“Maybe I will buy something tomorrow,” tweeted Andrej Babis, the second richest Czech businessman at the time, on the evening of June 25, 2013. The frenzied media speculation that followed predicted the acquisition of the Czech branch of the Swiss media house Ringier, then the number two media group on the Czech market. But Babis, at the time only a freshman in politics with his recently launched Association of Dissatisfied Citizens (ANO) movement and anticorruption crusades, surprised everyone—not least the journalists at Ringier—by purchasing a different media house: the Mafra group, the market leader with two quality dailies, the biggest news web portal, and several local radio stations.
Only a few months later, Babis achieved extraordinary political success when his newly formed party gained almost 19 percent of the vote and ended up as junior partner in a three-party coalition government. At that time, it was too early to say whether he had bought media explicitly in order to advance his political interests. But with hindsight—and with the sight of Babis in the Prime Minister’s seat after his party swept the 2017 elections—we can be certain that this was a carefully premeditated move, one that fit within a larger trend in Central Europe of local entrepreneurs investing in media for political and economic influence rather than for financial profit.
Babis’s purchase of the Mafra group came at the peak of an exodus of foreign investors, mostly from Germany, Switzerland or Scandinavia, who were all selling their media assets in Central and Eastern Europe. The dual effects of the financial crisis and the long-term decline of revenues due to the Internet led many media owners to leave this long-prosperous region and concentrate on their domestic markets instead—or at least that was the official explanation.
It should come as no surprise that the only buyers willing to take over money-losing media organizations were local oligarchs, who considered media a protective shield against their opponents. For these billionaires, having a prestigious news organization in their portfolio also bore a positive symbolic value, much like owning a successful football club.
In the case of Mafra, the former owner was Rheinisch-Bergische Verlags-und Druckereigesellschaft (RBVG), the regional German publishing house that had managed the Czech publisher since 1994, when it bought a majority stake from the Czech founders. RBVG built two new modern printing houses, which today still process the majority of Czech print dailies, and it introduced the famous German efficiency to the post-communist media business. Its flagship daily Mlada fronta Dnes was for many years considered the pillar of quality Czech journalism.
Mafra’s history shows that media in Central Europe were a very lucrative business in the period before the crisis. According to its annual report, the company made 304 million Czech crowns in 2007: about $12.6 million in current prices. But a year later profits went down to 220.5 million crowns, and by 2011 to 88.6 million ($4 million), a mere third of its pre-crisis profits. Mafra responded by repeatedly changing its management, adopting a more tabloid style of journalism, and lowering its standards. But it was all in vain: Two years later, Karl Hans Arnold, the CEO of RBVG, pulled the plug.
Obviously, this was a symptom of a much bigger problem. From the start of the crisis in 2008 until 2013, when Babis made his famous purchase, revenues of the biggest Czech publishing houses, together representing 80 percent of the market, dropped by 20 percent. That pushed other big players to sell their assets. Ringier, the publisher of the best-selling Czech tabloid Blesk, sold its media holdings in 2014 to another rich Czech businessman, Daniel Kretinsky, in partnership with the Slovak finance group J&T. Only a year later, Vltava Labe Media, owned by the German group Verlagsgruppe Passau (which had a monopoly on Czech regional daily newspapers) was sold into the hands of the Czech-Slovak financial group Penta.
Even in the hands of those powerful businessmen, Czech journalists could feel relatively lucky compared to their colleagues from other Central European countries. In general, most of these new owners have not used their media holdings as a political tool; at worst they have employed them more as a protective shield than an active weapon. But Andrej Babis is a horse of another color: he has entered politics, refused to admit any conflict of interest, and despite having been forced in 2017 to (nominally) put his companies in a trust, continues to influence them while presiding over the Czech government.
Hungary and Poland: Tightening the Grip
In Hungary, foreign owners came under the pressure of a political crisis as well as a financial one. The government led by Prime Minister Viktor Orban has been systematically pushing them to sell stakes to friendly Hungarian or Austrian businessmen, who have then either completely changed these outlets’ editorial lines—substantially toning down their criticism of the government—or shut them down entirely. The latter fate befell the biggest left-liberal daily Nepszabadsag, which had been majority-owned by Germany’s Bertelsmann after the 1990s privatization and was later acquired by Ringier.
