Mérték Média Monitor has been analysing the changes in state advertising spending for years. Our regularly published Soft Censorship report reviews the developments of the foregoing year, but it is also important to take a look at the impact of state advertising on the media market situation from a wider angle, as a long-term process. Correspondingly, our study reviews the trends in state advertising spending between 2006-2016 and examines how individual interest groups and groups of owners have claimed this type of public funding during the time investigated.
Our first hypothesis is that the shifts in the underlying balance of political power – be it as a result of a change in government or a change in the political climate even in the absence of a change in government – is also reflected in state advertising spending. Our second hypothesis suggests that since 2010, when the Orbán government came into office, the market-distorting impact of state advertising spending and its concentration have been more pronounced than in the years before.
This analysis was compiled on the basis of the Kantar Média database, which contains so-called list price advertising spending. This calculates advertising spending based on publicly available lists prices and actual advertising volumes sold. The database does not extend to every media outlet, which is something that needs to be kept in mind and must be accepted as a given. Thus, for example, the three political/news channels, Hír TV, Echo TV and ATV are missing, as are two important players in the outdoor advertising market, Mahir Cityposter and ESMA, the online newspaper 888.hu, which is part of the Habony-associated media empire, and Karc FM and Lánchíd Rádió among the major radio stations.
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The trends in state advertising spending
The first graph shows the changes in the amount of state advertising spending, with a growing trend overall but substantial fluctuations as well. It is apparent that the advertising activity of state institutions increased before the 2010 elections, and there was a drop after the change in government – the new government needed time to replace public media executives and to find new outlets for ads placed by the state. The 2014 election did not result in a change in government, and correspondingly there was no discernible change in state advertising spending until 6 February 2015, the infamous day when the conflict between Orbán and Simicska erupted out in the open. What is apparent, however, is that the third Orbán government has spent significantly more on advertising during its first two and half years than the second Orbán government and the Gyurcsány-Bajnai cabinets had over their entire four year terms.
It is important to note that the growth in state advertising spending was also boosted by the fact that certain major corporations that were previously commercial advertisers (e.g. MKB, Antenna Hungária) have been taken over by the state or others were launched later (BOM2024). An economic policy based on nationalisation and a growing share of state-owned business assets in the economy will increase the level of state advertising even if the amount of advertising purchased by individual players remains otherwise unchanged.
The distribution of state advertising spending
There have been profound changes in the composition of the market segment that qualifies as the major beneficiary of state advertising spending. This was true not only for the change in government in 2010, but also in the period after 2014, when the underlying power structure remained unchanged.
The graph reveals that before 2010 the main beneficiaries of state advertising spending were foreign-owned companies, which is hardly surprising given that the media outlets with the biggest reach tended to be held by foreign owners. As Hungarian players – typically investors with intense ties to politics – began to gain ground in the Hungarian media markets there was a shift in advertising spending, increasingly to the benefit of domestic owners. In the first phase, the companies of Lajos Simicska emerged as the main beneficiaries, and then, after TV2 was taken over by Hungarian owners, the share of commercial television increased, even as the amount of state advertising spending allocated to companies with ties to the political left dropped to essentially nil.
The outsize share of Simicska’s companies in state advertising spending lasted up until the day when Simicska publicly attacked Orbán. This is when the conflict between Prime Minister Viktor Orbán and Lajos Simicska, who was until then Fidesz’s leading background financier and chief media supporter, was laid bare. After that day state advertisers grew visibly uncertain, and they put their advertisement campaigns with Simicska’s media outlets on hold, waiting for the situation to clear up. Then, as a new pro-government media portfolio began to take shape, they started to direct money at the new favoured players at a pace that exceeded the previous levels of spending. This is readily apparent in the figure below. The share of media holdings controlled by Lajos Simicska, marked in the figure with the colour orange, dropped to nearly zero by the end of 2016; they were replaced by new pro-government media (the television channel TV2, the online newspaper Origo, and the daily newspapers Magyar Idők, Lokál and Magyar Hírlap), which received the share of advertising that had previously been awarded to Simicska’s outlets.
Of the twenty media companies that received the largest state advertising commissions during the two and a half government terms we investigated, there were hardly any left by the end of 2016 that did not have some ties to the incumbent government or its predecessor. At the same time, however, there is only one among these twenty media outlets, Népszabadság, which can be referred to as close to MSZP (and this newspaper, too, has been shut down in the meanwhile), while nine have ties to the Fidesz cabinets in this period (this includes the public broadcaster Duna Media Service Provider).
