Most of the editorial staff at Hungary’s largest online news site resigned on July 24, after a decade-long struggle for the company’s independence. The way pro-government interests co-opted the company, slowly, and then all at once, is a textbook example of the way Fidesz has built its media empire over the years. The way the editorial staff stood their ground, and broadcast this struggle, is an important commentary on independent journalism and democratic backsliding. Are Hungarians ready to pay to help them start over?
On June 21, the managing editor of Index, the most widely read online news site in Hungary, posted a mysterious public service announcement on the site.
‘The moment has come; we feel our independence is in danger. We have been exposed to external pressure in a way that may cause us to end our work here. We are worried that the values that made this site Hungary’s most prominent online publication may soon be eliminated. We are not sure we can continue working among these circumstances. We believe in the power of public opinion, so we wanted to let you know.
The post included no call to action. It was a declaration of moral integrity; a courtesy to readers.
In the weeks that followed, Index entered a very public crisis of leadership. The CEO resigned.The publisher dropped managing editor Szabolcs Dull from the company’s Board of Directors for airing dirty laundry in public. The new CEO resigned a few days later. Then the new leadership opened war on the company’s independence: on July 22, the managing editor was fired after he refused a settlement to stay quiet about the pressures to restructure the company. In a Facebook post, Index chairman of the board László Bodolai — a prominent free speech advocate who often represented Index journalists in the past — denied that there was political pressure behind his decision. According to many, his recent actions and choices around Index’s new leadership point to the opposite.
In response, the overwhelming majority of Index journalists quit all at once. It is increasingly clear that this is the last chapter in a long battle for the independence of Hungary’s most well read news site. For years, the staff has anticipated a takeover, and they have documented the process as much as possible. This is a developing story, but here is what we know so far based on a thorough account by Pál Dániel Rényi and a Partizan interview with two media experts.
What sounded the alarm at Index?
Two things happened immediately leading up to the events in June. First, Miklós Vaszily, a well known pro-government media mogul scooped up fifty percent of the shares in Indamedia, the company behind Index’s ad revenues. This constituted open war on Index’s independence: a close confidant of the Hungarian prime minister, Vaszily previously oversaw the transformation of Origo.hu from independent news site to hardliner pro-government outlet. He then went on to do the same for various public and private TV channels. He is widely considered to be the number one expert in dismantling media independence in Hungary.
Second, Gábor Gerényi, a businessman with close ties to the government, partial owner of an Index competitor, and remarkably, an ex-Index founder, showed up around the company as a consultant to advise on restructuring during the COVID-19 crisis. His plan was to drastically scale down the organization, and outsource most of its sections to independent contractors. In the short term, Index would turn into a news aggregator, and potentially run articles from other publications; in the long term, it would become nothing but a front page. (As a response to the public outcry, the restructuring plan was rejected by the Board of Directors.)
Index leadership and staff recognized political motives behind recent events.
First of all, the ownership changes and restructuring plans were hard to justify with financial concerns. Like any other news organization, Index suffered ad revenue losses in the early months of the COVID-19 crisis, and to cut costs, the company had to lay off 5 people from it’s roughly 100-member editorial staff. That said, Index was in no way on the brink of bankruptcy. The company turned a significant profit at the end of 2019; the owners even felt comfortable enough to take home dividends. László Szily, a prominent ex-Index journalist currently at 444, described the plan as “full of contradictions and economically unsound.”
Second, the events had the hallmarks of a Fidesz takeover, according to Pál Dániel Rényi, who wrote a longform explainer on the Index story. These tend to include the following steps:
- Deploy an ally to purchase majority ownership in a target media company,
- Slowly close in on the company, imposing more and more direct control, from shares, to board seats, to leadership positions.
- Keep details hard to follow for lay audiences.
- Avoid direct government involvement –too much visible damage to a news site’s reputation may hurt future propaganda value.
- If there is a risk of scandal, leave enough time for it to lose relevance before the next elections.
(Example: the infamous takeover of the iconic Népszabadsag in 2016, mid-election-cycle.)
A pro-government media empire, ten years in the making.
It is hard to grasp the importance of the Index story without some context on the Orbán administration’s decade-old campaign to redefine the Hungarian media landscape. As soon as the Orbán government came to power in 2010, they used their two-thirds-majority in parliament to completely overhaul media oversight and create a Media Authority that could fine opposition channels but support pro-government media.
They then redefined the competitive landscape: a Fidesz appointee would decide which media companies were allowed to merge and which were not, which empowered Fidesz to build a media empire, while annihilating their competition. The government also rerouted public advertising to pro-government outlets, taxed foreign media competition, and pulled the public media under government control. By 2016, 95 percent of public programming reflected pro-government messaging. (Political Capital, a leading Budapest policy think tank gives a detailed overview in this paper.)
Meanwhile, friends of the Orbán regime moved to buy up independent media outlets in bulk. Between 2010 and 2018, Orbán allies purchased a total of 476 newspapers, television channels, radio shows, and news sites. Importantly, these outlets are not directly owned by members of the government, which helps cultivate a sense of diversity of actors and opinions. This sense of plurality is false for many reasons. Nearly all of these publications can be traced back to a handful of owners; and, according to a confidential study by Mertek Media Monitor, the majority of journalists feel occasional pressure from their editors to withhold information. Data journalist Attila Bátorfy’s chart is a stunning demonstration of this consolidation process over the past 10 years.
