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Media trades blows over S & L advertising money

THE SPECTACULAR collapse of several savings and loan funds last month had Slovak media backpedalling from accusations of taking millions of crowns in advertising from firms they knew to be shady.
The director of television station TA3 last week placed an advertisement in several daily newspapers refuting accusations by competitors that TA3's start-up capital had come from the savings and loan funds Horizont and BMG.
Martin Lengyel denied that advertising contracts between BMG and his station were unusual, and asked Slovak Television (STV) and Markíza TV to make public their own advertising and sponsorship contracts with Horizont, BMG and other recently collapsed S & L funds.


"We signed the contracts [with BMG] because they were advantageous and important for us."

Martin Lengyel



MARTIN Lengyel says there was nothing unusual in the advance payments from BMG
photo. Ján Svrček

THE SPECTACULAR collapse of several savings and loan funds last month had Slovak media backpedalling from accusations of taking millions of crowns in advertising from firms they knew to be shady.

The director of television station TA3 last week placed an advertisement in several daily newspapers refuting accusations by competitors that TA3's start-up capital had come from the savings and loan funds Horizont and BMG.

Martin Lengyel denied that advertising contracts between BMG and his station were unusual, and asked Slovak Television (STV) and Markíza TV to make public their own advertising and sponsorship contracts with Horizont, BMG and other recently collapsed S & L funds.

On February 27, both STV and the Markíza claimed to have copies of contracts showing that BMG had given almost Sk150 million ($3.1 million) to TA3 over three months before the station hit the air September 9.

The money was a pre-payment for BMG's advertising on TA3, which was to be spread over 48 months.

Markíza's report claimed the deal meant that BMG's hapless clients "unwillingly helped to found TA3".

Under Slovakia's financial markets laws, S & L funds until January this year were not required to disclose client numbers, how much they had collected in deposits, or what they were doing with the money.

In the Markíza piece Bratislava lawyer Marek Števček said that the contracts were "rather disadvantageous for BMG because they allowed a considerable sum of money to be legally funnelled out of the company."

But Martin Šimečka, editor of the Sme daily paper, said that the dispute was less about unorthodox ad contracts than an attempt by many media to absolve themselves of blame for not having exposed the funds before they crashed.

"The media didn't criticise these companies because they were taking their ads," he said. "The money was so good that they didn't dare. Practically all Slovak media are to blame."

BMG spokesman Marián Kardoš confirmed that the TA3 contracts were authentic but added that the contract had been "a barter exchanging ad time for technical equipment". BMG had sent no money to TA3 accounts, he said.

Kardoš noted that similar contracts were not unusual among Slovak media.

Several months before TA3's planned launch with a projected investment of Sk350 million, the station's negotiations with Hanco, a potential investor, had broken down. Lengyel had then announced he had struck a deal with the British firm Millennium Electronics Ltd. for an input of about Sk150 million.

But Lengyel said in a March 1 interview with Sme: "We signed the contracts [with BMG] because they were advantageous and important for us." He added that even without the BMG money, he would have been able to launch his station.

"We'd have found another way to start the TV," Lengyel said, insisting the contracts were "standard and we stand behind them".

Lengyel said he believed the story had come out because "we are in an election year, and it bothers somebody that we are independent".

Pavol Rusko, co-owner of TV Markíza and head of the Ano political party, has in the past been critised by media watchdogs for giving Ano above-standard air time on Markíza. He was also involved in a court battle to prevent the launch of Slovakia's most recent TV project, Joj TV.

Lengyel said he was "fascinated by the arrogance with which both TV stations went into this problem without sweeping off their own doorsteps first" .

"It's scandalous. They have run ads for [S & L firms] Drukos, BMG and AGW for years," he said.

In his advert Lengyel appealed to both TV stations to make public their contracts with S & L companies.

But Rusko said: "Drukos didn't give us a single crown. Everything was a question of barters. I consider opening this topic to be incredible arrogance from Mr Lengyel. There's a difference when someone buys ads on Markíza, which is established on the market, and when someone buys ads for Sk150 million before a TV even launches."

Rusko said that over the last four years Markíza had had ad contracts with Horizont for almost Sk120 million, "less than he [Lengyel] got in advance."

For Sme's Šimečka, the bickering was not surprising. "These companies plotted a clever media campaign, and managed to buy the complicity of almost all Slovak media with their ads. Now that there's no more chance of getting any ads, criticism is heard from all sides."

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