15 March 2023

Too Much for Others, too Little for Us

The Draft European Media Freedom Act from a Hungarian Perspective

The draft of the European Media Freedom Act (EMFA) published last September appears to constitute, in part, an attempt to respond to the systematic erosion of media freedom in Hungary since 2010. The European Commission seems to be aware of how unsuccessful it has been in addressing the problem. Thus, even though the rule of law proceedings against Hungary found a serious violation of media freedom, the conditionality procedure and the Charter of Fundamental Rights eligibility criteria inquiry failed to address the issue, with none of the 27 “supermilestones” set out as conditions for the payment of EU funds mentioning it. The only indirect exception to this an insistence on restoring the pre-2015 conditions for access to data of public interest, whose success, however, depends on the willingness of public authorities to comply with data requests. Against this backdrop, this blogpost will analyse the draft EMFA’s capacity to respond to the unique challenges posed by the Hungarian media freedom landscape.

Among the areas covered by the EMFA, the following are particularly relevant to the Hungarian (as well as the Polish, Slovenian, Czech, Slovakian) media framework:

  • Editorial freedom, independence of editorial decisions (Articles 4 and 6)
  • Safeguards for the independent functioning of public service media providers (Article 5)
  • National regulatory authorities or bodies (Article 7)
  • Assessment of media market concentrations (Article 21)
  • Allocation of public advertising (Article 24)

Political influence on editorial decisions

The rules on editorial freedom and independence of editorial decisions stipulate, inter alia, that Member States and their bodies may not directly or indirectly interfere in or seek to influence the editorial policies and decisions of media service providers. However, it is not clear what evidence can support a direct or, more importantly, an indirect attempt to interfere; it is not by chance that the concept of trying to indirectly influence is not more precisely defined. Typically, there is no trace of a failed attempt to intervene, as it can take place during an unrecorded telephone call or a face-to-face meeting.

The rules also leave the European Commission unable to address the problem of editorial offices that simply lack a desire for freedom and independence. Explicit loyalty to the government does not require any formal government intervention. Rather, in the Hungarian media system, loyalty is paid for by the government through the discriminatory distribution of state advertising and other public goods. However, media outlets benefitting from this arrangement would deny that this affects their editorial freedom, or conversely, that their own editorial freedom is precisely to support the government. Even if a methodologically fully reliable content analysis could show that the beneficiaries of public advertising are also biased against the government, it would appear impossible to prove causality between public advertising and biased reporting.

Conflict of interest in media ownership

Similar questions arise regarding the EMFA’s attempt to ensure the independence of editorial decisions. It seeks to do so primarily through the disclosure of “any actual or potential conflict of interest by any party having a stake in media service providers”. A typical example of conflict of interest in Hungary and Eastern Europe is the fact that economic players who are the main beneficiaries of public contracts in other industries have used their companies to gain significant stakes in the media market. Are these media owners legally considered to have a conflict of interest under the draft? If so, how can this be proven and what are the consequences? Will there be a (judicial) authority with powers to order a media owner to sell their stakes because of the success of its other companies in public procurement?

By contrast, editorial statutes between the editorial board and a media outlet’s owner are an imperfect but at least enforceable form of editorial independence. In it, the parties clarify the competences of the owner and the editorial board, agree on the code of ethics to be respected in the operation, and regulate the response to pressure from advertisers. If such a statute is incorporated into journalists’ employment contracts, breaches can be challenged in court. While this solution cannot guarantee independence of editorial decisions either, it does offer a way to challenge excessive partiality in the longer term, not least by adding the protection of labour law.

Independence of the public service media

Concerning the independent operation of public service media providers, Article 5 mostly contains rules that express principled but legally unenforceable expectations. These rules are also difficult to interpret, as they largely set out legislative tasks, and remain relatively vague in terms of what they require. However, the Commission could help the debate on interpretation within Member States by summarising good practices in a recommendation, rather than providing binding guidelines. This would help to foster impartiality and balance in Member States such as Hungary and Poland – where there are ongoing debates on public media information practices- without interfering in Member States’ competences.

The only rule in Article 5 that imposes a real, enforceable obligation on the Hungarian legislator concerns the appointment of the head of management and the members of the governing board of public service media providers. It requires appointments to be made using a procedure and criteria that are transparent, open and non-discriminatory, as defined in advance in national law. The current Hungarian media law fails this test. Thus, neither the managers of Duna Media Service Provider nor members of its controlling body, the Public Service Board of Trustees, are required to participate in an open tender procedure or meet any professional requirements for that matter.

