Vivvo CMS 4.1 http://www.rbr.com/ ©2010 Spoonlabs d.o.o. http://www.rbr.com/files.php?file=rss_logo1_757997737.jpg http://www.rbr.com/ http://www.rbr.com/radio/18692.html Radio News Thu, 19 Nov 2009 15:51:00 -0500 Nine countries issued a joint statement from their Budapest embassies taking Hungary’s government to task for pulling the plug on two radio stations Radio News Thu, 19 Nov 2009 16:06:50 -0500 Has everyone gone nuts?? Emmis and the other guys had a fixed-term 12-year license, it expired and was re-tendered in a purely financial bidding process. The licenses went to (by far) the highest bidders. How is this corruption, or worse - political silencing? From the get-go in 1997 Emmis knew that this license would expire in 2009; they just didn't happen to be the highest bidder when it did. Tough luck - **** happens and you can't accuse a whole country of corruption, or absence of democracy just because you are sour over your loss. Radio News Thu, 19 Nov 2009 19:47:01 -0500 Please read the previous stories to learn about the corruption.http://www.rbr.com/radio/18673.htmlhttp://www.rbr.com/radio/18563.htmlIt was hardly a "purely financial bidding process."Jack MessmerExecutive EditorRBR-TVBR Radio News Fri, 20 Nov 2009 01:55:48 -0500 To learn about corruption take a look at Mr. Messmer's affiliation and the alleged evidentiary material he offered. He is at RBR-TVBR and the stories that he uses as evidence were manufactured by the same RBR(-TVBR). Mr. Messmer, do you think that everyone is as blind (if not stupid) as you are? Radio News Fri, 20 Nov 2009 02:54:44 -0500 Mr. Messmer, I read (and had read) the preceding stories. I also read the tender rules - and it is clearly a purely financial tender - with the highest bidder (in terms of % of revenues) would win. This, to me, looks like a transparent process.On the other issue of whether a 50% bid can ever be a feasible business case - that's a risk up to the bidder, unless the rules set a high limit (which they apparently didn't). I just looked up Emmis's performance in Hungary last year. It seems that their EBITDA margin was nearly 50% - and that included the cost for their license fee (whatever it is). Thus, i don't see why someone can't make money on the same set of frequencies with a license fee of 50% of revenues.I think the only thing that is corrupt in this story is the angle at which it's being reported. Radio News Fri, 20 Nov 2009 05:48:21 -0500 I'm on the side of Emmis. This is nothing more than "Euro Cronyism". Bad politics on the part of Hungary and ORTT. An easy solution would have been to just issue a couple of new frequencies for the politicians then everyone would have been happy. They wouldn't go for that because then they would have to build up the new stations on their own. Let's see now how they tear a few down. Radio News Fri, 20 Nov 2009 08:47:24 -0500 I had a gnawing feeling something like this would happen when I read about this back in the late 90s. http://www.rbr.com Radio News Fri, 20 Nov 2009 10:14:32 -0500 To Battle Star:Right. I don't know what I'm talking about. Neither does Joe Biden, the Wall Street Journal, The Financial Times, The Economist, the former head of Hungary's ORTT, the ambassadors of nine nations on the scene in Budapest, various local publications in Hungary and the leaders of Hungarian political parties not involved in the rigged bidding. We're all misinformed and it was, as you insist, "a transparent process."Jack MessmerExecutive EditorRBR-TVBR Radio News Fri, 20 Nov 2009 10:17:17 -0500 Just out of curiosity I went to the Slager Radio website and put on the webstream. It's still on. I don't speak or understand Hungarian, but it seems like the radio station "lives on" online - to some limited extent. At 4:10pm CET today I heard "It's No Good" by Depeche Mode and what sound like a soundbyte announcing Slager Radio's disappearance from the airwaves.I doubt living on as an online station will be financially successful. So what's next for Emmis - and was this fair for Emmis? No. It wasn't.Is this akin to what was seen in Cuba when Castro came to power, or what's been seen of late in Venezuela? I'm not sure.But let's not forget that a foreign company can only maintain a minority interest in a U.S. broadcast company. I'm sure Grupo Radio Centro and Emmis would have loved to make a deal for KXOS-FM 93.9 in Los Angeles. Instead, GRC has a deal with Emmis to control the station.So is there a double-standard here?Not sure. But I don't think we should be feeling so horribly for Emmis or Danubius Radio's owners - they knew the risks when they first entered the market. They gambled and lost. http://www.rbr.com Radio News Fri, 20 Nov 2009 10:49:23 -0500 Jake: Yes, Emmis confirms that Slager is still producing new content for its web stream. Just what will happen going forward is yet to be determined.Jack MessmerExecutive EditorRBR-TVBR http://www.rbr.com Radio News Fri, 20 Nov 2009 10:55:17 -0500 Jake: As for the double standard question, there are quite a few US broadcasters who favor elimination of the 20% limit on foreign ownership, particularly on a reciprocal basis with other countries. There is no US restriction on foreign ownership of newspapers, broadcast/cable networks or even FCC-licensed telecommunications businesses, so broadcast radio and TV stations are uniquely restricted.Jack MessmerExecutive EditorRBR-TVBR Radio News Fri, 20 Nov 2009 11:51:26 -0500 To Jack:The fact that Emmis successfully lobbied to get Joe Biden et al to support their cause does little to add any substance