October 10, 2016 / 2:25 PM / 2 years ago

Hungary media shake-up enters new phase with closure of major leftist daily

BUDAPEST (Reuters) - Journalists at Hungary’s main leftist daily Nepszabadsag gathered on Monday to mull ways of resuscitating the paper, with a senior editor saying an abrupt move to close it was meant to silence criticism of the government.

Journalists of the leftist newspaper Nepszabadsag, which was unexpectedly shut down on Saturday amid cries of a crackdown by right-wing Prime Minister Viktor Orban's government, paste a copy of the last issue onto the wall of a temporary newsroom in Budapest, Hungary, October 10, 2016. REUTERS/Laszlo Balogh

Owner Mediaworks said on Saturday it had suspended the 60-year-old newspaper and its employees after the publication piled up significant losses despite cost cuts. It said it would revamp the organization.

The closure was the latest wrinkle in a shake-up of Hungary’s commercial media landscape, where businessmen seen as close to the right-wing government have steadily enhanced their market share.

Since coming to power in 2010, Prime Minister Viktor Orban has locked horns with foreign partners over reforms which critics say have eroded democratic checks and balances and weakened the independence of the media.

“The Nepszabadsag editorial team wants to stick together and carry on working,” deputy editor in chief Marton Gergely told Reuters in a temporary shared office where staff gathered to discuss approaches to obtaining severance, acquiring the Nepszabadsag brand and securing funds for a fresh news outlet.

Gergely said that Mediaworks’ business arguments did not hold up as losses appeared relatively small over the last two years and journalists had taken two pay cuts of 10 percent each. It was unclear how much money these cuts had saved Mediaworks.

A Mediaworks statement said the newspaper had incurred losses worth 5 billion forints ($18.4 million) since 2007 due to a fall in circulation, and that it was on track for a “significant” loss this year as well.

“We believe the (closure) happened because of what we were doing,” Gergely said. “It is not necessarily due to the coverage of the past one or two weeks. The paper was shut down because they felt we could not be disciplined otherwise.”

In its final edition on Saturday, Nepszabadsag reported that a minister in Orban’s government used a helicopter to fly to a wedding. Earlier it also reported that central bank Governor Gyorgy Matolcsy had employed his girlfriend in lucrative jobs for years.

Mediaworks executives were not immediately available for comment about the future of the newspaper, in which the Socialist party held an almost 30 percent stake until 2015.

Nepszabadsag (People’s Freedom) was founded during Hungary’s abortive popular uprising against Soviet domination in 1956.

Government spokesman Zoltan Kovacs has said press freedom is “doing well” in Hungary. Orban’s Fidesz party has said it regarded the closure as a “reasonable business decision” with a party vice chairman saying it was “high time” the paper shut.

The European Commission, which has clashed several times with Orban over reforms affecting the media, the judiciary and central bank, expressed alarm about the latest development and said media freedom and pluralism were at risk in Hungary.

Nepszabadsag is wholly owned by Mediaworks, a company controlled by Austrian businessman Heinrich Petzina, who has long had ties to Hungary’s top business and political circles but whose main partner fell out of favor with Orban this year.

Petzina’s interests range from chemicals company BorsodChem [BDCD.UL] to FHB Bank, in which he holds a 25 percent stake. Petzina’s main business partner at FHB has been Chairman Zoltan Speder, who also holds a quarter of the bank’s shares.

With Speder’s business interests under state investigation, the fate of the pair’s media holdings, including Petzina’s tenure at Mediaworks, appears up in the air. The independent weekly Figyelo reported recently that Petzina had met with Orban to talk about Nepszabadsag. Petzina has declined comment.

Journalists of the leftist newspaper Nepszabadsag, which was unexpectedly shut down on Saturday amid cries of a crackdown by right-wing Prime Minister Viktor Orban's government, work in a temporary newsroom in Budapest, Hungary, October 10, 2016. REUTERS/Laszlo Balogh

“The financial investor (Petzina) is getting rid of Mediaworks,” media analyst Gabor Polyak of the Mertek Institute said. “The only potential buyers are oligarchs close to Fidesz.”

Most important television and radio channels have come under state control since Orban took office in 2010. One of the two largest commercial TV channels, TV2, is run by a businessman close to Orban, as well as a major political daily and a mass-circulation daily that is distributed free of charge.

With Nepszabadsag out, the only notable opposition dailies left are the small, leftist Nepszava and Magyar Nemzet, run by a one-time Fidesz magnate who fell out of favor with Orban.

Additional reporting by Gabriela Baczynska in Brussels; Editing by Mark Heinrich

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