírTV have already become much better. They are moderate right-of-center and critical of the government.

By the way, Magyar Idők, the new slavishly pro-government paper, was financed in pretty much the same way that Orbán designed Vajna’s purchase of TV2. First the government gave János Sánta’s Continental Tobacco Co., together with BAT’s Hungarian subsidiary, the exclusive wholesale rights to all tobacco products in the country. Shortly after Sánta received the government’s gift of a very profitable concession, he was “persuaded” to buy a 49% stake in the new pro-government paper.

Orbán’s stranglehold on Hungarian TV seems to be weakening. Although by definition he still has MTV, he has lost RTL Klub and seems to be in the processing of losing TV2. Fonyó’s case looks pretty strong, although it will probably not be decided in his favor in the Hungarian courts.