to Emmis's underlying complaint. I will be the first to accept any reasonable, substantiated answer to the simple question: how exactly were the Hungarian state and the ORTT supposed to issue the licenses to anyone other than the highest bidders? What would "good politics" have been in this case - to award it to the lowest bidder? Or to award more points to incumbents (which would have been illegal under European Union law?) Or, to overturn the original law from 1997, according to which the licenses must finally and ultimately expire in 2009, to allow a chance for newcomers to enter the market? That would have been also illegal under EU law (as there is a one-extension limit, which Emmis already got).I don't like the level of corruption in Hungary (which exists, don't get me wrong) any more than Emmis does, but what I hate even more is absence of a logical debate on this case, and the blind indignation in support of a business, at the apparent expense of total disregard for another country's laws. And alas, Scott's realpolitik idea that 2 new national frequencies could be found in a landlocked country the size of Indiana which borders 7 (!) other countries is simply unfeasible. http://www.mchentinc.com Radio News Fri, 20 Nov 2009 13:11:23 -0500 Well, let's see...A Hungarian citizen or citizens can't own more than 20% of a US broadcast licensee. A Hungarian corporation can own up to 25% under certain circumstances. Maybe the politicans in Hungary were just looking for a level playing field? Nah...Emmis just didn't do their politics right. When in Rome (er, Hungary) do as the Romans do. When you try to run your U.S. type business in other countries, you have to acknowlege that your aren't in Kansas anymore. Emmis should have seen this coming a long time ago.I'll bet they did. I'll bet they fought it. They lost, probably becuase they were'nt willing to pay the piper. Radio News Fri, 20 Nov 2009 15:27:23 -0500 Hmm...Brett...you are either unusually smart, or you are an insider unwilling to share your full knowledge of the story.As it happens, Emmis indeed played the game, but weren't willing to pay the price being *asked*. Radio News Fri, 20 Nov 2009 15:59:25 -0500 Since there are so many experts on this, perhaps I can clarify a few things. First, we only asked for a transparent system when we went to Hungary 12 years ago. We got a transparent system then in 1997. That has obviously changed. We fully prepared to pay the highest price for our license, and since we had by far the highest gross income (roughly 60 per cent of all dollars in the market), our percentage bid would have produced by far the most money for Hungary...and would have been the highest based on Hungarian law. The standards were changed after the bidding process started, which said that the highest percentage would be the winning bid. In effect someone could promise 50 percent of nothing and be the winner over someone providing 12 per cent of millions of dollars. This is what happened. The Chairman of the ORTT (Hungary's FCC) recognized this as a flawed process and demanded the bids (which were sponsored by the two political parties) be thrown out. By the way, Hungary's Prime Minister and President also called the process very questionable. When the parties voted for their proxies, the Chairman of ORTT resigned and called this a "major scandal". Perhaps it would also be helpful to know that both Slager and Danubius were visited by party officials in the weeks before the bids were due and were told, "either give us control, or you will lose your license". In meeting with Prime Minister Bajnai, I mentioned that the request made of us was a crime in my country, and as a violation of the Foreign Corrupt Practices Act, would make it illegal for us to accept the request, (which we obviously would not have done anyway). The Prime Minister stated that this was, "also a crime in Hungary." You should also know that one of the parties, Fidesz, nationalized a water company owned by the French several months earlier. The French Government and the European Union have registered protests over that case as well.We entered Hungary under the rules of the Hungarian system. We were proud of what our people accomplished, Slager had nearly 4 million listeners a week, and won numerous awards for our civic involvement. I will be forever grateful to our employees and our listeners. When freedom and democracy are taken from people, everyone suffers, and I am very sad for Hungary. Jeff Smulyan Radio News Fri, 20 Nov 2009 17:15:51 -0500 Dear Jeff,I truly sympathize with the situation you are in. It is almost unfathomable - especially for an American broadcaster - that your frequencies would be taken away from you after a certain time has elapsed. Yet, I respectfully disagree with your position that this was done in an inappropriate (per local laws) manner. At the same time, I appreciate that you are approaching this debate in a structured and motivated manner.Let me address your premises.First, you state that the process was changed after it was initiated. I am not sure what you mean by that. I just looked up the publication date of the "Call to Tender", which was July 30th of this year. The tender documents explicitly refer to a percentage of revenues as a component of the bid. Unfortunately, I could find it only in Hungarian (http://www.ortt.hu/palyazatok/7/1248957757palyazati_felhivas_orszagos_20090730.doc - thanks, translate.google.com) - so I hope I was not misreading it. Second, you say that 50% of nothing is less than 12% of