Index managing editor Szabolcs Dull’s career paints a graphic picture of this story, notes Mérce founder András Jámbor. Dull worked at a public radio station until 2011, when he was fired in the first wave of public media restructuring. He then joined Index’s former online competitor Origo. He quit Origo with the rest of the staff in 2014, when the managing editor was fired after running a story on a prominent member of the government. He then worked at two different publications that were captured by pro-government elites, now both in the portfolio of Central European Press and Media Foundation, the pro-government foundation that controls more than 500 of the country’s formerly independent media outlets. Finally he ended up at Index, where he stayed until his dismissal two days ago.
Slowly and then all at once: the fight for Index is as old as the Orbán regime.
As the oldest and most widely read online Hungarian news site with about a million unique visitors a day, Index has been under mounting political pressure for the last ten years. When Fidesz came to power in 2010, Index was owned by Zoltan Spéder, a conservative banker and businessman, who had varying degrees of good connections to the Orbán government. Seemingly, he remained in charge until 2017. Secretly, Lajos Simicska, formerly the closest oligarch to Viktor Orbán, obtained an option to purchase Index back in 2014. The agreement was so secret that the paper’s leadership only heard rumors of it for the next several years, until the prime minister and his oligarch friend had a falling out in 2017.
Now looking to spite the prime minister, the oligarch decided to use his option to buy Index. To prevent a scandal and keep the staff from quitting in unison, he set up a foundation to govern the company, and nominated László Bodolai, a well-respected media lawyer and long term Index ally, to be Chairman of the Board. The chairman promised to stand between politics and the paper, but in the end, this proved an impossible task. The setup lasted for a year, before Fidesz allies went after everything that Simicska owned, and purchased the company behind Index in 2018.
There are two basic conditions without which Index cannot function properly. One is our editorial independence (…) The other is that no outsider can interfere with our decisions regarding which people work in the editorial staff.(…) If we notice any changes in the above, we will notify the world as loud as we possibly can.Index Staff Announcement, 2018
In 2018, Index staff recognized their political exposure to outside interference, and set up a publicly available independence barometer, for two reasons: in an attempt to maintain open communication with the public about their independence, and to know when to quit. On June 21, this independence barometer was set to “in danger,” and the above public service announcement went up on the site. After a few narrow escapes, the appearance of the government’s Chief Media Dismantling Officer signalled the end of the paper’s heroic battle for independence, this time for real.
There are a number of theories as to why the government would need Index in their portfolio right now. Pál Dániel Rényi indicates that communications became a top government priority after Fidesz suffered some surprise losses in the 2019 municipal elections. With over a million visitors a day, Index could become a powerful campaign vehicle before the next elections, and two years may be enough time for a scandal to die down. Other experts argue that the government’s objective may be to weaken Index as an opposition platform. Index does not need to go all the way to propaganda, it is enough for the staff to quiet down and know their place when Orbán says so.
Could the staff restart together?
Hours after some 70 Index staffers quit on the spot, a group called Outgoing Index Staff (Távozó Indexesek) launched on Facebook. The first post read:
Today, a vast majority of Index’s staff, including leaders, editors, and reporters have resigned. We wish to carry on together and keep the spirit of Index alive. This will not be easy, we do not clearly see the way forward yet. (…) Thank you for everything, stay with us!Outgoing Index Staff Editorial, July 24, 2020
In a few hours, the group had over 50,000 members. The post was liked over 8,000 times.
Are Hungarians ready to pay for journalism?
It remains to be seen whether Index’s vast readership will mobilize to help the staff start over. This is not a Hungarian problem: it took a long time to get Americans to pay for the papers they read. The New York Times was struggling to answer similar questions in 2011, when it erected a paywall. (You can read the Harvard Business School case study about the decision for USD 8.95.) The Washington Post followed in 2013. Vox, a venture-backed company, only began to fundraise from users during the COVID-19 crisis.
However, the Index story (and all the others that came before) demonstrates that addressing news consumers’ willingness to pay for content is an especially pressing concern in Hungary. Hungarians are especially reluctant to pay, even though many are avid news consumers. According to a 2019 study conducted at Oxford University in partnership with Reuters, 37 percent of Hungarian respondents regularly share news articles, and 23 percent regularly comment on news. And yet, only 7 percent of respondents were paying for journalistic content in 2019, and no paywalls have been introduced to date.
Gergely Dudás, former managing editor at Index, notes that Hungarian media culture never had time to fully mature. The post-Communist free press grew out of underground samizdat culture on the one hand, and Kadar era mainstream career journalism on the other. It is often highly argumentative and opinion driven. Because of the first post-1990 media laws, it was always highly partisan in its ownership structure. Two to three decades of freedom after nearly five decades of authoritarian rule may not have been enough time for the public to develop a strong appreciation of the free media.
How have the remaining independent outlets survived?
