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By Marton Dunai and Shadia Nasralla
BUDAPEST/VIENNA (Reuters) - People close to Prime Minister Viktor Orban are increasing their control over Hungarian media, raising concerns among government critics and international bodies over press freedom as an election approaches.
Some journalists who spoke to Reuters said they were alarmed last month when the Austrian owner of Hungarian media group Mediaworks closed Hungary's largest opposition daily newspaper and sold the rest of the group to an Orban ally.
Mediaworks suspended the 70-80 staffers at the leftist Nepszabadsag, then the new owners dismissed most of them and brought pro-government editors into other group publications. Mediaworks CEO Gabor Liszkay declined to comment.
Orban has already taken steps to restrict the media, introducing tough legislation in 2010 and subsequently curbing the activities of state broadcasting outlets.
His new drive for media control follows a falling out last year with one of his chief backers, business magnate Lajos Simicska, whose media outlets stopped supporting the prime minister, according to staffers and media analysts.
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Simicska, through an assistant, did not immediately reply to questions seeking comment.
Since that parting of the ways, figures close to Orban have assumed prominent roles in the media industry after he used a broadcast interview to urge his supporters to invest in the sector. Those who support the ruling Fidesz party, he told Echo TV in May last year, should put their "personal and financial" energy into creating new media outlets.
Within a year, his closest political communications adviser, Arpad Habony, started Modern Media Group, which disseminates tabloid content on websites and free papers.
Andrew Vajna, the former Hollywood producer of the Rocky and Rambo movies and now the government's film commissioner, took over Hungary's No. 2 television group and acquired radio licenses.
A group of business associates with personal, financial or family connections to central bank Governor Gyorgy Matolcsy, another Orban ally, now runs two prominent news web sites. Liszkay, a former Simicska associate, bought a business newspaper which now backs the government after a makeover.
None of these entities or individuals had any comment in response to multiple Reuters inquiries about their ownership of, or influence over, the media.
Orban's spokesman rejected suggestions of undue government influence over the media.
"From the legal perspective our media structure is fine," Zoltan Kovacs said in response to Reuters questions at a press forum in Vienna last month.
Asked about the growing presence of government-friendly media owners, he said: "You mix up media freedom with the ownership of media." He said Opimus, Mediaworks' new parent company, had nothing to do with the government.
The control over large parts of the media exerted by business interests close to the prime minister, and the sense that this might increase ahead of parliamentary elections in 2018, has drawn criticism at home and abroad.
"We think the recent state of affairs in Hungary's media is highly worrisome," said Balazs Nagy Navarro, chair of the supervisory board at the European Center for Press and Media Freedom.
"We worry about the honesty of the elections as the media are not diverse enough and people's right of access to information has been limited," he told Reuters.
The chairman of Hungary's opposition Socialist Party, Gyula Molnar, told Reuters that with a significant part of the media controlled by Fidesz, millions of Hungarians were not seeing stories that criticized the government.
The Organization for Security and Cooperation in Europe, an intergovernmental human rights and media freedom watchdog, said there had been a significant decline in media pluralism in Hungary, where media had become "highly vulnerable to political pressure".
The radical nationalist Jobbik party's chairman, Gabor Vona, complained of untrue reports about him and his party in several pro-government outlets, saying the government was trying to divert attention from corruption.
"You can buy up the entire Hungarian press, down to the last rural gazette, but you can no longer hide what you are doing to this country behind the veil of your media," Vona said in an attack on Fidesz in parliament this month.
In his reply to Vona, Bence Tuzson, who speaks for Fidesz in parliament, ignored the remark.
Orban's chief of staff, Janos Lazar, said some conservative businessmen had heeded the prime minister's call and bought media interests or helped media businesses.
"As far as Hungary's media environment is concerned, I'm not sure whether this has anything to do with freedom, now that we have learned the lessons from the U.S. presidential elections," he told Reuters last month. "The entire American media was against Trump ... and he scored a landslide."
Mediaworks was acquired by Opimus, a publicly traded holding group. Lorinc Meszaros, the mayor of Orban's home village and a close friend of the premier, has denied media reports of links to Mediaworks or Opimus and neither he nor those companies responded to requests for comment.
Company filings, however, show a link between Meszaros and those companies through an intermediary. One of Meszaros’ closest aides, a lawyer called Zoltan Csik, is an indirect owner in Opimus and sits in management or board positions in several other Opimus-linked firms, the filings show. Csik could not be reached for comment.
Mediaworks is the largest player among provincial newspapers, which are read in the countryside where 80 percent of the electorate lives. In the sector, 12 newspapers and dozens of magazines are controlled by Mediaworks, with three media houses outside their control. Two of them, Russ Media and Lapcom, are seeking buyers.
Russ Media, a family business of Austrian businessman Eugen Russ, owns three dailies in northeastern Hungary. Lapcom, controlled by London private equity group Elliott Advisors, publishes two regional dailies and a national tabloid.
Russ has planned to leave the market for years for reasons that have not been disclosed, sources in the industry told Reuters. Russ did not reply to requests for comment.
At an internal meeting, a representative of Lapcom's owners made clear to staff that the business was for sale, according to Zoltan Koti, editor-in-chief of the Lapcom daily Delmagyarorszag, who attended the meeting. Koti did not name the representative. Elliott Advisors, which owns Lapcom, declined to comment.
Koti said Lapcom could come under the control of interests friendly to the government
"It looks a lot like this full-court pressure will reach Lapcom sooner or later," Koti said.
The new media companies often receive large amounts of advertising from the government, which has an $85 million annual advertising budget, making it the single largest player in the ad market, which totalled $3 billion last year in list prices before discounts.
"They have spent more money than ever before, focused more precisely than ever before, at outlets loyal to the government," media analyst Agnes Urban, chair of the Mertek Institute in Budapest, told a conference last month.
Antal Rogan, the minister responsible for state advertising, said Mediaworks had received ad spending worth nearly 1 billion forints.
But he told news channel ATV last month: "If there is a left-wing media house that asks for the government's help, I have no problem helping them out."
(Reporting by Marton Dunai; editing Giles Elgood)