Winners And Losers In Licensing Contests

Michael Hedges November 1, 2012 - Follow on Twitter

Broadcast licensing, for some, is a license to make money. Broadcasters have long railed against so called beauty contests for new or renewal concessions with onerous public service commitments plus technical and even financial requirements. Some regulators have agreed to make it simple and hold auctions. Sometimes it doesn’t work out

Hungary’s media regulator is looking at “further opportunities” as its selected operator for a Budapest FM license failed to conclude the required broadcasting contract. Click Radio was assigned the 95.8 MHz frequency (August 29), succeeding InfoRadio, and had 45 days to work out all the details, including an annual fee payment of about HUF 100 million, about €350,000. The deadline expired October 25th with no forward motion from Click Radio and the National Media and Communications Authority (NMHH) announced (October 29) it had closed the file.

“We are aware the deadline has expired,” said Click Radio managing director Zsolt Füzesi, quoted by mediainfo.hu (October 30). “The NMHH shall not be bound to a contract with us.”  He added that unforeseen difficulties prevented conclusion of the broadcasting contract. Click Radio, underwritten by a Hungarian events marketing company, was the sole applicant for the Budapest frequency. 

Radio broadcasting in Hungary has been hit hard with financial difficulties in recent months. In June the NMHH Media Council cancelled national channel Neo FM’s broadcasting license for “a serious and persistent breach,” meaning non-payment of the broadcasting fee. Neo FM filed for bankruptcy. One court upheld the Media Council decision but allowed the station to keep operating pending appeals. The Media Council last week (October 24) tacked on another HUF 153 million (€530,000) to the Neo FM debt approaching €3 million, saying it is “a very bad precedent that a notoriously non-paying broadcaster continues to transmit.” Four local radio stations closed in October with another ten “under review” by the Media Council.

Broadcast licensing in Hungary under an evolving set of rules is largely a matter of money. The prospective broadcaster promising the greater fee payment generally wins, irrespective of other criteria. When national commercial radio licenses changed hands, controversially, in 2009 the Neo FM application was challenged the losing legacy licensee as “not financially viable.” A certain grey area exists with politically-friendly applicants receiving licenses without undo financial scrutiny.

The 95.8 MHz Budapest frequency became available when InfoRadio moved to a different frequency. Applying for the 95.8 MHz license, in addition to the broadcasting fee, Click Radio promised a format change from news/talk to mostly music. Under rules adopted in 2009 radio broadcast licenses may be held for an initial seven years with the possibility of a five-year renewal, with periodic reviews by the Media Council.

Implementing the new rules on license term limits brought to the NMHH Media Council – and the government of Prime Minister Viktor Orban – considerable international rebuke when another largely news/talk station with a Budapest frequency – Klubradio – had its license renewal bid rejected in August 2011. The license was eventually awarded to an unknown bidder with no visibility in the Hungarian media sector promising more music. European Commission (EC) Vice President for the Digital Agenda Neelie Kroes weighed in, along with media rights organizations, asking the Hungarian government “for clarifications on the overall situation.” Two legal appeals invalidated the Media Council’s decision and Klubradio was allowed to continue broadcasting in Budapest.

The EC has opened infringement proceedings over broadcast licensing, reported Hungarian agency MTI (October 25), on objections from Liberty Global’s UPC Direct satellite TV operator. The NMHH requested UPC Direct set up a local Hungarian office to facilitate customer complaints, which the company fields from its Luxembourg headquarters. The EC investigated and is pursuing infringement of single market directives.

See also in ftm Knowledge

Europe’s Radio – Eastern Europe

Eastern Europe’s radio writes new rules. In fact, most everything about radio in this region is new... and changes often. The ftm Knowledge file reports on Belarus, Bulgaria, Czech Republic, Hungary, Moldova, Poland, Romania, Russia, Slovakia and Ukraine. 159 pages PDF (April 2013)

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