Controversial law

Blank pages, black screens and crackling static - that was how 60 private television broadcasters, radio stations, newspapers, magazines and websites in Hungary reacted last week to Prime Minister Viktor Orban's planned tax on advertising revenues. The protest even included important pro-government private media outlets such as broadcaster "HirTV" and "Lanchid Radio" and the newspaper "Magyar Nemezt."

But that didn't stop the controversial tax from sailing through the Hungarian parliament and being enacted into law on Wednesday (11.06.2014). The law places a tax on Hungarian media companies' advertising revenues and comes in addition to existing taxes. Ad revenues below 500 million forint (around 1.6 million euros, $2,213,000) remain tax-free. But beyond that, the tax rises progressively reaching up to 40 percent.

That upper limit affects two of Hungary's most successful private television stations, including market leader RTL whose news show "RTL Hirado" is known for its critical and unbiased reporting. The second television station, TV2, was sold last year by owner ProSiebenSat 1 Media to TV2 without naming the price or other details. TV2, which has a reputation for being especially government-friendly, even has a loophole created for it in the new law - the station can write off its losses against the advertising revenue tax.

Other smaller, independent television and radio stations, including Hungary's only independent news channel ATV, don't have it as easy. They have said the levy could be ruinous for their business. Some even say the tax could force them into bankruptcy.

'Attack on free and independent media'

Members of Orban's center-right Fidesz party said the tax can help beat back "damaging programs." Fidesz politician Gergely Gulyas has said that the two big commercial stations RTL Klub and TV2 "cause significant social damages" with their programs and that the advertising revenue tax should be seen as a kind of "hygienic product tax." Janos Lazar, head of Orban's chancellery office, said the revenue generated by the tax should be used to finance heath and education programs.

But Hungary's media companies take a different view. Many see the tax as a further clampdown on press freedom in the country. Orban, who was re-elected in April, has repeatedly run into trouble with the European Union and human rights groups over allegations that his government is undermining and restricting independent media and democracy.

"It's a warning to all media that still remain independent in Hungary," said Csaba Nagy, editor-in-chief of the independent news site 168ora.hu. "The message is: if you don’t work the way we want you to, we'll pass a law within a week with which we will crush you."

Andreas Rudas, head of the central and eastern European division of the Luxembourg-based RTL group spoke of "a direct attack on all free and independent media in Hungary." The tax, he said, "robs the livelihoods of the few remaining independent media outfits in Hungary that work profitably."

Rudas said his group will cooperate with other independent media to defend themselves against the law. "It cannot be that we have a country in the middle of Europe where basic democratic rights such as media freedom are subject to negotiation."

'Climate of fear'

The law has even sparked anger among some pro-government journalists in Hungary. "I agree that something has to be done about shoddiness and damaging content," said Otto Gajdics, editor-in-chief of the center-right Lanchid Radio. "But the advertising revenue tax leads to the factory being destroyed rather than forcing it to make better products."

How was the law passed in the first place? The editor-in-chief of a big television station, who requested anonymity, called it "sophisticated propaganda" by the government. It wants to show Hungary's citizens that "it's taking away money from evil, rich foreigners and using it for the benefit of the good and the poor," he said.

At the end of 2010, the Hungarian parliament passed a hugely controversial media law that placed public media under government control. And, independent media outfits have also felt the pressure. "There's a general climate of fear," Csaba Nagy said. "For instance, fewer companies are now willing to advertize with us because they fear they could lose public contracts or be harassed."

Media scandal linked to Telekom subsidiary

That mood was captured by a recent media scandal in the country. Last week, Gergo Saling, editor-in-chief of Hungary's second-largest media website origo.hu, was fired. In the debate that followed, several observers said the move was directly linked to the site's critical reporting of the expensive luxury trips taken by Lazar. There was no official reason given for Saling's removal and he was not allowed to comment on it. In protest, there were mass resignations at origo.hu.

The news site is owned by Magyar Telekom, a subsidiary of Germany's Deutsche Telekom. A Telekom spokesman denied in an interview with DW that Saling was fired for the article on Lazar or generally because of reporting that was critical of the government. The site has been undergoing "internal restructuring," he said, adding that there was no attempt to influence journalistic work.

But that hasn't stopped Hungary from tumbling in worldwide ratings for press freedom issued by groups such as Reporters Without Borders and Freedom House. At the moment, it's the only central European country in the category of states with only partial press freedom. However, it fares a bit better on an EU level with the state of press freedom in Croatia, Greece and Bulgaria even worse.