The Hungarian TV market 2011: between the media law and the income crossroads

While the advertisement pie is still on bottom levels and the broadcasters spend on more own production to keep the strong cable TV competence aside, the Hungarian market faces important changes: in January 2011, the national Parliament has introduced a new Media Law that set up new manners and rules for both commercial and public services. The TV players might develop telecommunication services, and the telcos could push video services, too.

The new media law
Promoted by the conservative party FIDESZ, the Media Law has already created a convergent media authority called Médiatanács (Media Council) that supervises both the media and telecommunications sectors. Up to date, the changes cannot be seen because the authority has not started off applying the new acts on the media services providers. For the comercial broadcasters, the new communication possibilities are a big opportunity to add new revenues.

All the public services, TV (MTV with m1 and m2, and both channels of Duna TV), Radio (Hungarian Radio with three public radios) and Press (one state owned press agency, MTI) are now gathered in a new one entity. The production of programs and acquisitions of film rights are managed by a new organization called Media Service Support and Asset Management Fund (MTVA).

All the assets (including broadcast equipment, facilities, capacities of MTV, Duna, Radio, MTI) were transferred to this Fund and the most of the employees are contracted by this Fund: editors, cameramen, directors, technical, financial staff, etc. The Media Council heads the Fund and, according to local sources, ‘is exercising the administrative control over the public broadcasters in the same extent as they do over the commercial broadcasters’.

The new regulation approaches the media services in a very broaden sense. It includes press media, not only printed press (newspaper, periodicals) but also news portals, if they provide services for profit. The “media services” definition contains the on demand —less strict than other medias— and the linear media (TV, radio), as well, and the protection of children and minors is one of the key points of the acts with very detailed categories and rules.

The Media Council has the right to supervise/control the press and to apply legal consequences on those who infringe the rules including impose fine (relatively of high amounts). These refer to all media services providers including linear and non-linear audio (radio) and audiovisual service providers. The scope of the acts extends to the program distributors/networks.

Prensario consulted some specialists about this law to know the pros and cons brought to the market. Some of them agree that the most controversial topics are that the definitions and obligations are unclear, due to their formulating/drafting. For instance, ‘the media content may not offend or discrimínate minorities, etc., but the majority as well’. The Media Council gathers candidates of the governing party (FIDESZ) but promises no presence of the opposition. The position and the wide scope of competence of the Council, are too strong. And the new status of the public broadcasters, provides deep doubts.

Some of the positive aspects, on the other hand, are: the implementation of the EU Directive regarding the comercial communication possibilities (allowing product placement, virtual advertising, split screen ads); to distinguish between editorial and commercial content; permission of sponsor’s appearance within the program, etc.

‘A very positive thing is that the ownership restrictions are abolished, so the broadcasters can launch new channels, and to approach the media concentration as a competition law issue. Unfortunately, the Media Council took act in concentration and competitions issues in the media sector (including the press)’, one of the specialists commented.

The advertising market
The Hungarian Advertising Association (MRSZ) announced last mid-April that the local advertising market totalized €607, 4 millions in 2010. If the newly added monitored segments (the new media) are included, the market sums up to € 646, 1 millions.

Television remains the biggest media with 40% of the share, followed by newspaper (27.2%), Internet (15.9%), Outdoor (10.9%), radio (4.2%), ambient (1.5%) and Cinema (0.4%). TV got € 258 millions in 2010, +4% in comparison with 2009, while newspaper saw a decrease of 12.6% (€164 millions) and Internet grew to € 102 millions.

According to a forecast by the worldwide agency Aegis Media, this year the ad market will continue declining -5.3% (2011 vs. 2010) while is expected to be back to positive growth next year. TV shows a further moderate decrease of 4.2% and expenditure in TV reaches USD 316 millions (the share is 35%).

About the broadcasters share, the most updated measurement Prensario has acceded shows that RTL Klub got 34% of the ad pie (April-May 2011, AGB Nielsen), while TV2 obtained 23%, VIASAT3 9%, m1 1% and other 33%. Considering the three main terrestrial TV players in Hungary, only RTL Klub was profitable in 2010 (+€ 11 millions); TV2 and Hungarian Television (MTV) lost money (TV2 was -€8 millions and MTV -€48 millions).