something. Sure, that's correct. But who are you, or who are we, to say that the newcomer will generate "nothing". Even if they generate only 30% of Slager's revenues, their 50% would still produce a higher fee for the country's coffers, right? And I can't imagine anyone operating one of two national licenses so poorly that they would generate less than 30% of Slager's revenues (this would probably mean that the other national license holder would steal the rest of the market - obviously the state should be indifferent to either outcome).Last, you state that Slager and Danubius were visited, before the award procedure, by party officials asking for controlling stakes in the respective operators. Well, if that was indeed the case, I am sure that Slager's (and Danibius's) management informed the authorities in due course. That's what most of us would do. Moreover I am sure they also publicized these arrogant and illegal overtures in their own news - Slager reaches 40% of the country on a daily basis, after all. If management didn't do either of these, then I would be very puzzled as to why not. As the only reasonable explanation I could think of would be that your local guys were in some sort of *negotiations* which just didn't end up right. But then again, if that wasn't not the case, and your management did what it was supposed to do in due course, then I am confident that Slager will win the legal battle and justice will prevail.And I truly wish you that you win. I just don't believe that's an option.Sincerely,BattleStar. Radio News Fri, 20 Nov 2009 17:49:37 -0500 Rather than get into a lengthy debate about the tender process, let me simply state that we are absolutely certain that the tender rules were modified and that everyone knew that the party bids were fraudulent. The ORTT Chairman publicly stated (with the backing of the independent analysts ORTT hired) that the bids were impossibly high. The Press reported that the parties would submit high bids and then renegotiate them several months after the process ended. As for reporting the overtures, our people did discuss this with authorties, and I can guarantee you there were no negotiations over this. Since I discussed this with the Prime Minister, the highest ranking official in the government, I don't think we were keeping this a secret. I asked him specifically to enforce the laws. You might have a different take on transparency in Hungary than I do, if so, I urge you to apply for a broadcast license there. Radio News Sat, 21 Nov 2009 08:05:41 -0500 Dear Jeff,I would have only two questions:If you knew from the very beginning that your competitors using "sales house" method and this way the offers are not comperable because your competitors have offered higher percentage from a far lower turnover why did'nt you do the same thing? Not doing this seems a little bit like a business suicide.In Hungary there is a gossip that the last profitable investment of Emmis was Slager. Is it true?Thanks for the answers,Gaspar Radio News Sat, 21 Nov 2009 11:44:56 -0500 Gaspar, several answers. First,the statement about Emmis is patently false. Emmis has been profitable in spite of the worst downturn in media in nearly a century. Slager's profits this year will be barely 4 per cent of our overall profitability. We have a number of stations in the United States that make many more times profit than Slager did this year. As to the sales house issue, it is patently fraudulent on its face, and is a clear violation of the ORTT rules. It would be no different than hiding revenues for the purpose of not paying taxes on them. If my gross income is 10 million dollars, but I only declare 2 million and leave the rest in a "sales house", then don't pay my percentage on sales house numbers, I am deliberately defrauding the government...and this procedure was always disallowed, as it should have been. Radio News Mon, 23 Nov 2009 10:35:20 -0500 dear star who battles,Please read the text of the tender and look only the numers as this is business, or not??? I am not a businessman but I can see this mess very clear. The Emmis is ok, they will survive but I still hope they ll fight further, but the country? What do you think about the money the new radio station is going to pay into the country's budget? is that going to be higher than what Emmis paid in. Please do not talk till you don't have evidences...I am a listener and yes, Jeff, we are waiting you back just starting to move on a new matter.Good Luck! Radio News Tue, 24 Nov 2009 01:41:54 -0500 Smulyan has to be careful here... Emmis underaccounted revenues in Hungary and paid next to nothing to the Hungarian Gov.... maybe 5% of rev for the licence... they are under SEC inverstigation and NASDAQ delisting.. Emmis is finished? Radio News Tue, 24 Nov 2009 02:00:35 -0500 Actually I wouldn't be surprised if the Hungarian Gov would go after Emmis and try to collect on past lic fees.. especially the 2001 unilateral suspension situation was never really fully resolved .. I'd be careful to bring up FCPA, it may backfire. Radio News Sat, 28 Nov 2009 06:01:01 -0500 dear Greg, I suspect you don't live in Hungary. Hungarian government would have to collect more money from other companies and look ath the back of state owned companies firts as there could be at least 10 times more money as Emmis has to pay to them since 2001....so be careful as this is a special jungle and you ought to live here to know the rules: politics comes first then the business but only if that is rentable for one or for the both of the parties...