Article 5 also requires Member States to provide public service media with adequate and stable financial resources, not least to guarantee editorial independence. The rule does not specify what ‘adequate’ and ‘stable’ funding amounts to, proposing instead that the threshold’s normative content be determined by an independent national authority. This ignores that the powers of such authorities are generally limited and almost never extend to obliging government bodies to provide larger amounts of funding.

Unfortunately, the EMFA ignores that editorial independence can be jeopardized not just by deliberate underfunding, but also the converse. Non-transparent and uncontrolled funnelling of public money into media outlets can foster loyalty to the funder. The Hungarian example is clear evidence of this, though it may constitute an isolated case across the EU. The problem could arguably be addressed by consistent enforcement of existing state aid rules, which ban the over-funding of public service media. In this regard, the Commission Communication on the application of State aid rules to public service broadcasting contains clear expectations regarding the transparency of funding and the independent and effective control of the use of public money, arguably of relevance beyond the issue of overfunding.

Independence of regulatory authorities

The 2018 review of the Audiovisual Media Services Directive (AVMSD) was intended to provide European guarantees of the independence of regulators. However, it only imposed formal conditions that could be easily met by the national legislator, without actually strengthening their decision-making autonomy. The Hungarian national regulatory authority, the Media Council, provides a case in point. While its political capture has been well documented, the Hungarian legislator could implement the AVMSD without having to revise a single section of the Hungarian media law as it already provided a formal guarantee of the Council’s independence. As long as European legislation limits itself to harmonising formal organisational and operational frameworks without also monitoring the decisions of media regulators, political co-optation of regulators will escape detection.

The independence of the EMFA’s proposed European Board for Media Services is also uncertain, given that the Board can only be as independent as the national regulatory authorities that constitute it. With there being no means of ensuring the independence of national authorities, there is a real risk that unilateral political influence will be brought to bear on the Board’s decisions. This is a serious risk for the Member States as a whole.

The creation of a permanent civil and academic advisory body alongside the European Board for Media Services, with an appropriate representation of the experience and knowledge of the Eastern European Member States, would both broaden professional perspectives and at least partly correct the bias of the national regulatory authorities. The proposed institution of structured dialogue is a step in this direction, but its focus is narrow, its operation ad hoc, the selection of participants unregulated and there is no guarantee that the results of the dialogue will be genuinely fed into decision-making.

Limiting media concentration

From the perspective of current Hungarian regulation and practice, the proposed regulation to limit media concentration seems to be particularly relevant. The Hungarian Media Council has the power to issue a binding resolution on all mergers in which members of at least two groups of undertakings have editorial responsibility and whose primary purpose is to provide media content to the public. It is meant to examine and ensure that “the post-merger level of independent sources of opinion also ensures the exercise of the right to a pluralist information in the relevant media market”. Instead, it has seriously abused this power, securing the unhindered expansion of pro-government media while preventing the emergence of strong independent players. There is no publicly available and professionally sound methodology behind its decisions. Decisions supporting the expansion of pro-government media in particular lack any justification.

By contrast, the EMFA expects media concentration to be regulated in a transparent, objective, proportionate and non-discriminatory way. The impact assessment of media concentration on media pluralism and editorial independence is subject to a similar set of criteria. The proposal therefore requires the application of a clear methodology that is known in advance to stakeholders. It also provides additional criteria and allows the Commission to develop a more detailed methodology to be published as guidelines. An important guarantee is the mandatory consultation between the national authority and the European Media Services Authority in all national procedures. While the Board or, where appropriate, the European Commission cannot veto a decision by a national authority, their opinion can be taken into account by national courts, including in national appeal procedures.

While the EMFA framework could go some way in preventing the abuse of regulatory powers we see in Hungary, it does not consider the case of a government restricting the powers of the relevant authority to assess concentrations. In 2013, the Fidesz majority amended the Hungarian Competition Act to allow the government to classify certain mergers as “of national strategic importance,” exempting them from examination by the competition authority. While a European-level regulation need not respond to this specific Hungarian situation, the EMFA provides an opportunity for the Commission to examine whether the relevant provisions of Hungarian competition law are in line with European rules.

Placement of public advertisements

The most Hungarian-specific proposals of the EMFA are the rules on the distribution of public advertising. While the importance of public advertising in a functioning media market is insignificant, in Hungary, the state is by far the largest player. Not only do its contributions dwarf other advertisers, but 80% of state advertising appears in the pro-government media. This turns media outlets into propaganda tools, while also insulating pro-government media from the risks of market operation.