Broadcaster Highlights
Tibor Forizs, head of program acquisitions and scheduling at RTL Klub, the market leader broadcaster in Hungary, stresses to Prensario about the TV market, 2011: ‘Local production is getting stronger. We have started to produce big live entertainment shows for prime time in the spring season, which was not common in the past. And we are buying less scripted product. While about the US TV series and the feature films we have strong competition from cable pay TV channels, with own production we make huge difference in ratings. That really makes the awareness of the channel both linear and online’.

‘The global picture is still complicated. The advertisement market is not recovered —we expect a flat income this year, if not down— but we are investing for the future. This is a year of transition and we trust things will be better from 2012. We are the leading broadcaster in this country and we must keep our position with top programming’.

‘Currently there are about 100 different Hungarian language TV channels in the country. Considering a local market of only 10 million people, they are too many. The main competition of the free TV is the pay and cable TV sector, not still the DTTs channels. The situation may change with the analogue switch-off, which was supposed to take place already this year but was delayed further to 2012 or 2013, but let’s see…’

RTL Klub has a strong partnership with a string of successful cable channels operated by our local shareholder that are very popular in the country. They are considered to be already medium-sized channels such as Cool and Film+, which sometimes outperforms well established channels, such as the MTG owned Viasat’.

On behalf of the second channel of the market, TV2, Peter Kiss, programming director, highlights: ‘The channel performance year to date is very steady. With our current scheduling we are stabilizing the loyalty of our viewers, we have about 360,000 viewers (8,4% amr) among the 18-49 target audience in prime time, which means 17.6% market share (January-June, all day), reaching in prime time 19.6% market share. We get 23% of the Hungarian television advertising pie, according to the data provides by AGB Nielsen’.

‘Considering the amount of Hungarian channels available, the competition is very hard. So, we’ve developed ourselves in the pay TV arena. We’ve started two years ago with a femaleoriented TV channel, FEM3. We’ve tested new programming tips on it, strengthened the ones that worked well, made focus on a good target audience and offered local productions. So, our cable channel for women became popular in a short time’.

‘We have used this experience for the case of PRO4, launched this year in January. Now we are talking about a channel of general entertainment, but we based our action on the conformity of a concrete target audience, a solid structure both of the channel and the contents, and everything run well. With the broadcaster and the pay TV channels, we have a broaden platform to get market this year’.

Owned by the leading free-TV and pay-TV operator in Scandinavia, Viasat Broadcasting, VIASAT3 is the third channel of the local TV market with 4.8% of the market share, and gathering 9% of the total TV ad spending.

Kati Csényir, programming director, affirms to Prensario: ‘VIASAT3 is an entertainment channel focused mainly on young women, with a W18-39 target affinity. This year, we would like to put more emphasis on local content. The last season, our own production hits showed an average 77% growth on A18-49, and 83% on main target group of W18-39’.

Andrea Zaras is Head of Acquisitions at MTVA, the mentioned new entity that provides broadcast support in content sales and acquisitions for the public TV channels: MTV, Duna, mr and mti. At last MIPTV, she told Prensario that the entity was focused at the show on buying daytime series, both for the afternoon slots and for the prime time of the channels. Also, there is a priority on family material, from live series to animation and movies.

Before MTVA, Zaras has got a long experience as Acquisitions Manager in RTL Klub.

Genre twists: Entertainment shows + Turkish series
About the top programs of RTL Klub, Forizs adds: ‘In spring we had for access prime time a daily reality format, now in its 4th season (Való Világ) and a 3rd installment of a weekly live talent search show (Csillag születik) both constantly delivering excellent ratings. For the autumn, we will add a new season of X Factor (FremantleMedia) a weekly dating reality show starring a local celebrity and a new game show, the local version of Minute to win it (NBCUniversal)’.

‘Also, a hot issue this year are the Turkish drama series. We’ve launched them at the same time with TV2 both in the afternoon slots two months ago. We are competing head to head each other with very good ratings… with the series Ezel, we have a very strong position before the daily news, although TV2 decided to air two back-to-back episodes of 1001 Nights (Binbir Gece) against it, which does not perform as strongly as in other CEE territories and not even close to the Slovak results’.

