How political interference is distorting the financial landscape of Hungary’s media industry

Editor’s note: this article offers an overview of a new study into the Hungarian market. Eva Vajda is one of the co-authors of the study.

A new study released in May by the Media and Journalism Research Center (MJRC) uncovers how proximity to the ruling Fidesz party correlates with stronger financial performance in the media sector. The research was part of the Global Media Finances Map project conducted by the MJRC and offers a financial and political analysis of 20 Hungarian media companies. These outlets were grouped into nine clusters based on their format—online, print/online, or broadcast—and their political alignment, ranging from pro-government to independent.

Key findings

Pro-government outlets—especially traditional broadcasters and print publishers—enjoy stronger financial fundamentals, including higher profit margins, significant assets, and preferential access to bank loans and equity. They receive a disproportionately high share of state advertising, often irrespective of their market share or audience reach.

In contrast, independent media struggle to break even. Many rely on precarious funding models such as reader donations and grants, particularly in the online-only segment where outlets often lack long-term financial sustainability. However, private advertisers still allocate some spending to independent media, especially those that attract affluent and engaged readerships, offering a modest path to viability.

Characteristics of a distorted advertising market

The regulation of Hungarian media is significantly influenced by the state, primarily through the National Media and Info-communications Authority (NMHH). State advertising shows a marked preference for pro-government outlets, distorting the market landscape. For example, in the 2023 budget, media aligned with the Fidesz party reportedly secured around HUF 50bn (EUR 125m) through state-backed advertisements, underscoring their financial reliance on public resources. This state advertising favoritism cripples independent media by reducing the market dependency of pro-government platforms.

Political backing boosts profitability, most notably in market segments with scant competition. In capital-intensive media operations (e.g. TV broadcasting) where political influence is more readily exerted, Fidesz-affiliated media companies boast profit margins exceeding the average. By contrast, in digital media, characterized by minimal entry costs and thriving competition, Fidesz-affiliated print/online operators lag in profitability compared to independent challengers. This is mainly because audiences tend to gravitate towards affordable independent online sources.

While the independent online news outlets survive on grants and reader donations, Fidesz-affiliated news portals reap excessive state ad revenues, amplified beyond their actual user bases. When it comes to private ad spending, all sources, including independent outlets, proportionately gain ad earnings aligned with their reach.

Industry trends: The impact of Covid-19

While declining economic activity in the wake of the pandemic initially led to cuts in corporate advertising budgets, it also seemed to have boosted the profitability of online-only media content providers. This could be explained by enforced isolation, which likely made online media a more convenient choice for consumers than buying physical print copies. Moreover, reader donations seem to have skyrocketed during the COVID-19 crisis, as audiences probably valued impartial reporting amid such turbulent times, thereby supporting independent online channels.

New versus old media

Independent online media have enjoyed more significant revenue growth compared to their traditional offline counterparts and boast a fairly robust EBITDA margin - the main indicator of the profitability of an industry - surpassed only by broadcasters affiliated with Fidesz.

One presumption is that the shift toward digital and online media content consumption was a significant driving force. Indeed, digital platforms had already booked over 50% of advertising expenditure in the last few years.  However, Google and Facebook typically absorb 60% of the digital ad spend, therefore the profitability of local, online-only, independent media operators is mostly sustained by a combination of other incomes such as grants and donations and a relatively low cost base, despite their significantly smaller economies of scale.

The role of grants and donations

If grants and donations are excluded, the profitability of local independent and Fidesz-affiliated media is turned upside-down.

First, without factoring in grants and donations, the Hungarian media industry shows an average EBITDA margin languishing at just 7-8%, scarcely more than half the international benchmark of 13.5%. When grants and donations are considered, it aligns more closely with worldwide figures, reaching around 11%.

Secondly, Hungarian independent online media too illustrates a significant disparity, with its EBITDA margin plunging dramatically by almost 90 percentage points—from a positive 12% to a negative 77%—if it had to rely solely on operational income without supplementary support such as donor grants and reader contributions. In contrast, Fidesz-aligned online media would exhibit only a slight decrease (of 1.2 percentage points) in similar circumstances.

Finally, apart from a select few well-capitalized independent players, like Central Media, HVG, and RTL, most independent media entities in Hungary find themselves increasingly cornered into the digital domain, their survival heavily reliant on donor grants and reader donations.

Conclusions

The study confirms how political alignment in Hungary increasingly determines not only editorial direction but also economic survival, providing some new evidence how political interference - more precisely close ties to Fidesz, the ruling party - lead to significant financial repercussions within the country’s media landscape. The current government for the most part allocates its advertising budget primarily according to political affiliations rather than actual user engagement. A recent in-depth study, which may well lay the groundwork for an EU Competition Commission investigation, further corroborates these conclusions.

Faced with an environment marred by state or ruling party interference, one may wonder what steps independent media outlets can take. Striving for critical mass often appears a prudent strategy, as evidenced by the profitability of publications such as the independent weekly HVG, which sustains itself despite the meager allocation of state advertising revenue, thanks to its impressive draw of over a million daily online users.

Yet, achieving critical mass can turn into a double-edged sword: while it assures financial viability, it can also attract the attention of Fidesz-aligned corporate entities. Furthermore, with the government bent on forbidding media outlets to receive foreign financial aid, a smarter tactic might be for independent media to collectively negotiate key cost burdens—such as IT, financial and auditing services, office rentals, and utilities. Rather than direct monetary contributions, donors could opt for indirect support by securing discounted office spaces or services in IT and finance for the benefit of media recipients.

Source of the cover photo: Jakub Żerdzicki via Unsplash