What’s the state doing in the media research market?
The end of 2018 saw the announcement of a striking bit of news: a government-owned Media Research Institute would be created in Hungary. For the time being, the main responsibilities of this institute remain unclear. There is reason for concern, however, that media research will join a long list of areas where the state’s role is on the rise. By Attila Bátorfy and Ágnes Urbán.
When we discuss the problems of the Hungarian media system, the issues that regularly come up are the ownership structures and the funding of government-friendly media outlets, along with the concomitant issue of state advertising spending. Occasionally, the ignoble role played by the public service media and their non-transparent operations, which also run afoul of EU regulations, tend to crop up as well. Another area that is sometimes discussed is how the Media Council uses its powers in the radio market to improve the positions of pro-government radio owners while independent stations are gradually disappearing from the market. What is rarely analysed, however, is the broader media ecosystem, even though it exerts a substantial impact on the development of the media system overall.
In the future, we will have to devote more time to reviewing how the balance has shifted over the last few years in the wider sector in which the media system operates, and how the role of the market is in decline in this realm. Disconcerting news proliferate about printing facilities, newspaper distribution and the market for television distribution. The destructive impact on the media market of the free news services provided by the state’s news agency, MTI, is also well known. The situation of media agencies is extremely dire, and it is well documented how during the last years various government-favoured players have prevailed in state tenders to the tune of billions. Who the government’s favoured players were actually changed fairly often during the last years, but the fluctuations in the government’s preferences were not a reflection of shifting business considerations but of underlying political conflicts. The role of media agencies is not negligible by any means as the state’s advertising spending is continuously on the rise, and several of these media companies survive financially speaking thanks to state funding rather than based on market revenue.
There is a segment of the media ecosystem, however, that we have talked less about than those discussed above even though they have played a significant role in bringing about the prevailing balance in the market through providing the media consumption data that advertisers rely on when they allocate their advertising budgets. This is the media research market. It is thanks to media research companies that the market overall stays informed about the size and composition of the audiences of individual market players. The readership of newspapers, the number of radio listeners, the viewer figures of television channels or the numbers of visitors of online news portals are all vital pieces of information that the advertising market cannot do without.
For many years it was clear that the media research segment was dominated by market forces and a concomitant market logic. The relevant kinds of activities were typically performed by the Hungarian subsidiaries of global enterprises, and in so doing they obviously drew on the know-how provided by their parent companies. Major changes began to set in in this market segment when, starting in 2018, the National Media and Infocommunications Authority (NMHH) became actively involved in measuring radio ratings, even though that responsibility was completely alien to the Authority’s original functions. Its research partner in this endeavour were Kantar-Hoffmann and M-méter, the latter of which also performs readership measurements.
And then came the news at the end of 2018 that the government was in the process of setting up the Media Research Institute (Médiakutató Intézet), which was immediately awarded 500 million forints in government funding. The new organisation’s board is made up of figures who are loyal to the government rather than persons with expertise in media research. The creation of the new institute raises numerous questions, and these become more pressing by virtue of the fact that except for the brief notice in the Hungarian Official Journal (Magyar Közlöny), no information of any kind has been divulged on the planned functions of the organisation. However, its name suggests that its main responsibility will be to either directly perform or commission/fund media research. It’s worthwhile to review what kind of risks this implies.
- One of the major issues is whether the data that this research yields will be publicly released. If the media research is financed with public funds, then this must go hand in hand with public access to the relevant data. At the same time, prior experience suggests that that may clash with the interests of market players. It would be unacceptable, however, if market players used research created with taxpayer money for their own business ends. Based on the negative experiences gathered thus far, the partial or wholesale nationalisation of market research will not be accompanied by public access to the relevant data. The radio audience measurements preformed with official funding by the authorities have thus far only resulted in the public dissemination of two basic graphs – this much data was already publicly available back when the measurements were performed on a market basis. For the time being, data about television viewership and newspaper readership are not publicly accessible, but the number of visitors of online news portals and the changes in the circulation of audited newspaper can be tracked. There are paid databases, for example, that feature data about the advertising revenues of media outlets.
- Transparency and accountability will decline. Insofar as the state were to indeed enter the market for media research and the data thus produced would not be publicly accessible, the professional public in this field would lose their already limited control over the research methodology, along with the ability to review the veracity of the data and the results. Even the minimum remaining competition that could foster improved measurements will cease. Previously, market players were willing to even publicly criticise the methodology of official measurements as well as their results. This spurned other players in market research to improve their measurement technologies and methods, to continuously test these so that they could present more modern, more accurate, improved and transparent bids in future measurement tenders. There is a real danger now that because of the nationalisation of media research the players in the Hungarian market will lose the incentive to improve their techniques and to deploy new technologies in the Hungarian market.
- It seems likely that the Media Research Institute that is being set up now does not plan to perform these measurements and research by itself but will look for partners that can do so as part of a consortium. These consortium partners can then legitimate the state commissions with their professional background and international owners. In this context, it is important to keep in mind what has happened thus far with the international players in the domestic media and advertising agency markets. At the time when the National Communications Office was established, a public procurement tender was published for the distribution of state advertising spending. In the first round, there were three winners, which included a credible agency with an international background. Once the system was fully in place, this international player no longer received any commissions. Today, this market is dominated by a single agency which has manifest ties to the governing party. In hindsight, it is rather obvious that the inclusion of an international agency only served to lend legitimacy to the process of allocating state advertisements, and it is was also readily apparent that for relatively trifling sums market players were ready to forgo professional considerations to curry favour with the dominant political forces.
The state’s growing involvement in the market for media research is unlikely to trigger widespread outrage, we will definitely not see masses marching in the streets to protest against this. It will nevertheless have a major impact on the remaining independent players in the market, since the indubitably independent and internationally renowned media research companies that are active in the Hungarian market might be crowded out by their government-friendly counterparts. This would fundamentally undermine the research data, the impact of which would be felt by both media companies and advertisers. The reputation of research companies that assist in some form in the nationalisation of media research will suffer, and in the long run everyone with any interest in preserving market mechanisms will be worse off.