It is also instructive to review how the advertising portfolio of the five biggest state advertisers has changed. It is apparent that back in 2006 – and in fact even as late as 2010 – a significant portion of state advertising spending went to media which, in terms of its ownership structure, cannot be classified as being affiliated with any party. What is especially striking is that the share of media affiliated with the centre-left MSZP and/or the liberal SZDSZ was not especially high, even though these two parties made up the coalition government at the beginning of the 2006-2010 term (SZDSZ later quit the government but continued to support it in parliament). By 2014 this had changed massively. The share of Lajos Simicska’s companies in state advertising during this period is especially striking, but other media with ties to Fidesz also began to play a major role at this time, especially owing to the growing significance of the major private television channel TV2, which was taken over by the government’s film commissioner Andy Vajna. Then, within the span of only two years, Simicska’s companies were completely squeezed out of the advertising portfolios of the five state-owned companies we investigated. Other Fidesz-affiliated media companies came to dominate in this sphere along with public media outlets. The only exception was the advertising spending of the Hungarian National Bank (MNB). The latter directed much of its advertising money towards the CEMP Sales House, which is affiliated with the major online newspaper, Index.hu, a media outlet that is critical of the government.
State advertising spending in the market for political dailies
State advertising spending underwent a striking change in the market for political/public affairs dailies. The share of newspapers affiliated with the left (Népszabadság and Népszava are indicated with red) dropped precipitously after 2010. This was the period when Magyar Nemzet, owned by Lajos Simicska, and Magyar Hírlap, owned by another oligarch, Gábor Széles, dominated. Both newspapers are known for their rightwing affiliation. The aftermath of the Simicska scandal in 2015 saw the creation of the pro-government daily Magyar Idők (previously Napi Gazdaság), which was hugely successful in drawing state advertising funds despite the fact that it was nearly completely unknown to wider audiences.
Overall, it is apparent that during the decade analysed here there was no major change in the total state advertising spending in the market for political dailies, but there were vast fluctuations. Especially striking is the unprecedented dominance of Magyar Nemzet after 2011, as well as that of the Magyar Idők and Magyar Hírlap, the two pro-government dailies, after 2015.
State advertising spending in the market for public affairs weeklies
The impact of the 2010 election was also spectacular in the market for political/public affairs weeklies: Heti Válasz, which is affiliated with Lajos Simicska, practically monopolised the state funds expended in this sector.
If we look not only at the percentage of spending allocated to individual outlets but also at the total forint amounts, then we see that this sector, too, was marked by extreme fluctuations. Especially after 2010 it was very unpredictable how much state money would be allocated to each paper. It was also apparent that for several months in 2015 the state spent little to no money in this market segment: the role of Heti Válasz declined after the Simicska conflict, but since no new pro-government weekly was launched, there was nowhere to spend the money. In the segment of weekly newspapers, the share of state advertising received by Figyelő, which was acquired by Mária Schmidt at the end of 2016, is worth watching in the future.
The distribution of state advertising spending in the television market
It is instructive to compare how television channels’ competition for state advertising funds has evolved in this area.
As is apparent, the growing share of TV2 (in black) in the state advertising market is striking. Until the end of 2013, RTL and TV2 received roughly the same share of state advertising. At that point, however, two company executives, Zsolt Simon and Yvonne Dederick, bought the holding company from the owner, the German Pro7Sat1 group. Subsequently, the share of the TV2 group surged to 70-80% of total state advertising in the television market, and it has held steady at this level, only dropping to 30-40% in the first half of 2015, when media reports suggested that the government was pressuring Simon and Dederick to sell their shares in the television channel to Andy Vajna. This deal was ultimately concluded in autumn that year, and TV2’s share in state advertising spending returned to its new “normal”.
The distribution of state advertising spending on the outdoor market
It is in the outdoor advertising market that the impact of the change in government in 2010 was most pronounced. International companies were relegated to the background, while state institutions practically poured public funds into companies controlled by Lajos Simicska.
It is important to note that this market was subject not only to an internal reallocation of funds but was also the target of a massive increase in the amount spent by the state on advertising. One of the reasons may have been that Simicska’s companies allowed for a cost-effective way for funnelling taxpayer money into favoured private hands (there are basically no costs for producing content in this market – one only needs some creative design for ads and to put them on posters). Another reason may have been that the Fidesz government has been more deliberate in its use of this particular form of political communication. Outdoor advertising can also reach segments of the public who do not consume public affairs content or make a deliberate effort to avoid pro-government media. That is why it has become an often-used communication instrument in recent years.
After the public break between Orbán and Simicska, the companies owned by the latter fell out of favour in this market as well. Until the point when a major outdoor advertising company will be taken over by a businessman with close ties to the government (the ESMA- Hungaroplakát portfolio held by the businessman István Garancsi is too small for this purpose), the government will have no choice but to spend the money on outdoor advertising at the French-owned company JCDecaux.
The distribution of state advertising spending on the radio market
The history of state advertising spending in the radio market followed a somewhat different trajectory from that observed in the other sectors. The inflection point was not the change in government in 2010 but the frequency tender for national commercial radio stations in 2009. As a result of the tender, two stations active at the time, Danubius and Sláger, lost their frequencies, while in November 2009 two new, Hungarian-owned radios, Class FM (operated by Advenio Zrt) and Neo FM (operated by FM1 Zrt) began to broadcast on the same frequency.
