The controversy surrounding the new advertising tax in Hungary seems to be getting worse almost by the day.
It has also taken on an international dimension, something I learned first hand late last month at the Digital TV in CEE conference in Budapest.
There, Andreas Rudas, a senior executive at RTL Group, warned that if Europe did not intervene the same situation could be repeated in other European countries. He also said that the tax would have a damaging effect on the Hungarian economy.
Since then, Rudas has told a Hungarian radio station that RTL plans to contest the law in the International Court of Justice in The Hague.
Dirk Gerkens, the company’s CEO, has meanwhile told Reuters that the Hungarian government’s hidden agenda is to force RTL to leave the local market – something that it has no intention of doing.
Indeed, the company has a strong strategy in place and is prepared to fight tooth and nail against the government’s measures.
Gerkens also made the point that RTL is not sensitive to any losses it may incur in Hungary, which accounts for only around 1% of the group’s revenues. It is certainly prepared to play a long game in the courts with the Hungarian government.
Alongside this, the latter is currently attempting to close a loophole in the law that would see RTL Klub, RTL’s Hungarian broadcaster, get off relatively lightly in the first year. It may succeed in doing so as soon as this Friday (July 4).
Interestingly, TV2, Hungary’s other national commercial broadcaster, has also insisted that it, too, will be hard hit by the new tax.
However, the perception is that real “fight”, for want of a better word, is between RTL and the Hungarian government, with the latter effectively accusing the broadcaster of tax evasion.
How this will all end is impossible to predict.
What is clear, though, is that this dispute is highly damaging to the country’s reputation and its TV industry.