This problem should not be solved by legislation, but by individual executive decisions. In line with this, Mertek Media Monitor, Klubrádió and Benedek Jávor submitted a complaint to the European Commission in 2019. They argued that the discriminatory, highly market-distorting allocation of state advertising is prohibited state aid because it favours the market players concerned, despite the fact that their actual market performance would not merit such treatment. In the non-published preliminary assessment in 2021, the Commission recommended rejecting the complaint, noting that “the value of advertisement depends on a number of elements, such as timing, length and possibly other factors, which may justify the differences between the aggregated value and advertisement time for different media outlets”. The ‘possibly other factors’ must be such as to justify a tenfold difference in the placement of public advertising between, e.g., television channels with the same audience share in the commercial television market. As such, their importance deserves an explanation, which the Commission made no attempt to provide.

The draft EMFA stipulates that the award of public funds or other public advantages to media service providers for the purposes of advertising must occur on the basis of transparent, objective, proportionate and non-discriminatory criteria. While it leaves the precise meaning of these criteria undefined, they appear to mandate that public advertising be awarded in proportion to a given media outlet’s market performance, audience share and other objective, measurable characteristics. It certainly precludes political sympathy as a relevant criterion.

The draft also insists that public advertising be allocated through open, proportionate and non-discriminatory procedures, though, importantly, these requirements do not affect public procurement rules. Read in conjunction with the Commission’s assessment in the Hungarian case, it seems that public procurement is exempt from the procedural requirements for the award of public advertising. The Hungarian government’s repeated award of public procurement contracts to the same pro-government business group illustrates the shortcomings of such an approach, although even a fair public procurement process might do little in the face of a government willing to pressure a media agency to favour certain media.

The EMFA casts the guarantee of fair use of public advertising primarily in terms of transparency. Thus, it proposes the publication of accurate, comprehensive, intelligible, detailed and yearly information on public advertising expenditure, naming at least the media service providers involved and disclosing the total annual amount spent as well as the amounts spent per media service provider. A valuable addition would be an obligation for media publishing public advertising to disclose the amount of revenue they have received from public advertising. Yet, the Hungarian experience shows that transparency alone is no solution. While analyses of the allocation of public advertising are published regularly, they do not influence the government’s behaviour.

Institutionalizing a public service guarantee for state funded media

In the case of public service media, we accept that the use of public money comes with increased social responsibility. When private media outlets receive significant funding from public advertising and sponsorship, the same expectation should apply. This could take the form of a public service guarantee mechanism for private media once they receive a certain proportion of public advertising. While there is no easy way to determine the threshold at which this guarantee should apply, I propose, in line with the previous practice of the Mertek Media Monitor, to set the limit at one third (33%) of advertising revenues. The loss of one third of a medium’s advertising revenue would seriously threaten its viability. If this dependence is towards the state funding, there is no way that the medium in question can fulfil its checking function.

The guarantee could be institutionalized through the establishment of an internal supervisory body for each media outlet, whose members have no dependency relationship with either the media outlet or the advertiser, i.e. no public body that has published advertising with the media outlet in the last three years. Its task would be to monitor and objectively assess whether the media outlet is carrying out its information activities in a politically impartial manner according to appropriately defined criteria. The supervisory board would develop a set of criteria for evaluation, a kind of public service code, for which the European Commission would publish a model code. Negative assessments of media companies would have to be given serious weight if they were backed up by automatic exclusion from public advertising. The supervisory body should also be empowered to hear complaints from the public about media content as well as to adopt and monitor the implementation of a plan to continuously reduce the proportion of public advertising.

This institutional solution is of course not a perfect response to political influence. Its weak point is the development of an appropriate, objective evaluation criteria system. However, the national regulations on public service media and the national regulations on balanced, impartial information provide a good starting point in this regard. At the same time, the proposed solution has the benefit of leaving the exercise of editorial freedom untouched.

Conclusion

Overall, the European Media Freedom Act is a very ambitious attempt at regulation that responds to real problems. It is clear from the draft text that the specificities of the Hungarian and Eastern European media markets were taken into account in its preparation. At the same time, the proposal opens up the possibility of European intervention in areas that are highly sensitive from the point of view of national sovereignty, which predictably and justifiably leads to resistance from Western European Member States. It would be possible to argue convincingly in favour of the EMFA if the European Commission and other European bodies had already exhausted all the instruments at their disposal against Member States that disrespect media freedom. But this has not yet happened.

 

Transparency Disclaimer: Besides his academic work, the author is a researcher for Mertek Media Monitor, a Hungarian NGO dealing with media policy issues.