As is well-known, the frequency tender was based on a backroom political deal, and Class FM, affiliated with Lajos Simicska, became the target for the allocations of vast amounts of public funds. At the same time, Neo FM, whose owners had ties to the Socialist Party (which was in opposition after 2010), hardly received any state advertising. The station became financially unviable and ceased operating in the autumn of 2010.
Another striking disproportionality was manifested in the gap between the respective revenue from state advertising spending received by two Budapest talk radios, the right-oriented InfoRádió and the openly leftwing station Klubrádió. Despite the fact that Klubrádió has more listeners, InfoRádió received more money. State advertising spending allocated to InfoRádió has been rather stable over the past 10 years, regardless of whether the government was leftwing or rightwing. Yet as the rightwing government entered into office in 2010, Klubrádió now longer received any state advertising funds.
Here, too, the impact of the Simicska scandal is readily apparent. Though the amount of state spending in this sector began to decline from the time of the Simicska-Orbán break in early 2015 until the end of the same year, as of 2016 the public media radio stations and Sláger FM, which was approached by businessmen with ties to Fidesz, took the place previously held by the Simicska-controlled Class FM. The end of 2016 deserves special attention: that was when Andy Vajna’s new radio station, Rádió 1, was launched. This station, marked with the colour black, took a quarter of all state advertising in this market segment within two months of its launching.
The distribution of state advertising spending in the online market – Origo vs Index
Spectacular changes in state advertising spending in the digital media began only in 2012, relatively late when compared to other sectors.
The first beneficiary was index.hu, which was then supplanted by origo.hu as the prime beneficiary. Though Origo was only acquired by the pro-government New Wave group at the end of 2015, the online newspaper took over the position as the leading target of state advertising spending in its market segment from the Index group already in May 2014. A month later the Origo scandal broke, and from them on Origo essentially became hegemonic in this market, save for the few months when it was bogged down in speculations about its sale, a process that ultimately resulted in its acquisition by business interests associated with Fidesz. As of the second half of 2016, its share fluctuated in the range of 70-90% of total state advertising spending.
The share from state and commercial revenue at individual media brands
The graphs below present how each company did relative to other companies and in absolute terms in attracting commercial and state advertising revenue, respectively (the graph allows you to set different years).
It is readily apparent in this table that for most media brands, advertising revenue was low, no matter what the source (e.g. state or commercial). The companies which are close to the horizontal X-axis but are further from the graph’s zero intersection point boast a higher amount of commercial revenue than the other media and typically live off the market. Those that are further from the horizontal axis and have higher values in that dimension than the majority of media realised greater revenue from the state.
The other graph presents the percentage of total advertising from state and commercial revenues. These ratios are zero-sum, that is an increase in the total share of advertising by either commercial or state revenues will inevitably lead to a commensurate drop in the value of the other. The closer an individual media outlet is to the lower right-hand corner, the more of its advertising revenues stem from the market (for then its revenue from commercial advertising is near the 100% mark, while money from the state is around 0%). A ratio of 40-50% can be considered very high, but a share exceeding this level means that the state essentially sustains the media outlet in question.
The share of state-sponsored and business-sponsored advertising, respectively, is also manifest in the figure below. Media companies marked with light blue in the individual years are those with a relatively low share of state advertising spending. The further we move up in the column, the greater the role of state-sponsored advertising. The lines that separate the various levels (25%, 50%, 75%) are also highlighted by the distinct colours used.
One can see here that media outlets with close ties to the governing party are often marked with the colour orange (a share of 25-50% of state advertising in their total revenue from advertising), but from today’s vantage point it is somewhat surprising that between 2007 and 2009 Magyar Nemzet – which was at the time the flagship daily of then-opposition Fidesz party – fell also into this range. The State’s favourite outlets fall into the red and black segments. The highest ratio during the 11 years we reviewed was attained by the left-leaning satirical monthly Hócipő, with 87% (which the newspaper attained in two successive years, in 2009 and 2010). State support via advertising does not lag far behind in the case of Magyar Idők, which received 81% of its advertising revenue from the state in 2015.
As the graphs show, the changes in state advertising spending also illustrate the underlying political processes. Under the centre-left government before 2010, the spending of state institutions was more balanced, but after the election of 2010 media owned/controlled by Lajos Simicska began to completely dominate the state-funded segment of the advertising market.
The 2014 election did not lead to a change in the political landscape, but it was marked by the conflict between the prime minister and Simicska, which came to the attention of the wider public in February 2015. This led to a comprehensive redistribution of state advertising spending, the first signs of which are already apparent; the new structure will probably fully take shape in time before the 2018 election.
The Adatozz okosan! (a wordplay which literally translates as “use data smartly!”) project of the anti-corruption NGO K-Monitor Association and the Norway NGO Fund also contributed to our data acquisition. The drafting of the present analysis was also supported by the Democracy and Media Foundation.
Text: Ágnes Urbán, Gábor Győri
Data, Visualisations: Attila Bátorfy
Raw data: Kantar Media