The figures are so good that we are analyzing to buy new Turkish products. Two years ago, in the afternoon we used to have talk shows. Now we air Latin American telenovelas and Turkish series. The Latin American pieces are slotted earlier than before but still with good ratings. We will see if the trend of Turkish series will continue in the future or not’.

‘Is there something new coming? On one hand, we are considering scheduling new game shows and reality shows for access prime time, and to try new formats, but the issue is not easy as there are not a lot of fresh ideas at the international market. The format titans are mainly recycling their successful classics, such as American Idol, X Factor, now we have The Voice… About ten years ago fresh ideas such as Who Wants To Be A Millionaire? Were launched kicking the table, now the potential is not the same’.

‘At the last L.A. Screenings in Los Angeles, we saw the Hollywood studios want to change the approach: less medical and legal TV series, less serialized shows that you have to follow chapter by chapter as Lost, and more refreshed, good quality soap operas in the Dallas tradition, to get the audience involved but with the chance to skip some episodes. Also, there are more series involving supernatural plots’ (e.g. Alcatraz from Warner Bros.) but less edgy dramas. Retro series appear, as Sony’s PanAm and The Playboy Club. And of course the trend of procedurals is still there (the spin-off of Bones from Fox)’, says Forizs.

Instead of acquiring, TV2 is making ‘stronger emphasis’ on own-developed content, not only to get better ratings, but also to sell the contents abroad. Kiss points out: ‘Stars Gone Crazy was a real hit, which beating Come Dine with Me on RTL Klub, and doubled its slot. SevenOne International (Germany) picked up the show for distribution, and not only this one, they are distributing our celebrity dating reality: Sweet Foursome as well’.

Another in house show developed by the channel is the celebrity duet show: The Big Duet, ‘which is constantly winning its slot on Friday nights’, comments, and he adds: ‘The Money Drop (Endemol) did very well: we broadcasted the show live, which delivered good ratings, and intensive online activity. We also broadcast longer news program with success, which is widely acknowledged as the most reliable news resource in Hungary. It has a great market share’.

About the content trends in Hungary, Kiss summarizes: ‘There are more original programming on screens and the era for long drama series in Hungary has begun to bloom, especially the Turkish ones, like 1001 Nights (Seherezade), but also the Latin American telenovelas, which are delivering the expected ratings as well and start to work again, like Cuidado con el Angel (Televisa)’.

Csényir remarks that the most important own production from VIASAT3 has been Paradise Hotel: ‘Shot in Colombia, it is a strategic game where 28 girls and boys have to pair up week-by-week, the one who is left alone has to leave the Paradise. We also had in spring an improvisation game called Jump-in, where five well-known Hungarian actors play different kind of games. In autumn, besides the former one, we’ll have the return of two other successful own productions of the channel: Dreambuilders and Four Weddings. Both will be on air once a week in prime time’.

About programming trends, she says: ‘There are more and more US series & movies, but own productions are getting very popular, as well. Local audience is looking for talent and reality shows. Providers adapt themselves well to content needs: when Gordon Ramsay and Jamie Oliver got popular in Hungary, all providers came out with cooking shows. When there is any major sport event —Olympic Games, Football World Cup, etc.— they provide local content about that. Weddings (Kate & William’s royal wedding), trash realities and game shows have got popular again, too’.

New Media
Forizs describes RTL Klub strategy on content distribution through digital platforms: ‘We are already offering a catch-up VOD service of our shows, through the Internet. The service is doing well, we literally doubled our unique visitor number from one year to another and in some top products, we have now more than 100.000 unique visitors per day. We are offering so far our own productions and some series and telenovelas, but we will start offering catch-up windows of TV series from Hollywood studios later in the year’.

Lastly, TV2 is focusing strongly on the Three-Screen model: ‘Not only on television, but also on Internet and on the mobile platforms’, highlights Kiss, and he remarks: ‘This is why the company is constantly working on new mobile applications: we already have tv2.hu application for Android and iPhone developed together with AppShaker, Joban Rosszban application developed by Origo and we had a mobile application for Megastar5 for iPhone. Another development is tv2.mobilnet, powered by Vodafone, which is a TV2 branded mobile Internet that provides free contents from tv2.hu’.

Nicolás Smirnoff and Fabricio Ferrara