State-owned Hungarian News Agency (MTI) claims extra funds from Parliament after slipping into the red. The company also lost two of its key customers. “After posting profits in previous years, MTI accumulated significant losses in 2002 and 2003,” chairman Mátyás Vince told HVG. Vince explained the poor results by the simple fact that – despite state subsidies – MTI’s news are relatively expensive for the small market it serves. MTI turned into a company limited by shares (Rt) in 1997 with HUF 1.75 billion in equity. The company was profitable until 2001, when net profit amounted to HUF 192.3 million. The company made losses of HUF 142.4 million in 2002 and HUF 138 million in 2003. Total revenues came to HUF 3.6 billion in 2002 and HUF 4 billion in 2003.
Out of that state subsidies accounted for HUF 1.32 billion and HUF 1.52 billion, respectively. This year MTI gave a significant price discount to the public television channels and to commercial station TV2, while two major customers, the Hungarian Radio (MR) and another commercial TV-channel, RTL Klub, terminated their contract with MTI, referring to expensive services. Losing MR as a customer results in an annual loss of HUF 120 million for MTI, and the deficit caused by RTL Klub is a similar amount. According to MR deputy chairman János Hollós, MTI’s prices are far from being realistic, as its news cost about ten times as much as those by international news agency Reuters.
To increase MTI’s revenues from traditional markets is not possible, experts say. MTI’s economic news service MTI-Eco Kft. was not profitable either; after a few years of independence it had to be reorganised and put back into the parent company. MTI strives to add new clients by offering new products. It aims to sell its services to companies, local municipalities, government organisations and – using the Internet and mobile phones – individuals. Due to the fall in demand, MTI has had to cut its expenses. As a result, the number of foreign correspondents has been reduced from twenty to around ten, and further layoffs are expected. “We produce our foreign news at very high costs,” Vince said, adding that maintaining a correspondent abroad costs HUF 30 million a year. In the first phase, MTI’s management plans to lay off 80 employees. Trade unions claim HUF 1 billion from Parliament for wage hikes plus HUF 450 million for development. Direct central subsidies accounted for almost 40% of total revenues last year.
Source: HVG
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04.06.2004