In case of foreign owners’ resistance, the government has applied different types of pressure, as illustrated by the story of Hungary’s biggest private TV channel, RTL Klub. Owned by the Luxembourg-based RTL Group (whose parent company is Bertelsmann), it is the most watched channel in Hungary, commercial or state-owned. When its news became too critical of the governing Fidesz party in 2014, the government proposed a special law aimed at taxing media advertisements, a measure designed specifically to hurt RTL Klub and the larger RTL Hungary group. The situation was so severe that it was even rumored that Chancellor Angela Merkel had to intervene in the conflict between the Hungarian government and the channel’s German owners.
Another worrying story of mounting government pressure on foreign investors is unfolding in Poland, concerning an American investor who has played an important role in the media market and in upholding media freedom. While the print and online world is still dominated by big Germany-based groups, the biggest private television network TVN, originally founded by two Polish businessmen, is now in the hands of America’s Discovery Inc. (Another American company, SNI Media Group, had acquired 52.7 percent of TVN shares in 2015 and became part of Discovery in 2018.) The revenues of TVN in 2016 were 1.6 billion złoty: approximately $427 million.
The flagship of TVN is TVN24, an influential news channel whose reporting is perceived as counterbalance to the disproportionate and overwhelmingly pro-government bias of the state Televizja Polska (TVP) channels. This has naturally caused much friction with the governing Law and Justice party, which has been stealthily seeking to bring TVN to heel. Behind the scenes, lawmakers have prepared a bill comparable to the aforementioned special tax in Hungary to target the channel. However, it has (for now) been abandoned for political reasons: The governing conservatives do not want to provoke a conflict with their valuable American ally.
Golden Times Gone, but Hope Glimmers
While oligarchs grabbing up media outlets generally pose a threat to journalistic freedom and independence, their actions can in some cases have the opposite effect. The changing of hands in the media market often pushes journalists to start their own business ventures. This was the effect of Babis’s purchase of Mafra in the Czech Republic. Shortly after the acquisition, a few former editors launched small, independent media outlets that—defying the odds and general expectations—still survive today. Some of them have even brought new advertising models to the market, such as the magazine Reporter founded by the former Mlada fronta Dnes editor-in-chief Robert Casensky.
Slovakia also provides an interesting case study in this regard. When the German company RBVG was leaving Slovakia in 2014, the Czech-Slovak financial group Penta bought a 45 percent minority stake in Petit Press, the publishing house responsible for Slovakia’s biggest non-tabloid daily, SME. Penta had become infamous for its close ties to the governing party Smer and for influencing many shadowy deals of the state, which investigative journalists from SME had uncovered. Penta’s decision to invest in Petit Press was thus considered an attempt to silence those journalists. Many of them instead left and founded a brand new daily, Dennik N, building on their prior experience developing novel formats and paywalls for SME. This allowed them to establish Dennik N on a new business model, independent from oligarchs (aside from some starting money from the ESET IT company). Less than four years later, the paper has become almost entirely financially self-sustaining.
The departure of foreign investors and clashes with oligarchs can thus lead to either the destruction of quality journalism or to its renaissance. But the market fundamentals for media remain shaky, and it is fair to say that the “golden years” of the late 1990s and early 2000s will never return. The days when foreign investors could derive huge profits from the Central European media market are over.
On balance, then, we can conclude that foreign ownership can play a positive role in shielding independent journalism, as the TVN example in Poland shows. But when bad economic times hit, the same foreign owner will care only about making a quick and painless exit from the market. Prevailing foreign ownership has also meant, historically, that profits have been channelled out of Central European countries without contributing to the broadening of the base of independent media. This has ultimately left media in Central Europe weak, easy prey for oligarchs and vulnerable to external pressures.
Thus, after almost thirty years of democratic development, free and independent journalism in Central Europe has never been as endangered as it now—not least because of the lack of strong domestic players able to weather economic and political storms.