TV storm brews

U.S. and European TV investors are hoping Hungary’s lazy summer of ’95 will be remembered as the proverbial calm before the storm.

Industry insiders expect the passage of Hungary’s first post- Communist television law – the Bill for Radio, Television, & Telecommunications – in a matter of weeks, and an eruption of investment and growth in the Magyar TV sector soon after.

Says Judy Kemeny, director of production for TransAtlantic Media Associates (TMA): “Everyone believes the Hungarian TV market will soon blow right open.”

The industry has been bracing itself for a blast since May when the government announced that draft legislation would mandate the sale of the state-controlled MTV2 channel – Hungary’s second largest national broadcast frequency.

Prospective foreign buyers for the MTV2 frequency – which reaches almost all of the country’s 3.7 million TV homes – include Central European Media Enterprises Group (CME) and the German media group Westdeutsche Allegemeine Zeitung.

CME also owns a majority share of the Czech Republic’s highly rated commercial broadcaster Nova TV, plus a TV production with Pro Plus in Slovenia and an agreement with media group Media Pro to set up the first commercial TV net in Romania.

Local moguls also are eyeing MTV2. MTM Communications, a Budapest-based production company unaffiliated with the U.S. firm of the same name, aspires to bring programming to this frequency with the help of unidentified French backers. (MTM currently owns the rights to the Hungarian versions of “Wheel of Fortune,” “Let’s Make a Deal” and “Jeopardy!,” which are popular fixtures on state TV.)

Mafilm, Hungary’s premier movie studio complex, will be part of a consortium bidding for the frequency. “The odds are not bad that we’ll succeed,” says Mafilm general manager Gyorgy Marosi. “But not more than 50%. It will be a political decision.”

Smaller broadcast interests are already active here. In March, the government issued a round of local broadcast licenses to CME’s 2002, O’buda TV Ltd., cable network TV4, MI TV and Nap TV.

The network TV3 Budapest, on air since November 1994 after winning a regional frequency in an earlier tender, expanded its market reach after receiving a license renewal in March. It has been huddling for months with potential foreign investors in an effort to increase its operating capital.

Local Budapest broadcaster ATV Televizio, on air since 1994 and owned by the U.S. company Hungarian Broadcast Corp. (HBC), replaced senior management, and launched a new programming initiative in early summer.

At least one locally based group is looking to secure a piece of the Central Euro regional market. Since 1991, Budapest-headquartered First Foundation for Central & East European Cooperation has been developing a multilingual sat TV channel called Alfa TV. A cooperative effort made up of reps from 25 countries, stretching from Austria to Azerbaijan and Finland to Albania, Alfa will serve a market of up to 400 million people after its skedded launch in July 1997, following a pilot phase starting next May. Alfa’s programming focus will likely be cultural, and organizers admit it will need government assistance from its 25 members to go to air.

But the private sector is interested in Alfa’s potential. Alfa reports that Sony Intl., Ferenczy Media Group and Hungary’s Pharmavit already have invested in the venture.

Upshot of all this activity is that market pressure is mounting in Budapest and the momentum will be lost if the government delays the passage of the current media reforms past the fall.

The administration of Prime Minister Gyula Horn is under onerous pressure itself from the World Bank and IMF to reduce its account deficit of $3.8 billion and the national debt of $28.5 billion. Ridding itself of half of the costly state TV bureaucracy would be one step to increase foreign investors’ confidence during a year when pessimists have warned of a Mexico-type economic meltdown.

“What the Mexican situation could mean to Hungary is an important consideration for the government,” CME co-founder Mark Palmer says. “The government recognizes the need to do something significant to reduce costs.”

There’s also concern about the criteria to be used to sell this frequency. According to Palmer, the decision should be based on “quality of programming and concept, rather than an auction to the highest bidder.”

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