Small Talk Economics - a blog written together with Miroslav Palanský and Michal Šoltés.

The latest article: A bit too tight relationship between politics and media

A quid pro quo setting undermines the purpose of media as the guardian of democracy.

The links between politics and media have always been an object of much scrutiny. No wonder, considering they should serve as the fourth pillar of democracy. However, in recent years, media’s role has been undermined by the polarization of politics and society alike. Traditional news outlets lose ground to obscure websites spreading biased news at best. Yet in some countries, a more imminent danger for the traditional media does not come from the customers but rather from the advertisers.

Adam Szeidl and Ferenc Szucs brought evidence from Hungary showing that the right-wing parties associated with Viktor Orban engage in influencing the media via advertising done by state-controlled firms. As soon as the right-wing government was formed in 2010, the state-controlled companies redirected their advertisement to those media which were owned by Mr Simicska, a media mogul, who happens to be Mr Orban’s former roommate. A reverse channel exists as well. When a news website changed its owner, its coverage of government scandals adjusted accordingly. With an owner linked to the government, the coverage drops rapidly.

The authors use a peculiar event in Hungarian politics to prove their case. In February 2015, there was an unanticipated parting of Mr Orban and Mr Simicska. Since then, the media which had supported the government became independent or even hostile to Mr Orban. Surprisingly, the advertisement from state-controlled firms immediately plummeted to the level of advertising before Mr Orban took power. The figure below illustrates this development where private advertisement is used as a benchmark. The horizontal axis describes the share of total advertisement in right-wing leaning media.

Using the same event, Szeidl and Szucs show that the channel of media coverage is active as well. Indeed, before the fallout date in February 2015, the media owned by Mr Simicska consistently underreported on the government’s scandals compared to the independent media outlets but were in line with other media related to the right-wing politics. However, once the relationship between the two former roommates crumbled, the media owned by Mr Simicska quickly drifted to the pattern of independent media. The following figure comprehensively describes the change. The horizontal axis gives a measure of scandal coverage.

What does all this mean? The connection between the government and the media is no laughing matter. On the more positive note, transfers such as those through advertisement are costly and cumbersome. That suggests more direct routes are not yet available which gives a glimpse of hope to the Hungarian civil society. There are still some checks and balances in place hindering a more efficient behavior from the government’s perspective. But it also explains the ferocity with which Mr Orban attacks Central European University. Mr Szeidl works at this very institution.

Reference: Szeidl, A., & Szucs, F. (2017). Media Capture through Favor Exchange. Available here.

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