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12 April, 2022updated 12 Aug 2022 15:58

Sebastian Shehadi

Opinion: Foreign investors have helped Orban to destroy Hungary’s free press

Foreign investors have directly and indirectly helped Viktor Orban destroy press freedom in Hungary and win another election.

Fidesz, the party of Prime Minister Viktor Orban, celebrated a landslide victory in the Hungarian national elections held on 3 April 2022, winning 56% of the vote.   

But the elections fell short of international standards, even more so of EU standards.

Although the ballot boxes were professionally administered on voting day, the elections were marred by the absence of a level playing field, more specifically, the “pervasive overlapping” of the ruling coalition’s messaging, media bias and opaque campaign funding, according to preliminary findings from the Organisation for Security and Co-operation in Europe (OSCE).

The organisation also stated that “widespread government advertisement campaigns paid from the state budget reinforced the main ruling party campaign messages” and provided an “undue advantage” to the ruling party, which has now been in government since 2010. Meanwhile, the lack of balanced news coverage and the absence of a debate between the main contestants ahead of the elections limited voters’ ability to make an informed choice.

“For voters to be able to make an informed choice, it is fundamental that contestants have equal access to the media and run informative campaigns rather than focus on polarising messaging and personal attacks, as has unfortunately been observed here,” said Kari Henriksen, the leader of the OSCE’s observation mission, in a press release.

Hungary no longer has a free press

Since coming to power over a decade ago, Orban has taken slow but sure control over Hungary’s media industry.

If this descent was not obvious before 2016, then the dismantling of Hungary’s leading oppositional daily, Népszabadság, was a rude awakening that year. Fast-forward 24 months and the country’s last independent daily would be shut down too, marking the near annihilation of non-state influenced print media in Hungary. 

Little wonder, therefore, that Reporters Without Borders added Orban to its annual list of ‘enemies of press freedom’ along with North Korean leader Kim Jong Un and Syrian President Bashar Al-Assad. Orban is the first ever EU leader to join that ignominious list. 

The origins of this malaise, Orban’s media capture, cannot be understood without looking at how informal power in Hungary intertwines with foreign investors.

One of the leading academics on the subject is Edit Zgut, a researcher at the Polish Academy of Sciences who studies, more broadly, systemic clientalism and corruption in Hungary and Poland.

“Orban’s role has been crucial when it comes to dynamic changes in the media markets,” she tells Investment Monitor. “No media acquisition or defamatory campaign is not approved, somewhat, by him. We’re talking now about a fully top-down, 100% centralised regime, from this perspective. To get there, he used his favourite tool: proxies.”

Shutting down the opposition’s voice through acquisitions

One of the those most often accused, though not proven, to be a proxy of Orban is Austrian businessman Heinrich Pecina. He has been involved in several scandals and business acquisitions linked to politicians in Central and Eastern Europe.

In 2014, Pecina founded Hungarian company Media Works, and that began a process of buying independent regional newspapers and media in Hungary, including the biggest national daily paper, Népszabadság – the very publication that was then shut down in 2016, for ‘business reasons’ according to Pecina.

But Pecina also bought German-owned company Funke Mediengruppe, a mini media empire in its own right, which he sold to none other than Lőrinc Mészáros, Orban’s most well-known business ally. 

“You can connect the dots,” says Zgut. “This is how the whole empire ended up in the hands of Mészáros, who became the richest Hungarian since Orban’s government came to power. He is the crony who gets most of the public procurements. And he’s also known as the primary proxy for Orban.” Investment Monitor reached out to both Pecina and Mészáros for comment, but received no reply.

“[So you see how] Clientelist media ownership plays a crucial role in how Orban’s system functions,” she adds.

Pecina’s acquisitions were part of a wider process that saw the independent media landscape hoovered up by the state. Several hundred Hungarian media outlets have been centralised by government or pro-government companies over the past 12 years, says Zgut. When Orban aimed his sights on them, many publications donated their assets to pro-government actors or organisations, which made no sense from a business point of view – everything about it screamed suspicious, adds Zgut.

Foreign companies will not advertise with Fidesz’s opponents

Orban’s control over the media industry can also be observed through Hungary’s advertising sector, which has been weaponised to boost pro-government media and starve out independent outlets.

For example, one of Hungary’s last remaining opposition newspapers, Magyar Hang (which has to be printed in Slovakia since no company risks printing it in Hungary), has been excluded from some of Hungary’s marketplaces, while businesses owned by its senior staff have been under regular investigation by the tax authorities, according to Zgut.

Although Magyar Hang has an ideal audience for German automotives, the paper has no chance of attracting advertising from the German car industry due to the informal power exercised by the government.

“We still don’t know if this is because of direct pressure from Orban, or just that the car industry is self-constraining itself deliberately,” says Zgut. “What we know for sure is that Orban’s capture of the state and economy in an informal way (with the help of his oligarchs and family members) leads to a huge chilling effect."

Zgut says statistics show just much foreign companies in Hungary keep a distance from dissident media outlets.

Magyar Hang was just one example. Index.hu, which was one the biggest independent websites in Hungary, is another. "It used to be quite critical of the Orban government, so when it was trying to approach large telecommunications and retail companies (mostly from Western European countries), it was also rejected because the businesses were too afraid that they were going to lose business opportunities provided by the government."

Hungary provides some of the lowest corporate taxes in Europe, at 9%, as well as other bespoke corporate benefits through Orban's opaque and bilateral Strategic Partnership Agreements.

Zgut believes that it is impossible not to embed this whole issue into the broader context of Germany's role in supporting hybrid-authoritarian regimes over the past two decades, something that Investment Monitor has reported on. German companies are by far the primary foreign employer in Hungary, especially via automotive manufacturers.

Orban's media capture can certainly be put into the wider context of Fidesz's hollowing out of Hungary's checks and balances. Well beyond the media, Orban has also taken complete control of the country's judiciary and public procurement office. Given the chilling effect Orban has had on foreign companies interacting with independent press, how many other boardroom decisions were taken out of deference to Fidesz?

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