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Government to redraw billboard market before elections

Pharma

Hungarian governing party Fidesz issued a decree last Friday, bearing the name of Prime Minister Viktor Orbán, which appears to completely redraw the countryʼs advertising billboard market, entering into effect in 30 days, says a report by news portal index.hu. The decree comes ahead of next yearʼs general elections, and is thought by some to favor Fidesz interests.

After the 30 days have passed from the publication of the measure, businesses will be restricted in placing new billboards, and by 2020, all currently installed billboards must be dismantled, according to index.hu. Estimates by the online daily suggest this means that a total of approximately 36,000 billboards will be dismantled.

Although the decree did not surprise the market as rumors had arisen earlier with regard to the government’s plans to regulate and significantly reshape the market, professionals questioned by index.hu said they anticipate the move will hurt the market badly.

Under the decree, advertising in public spaces will be limited. The currently common 12 square-meter billboards will be decreased to 9 square meters, and besides these only street furniture can be used for advertising. Additionally, the decree states, advertisements can only be placed on buildings that are in public ownership, so that all private buildings and properties will lose their billboards.

Street poster kiosks will only be allowed to carry advertising related to culture, such as theater programs for example, and no businesses or political parties will be allowed to appear on such surfaces. Index.hu speculates that this may be Orbánʼs revenge on one-time friend and ally Lajos Simicska, with whom he had a well-publicized and acrimonious falling out in 2015, and whose businesses currently dominate the kiosk market

After all the current billboards have been dismantled, businesses will need to negotiate with local governments on the possible placement of billboards, under the new decree.

The dismantling of the almost 36,000 billboards is seen as a big drawback for a sector that generated HUF 15 billion in revenues in 2015. In addition, in another amendment the Hungarian government passed earlier, businesses will be forced to pay HUF 12,000 for each square meter of public advertising space, which the Hungarian Advertising Association (MRSZ) calculates could generate an excess levy of HUF 6.5 bln on the sector, on top of the  ad taxes it already pays, index.hu added.

A draft bill leaked to index.hu in October last year indicated that the Hungarian government might be planning to restructure the billboard advertising market. The report suggested that governing Fidesz-friendly circles could benefit from the move.

After the bill was leaked, the MRSZ said that plans on raising taxes on billboard advertising could significantly raise costs at advertising firms, and ultimately threaten the outdoor advertising market. The association consequently asked the Hungarian government to rethink the introduction of yet another sectoral tax on advertisers.

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