That said, there may be hope for Index. If the little over
50,000 200,000 supporters in the Facebook group (a fraction of the one million daily visitors) were willing to pay just USD 8 dollars a month, (more than a New York Times subscription, but less than Netflix), they could get to a yearly operating budget of almost USD 5 million USD 20 million. Many of Index’s current readership are Hungarians living abroad, who typically have higher salaries in stronger currencies than the Hungarian forint. This could be a moment to capture that audience as paying customers.
Despite a systematic government campaign to dismantle the free media, some publications have been able to stay their ground, typically thanks to specific ownership structures and, often, foreign funding. The most prominent example is 444.hu, an Index-spinoff started by Péter Uj, ex-founder and managing editor at Index. (Named after !!444!!!, old internet lingo to note that something is too important to hold down “Shift” in producing exclamation marks. The English equivalent being e.g. !!111!!!)
As early as 2010, Uj felt pressured to pull stories as Index’s managing editor, and he spun off 444 with a handful of leading Index journalists in 2011. As a guarantee against future takeover attempts, Uj established a co-ownership structure at 444, and later the two owners sold 20 percent of the company to an American impact fund that supports media independence. Though 444’s investor belongs to a nonprofit, 444 is a for-profit company. The paper is known for award winning journalism and an innovative video department, but its roughly two hundred thousand daily readership never approached Index’s one million.
All evidence suggests that grassroots support is the only way to breathe hope into the Hungarian free media. Átlátszó, Mérce, and Direkt36 (all three much smaller than Index or even 444) are all supported by readers, at least in part. All three are nonprofits. Átlátszó discloses donor names above a certain ticket size, and they also publish a detailed breakdown of their revenues: in 2019, about half of their funding came from small donors, the rest from foreign philanthropists and foundations. Mérce is supported only by readers. Direkt36 lists Open Society Foundations, the Rockefeller Brothers Fund, and strangely enough, a debt-collection and management consulting firm called Credit Express, among their funders.
To many people, Index is the Internet.Ferenc Bakró-Nagy, Index video, in Index’s farewell video
A month has passed since Index’s manifesto was published, and things have only gone downhill from there. Firing their managing editor on July 22 was in clear violation of the staff’s second principle of independence. On July 23, a number of leading journalists quit. On July 24, 80 others followed.
A few days ago, Index staff posted a nostalgic rest-in-peace video about what it has meant to them to work at Index. As one staff member notes in it, the freedom of spirit is palpable — we encourage you to count the number of journalists in heavy metal T-shirts. Journalists talk about what it meant to them to work in a supportive environment where all staffers were encouraged to write, to utter the words “I work at Index” at a party, to post a piece that could be read by 500 thousand people. (The video also makes one wonder if the Coronavirus evaded Budapest; no one seems to be wearing a mask in a crowded newsroom.)
Founded in 1999, Index was among the first widely accepted online news sites, back when widespread internet access was still new, and 8,000 visitors a day was still a lot. It was always meant to be a serious news portal; the founders made that clear by launching it in front of 200 journalists at the Hungarian Association of Journalists headquarters. By 2000, they had seventy thousand visitors a day; by 2003, two hundred thousand. It was a real tech startup too; it had venture funders, blog and email services, IPO aspirations. Right at the height of the dot com bubble, they planned to go public in Frankfurt, but were never able to do so once the bubble burst. (Imagine how different things would be if they had succeeded…)
They led a conscious movement to liberate the language of journalism in Hungary, to make news more accessible to a wider public, and to foster news consumption as a habit. They were known for an innovative photo and video department; for outstanding economic journalism (we quoted many of their earlier pieces on China in our post on the Budapest-Belgrade railway renovation), for keeping topics organized and accessible, for award-winning coverage of the refugee crisis, for excellent data visualization, and for authors who wrote influential nonfiction books on politics, economics, parenthood, and late Communist-era criminals. Not to mention the journalistic upbringing of many of the great journalists at 444, Átlátszó, and Direkt36.
Index staff delivered an important public service in the way they told their own story.
The June announcement about the paper’s endangered independence was more than just a warning. It was a manifesto on what makes a paper independent. It listed the markers of an autonomous news organization, from the freedom to print any story, to the freedom to hire any journalist, to guarantees to protect sources. As long as those conditions were met, argued the roughly one hundred journalists who signed the announcement, they would carry on.
Throughout their fight for the paper’s independence, journalists at Index let the readers in on important internal dilemmas. Is an option to buy a company a threat to journalistic standards? Is the sale of a company to the prime minister’s greatest enemy a threat or a guarantee of freedom? How can you finance quality journalism to maintain editorial integrity? How can you protect your staffing decisions? When should you reach out to public opinion? Where does paranoia end, and reality begin? When is it time to stand up?
This public conversation has been an important service to those of us who witnessed it, and a valuable commentary on the processes of democratic backsliding. The question is: are Hungarians ready to return the favor and help the staff start up again?
Contributed by Lili Török.
Cover photo by András Földes.
Update: in the days since this article was published, the Outgoing Index Staff Facebook group gathered nearly 200,000 followers. Please follow, share, and like that group if you want to help the team as they figure out next steps.