State television channel MTV has no money to pay wages or the rent on its office because it will not receive any supplementary subsidy from next year’s budget, MTV executives announced after a crisis meeting yesterday.
Parliament on Monday voted to redirect a subsidy for 2010 worth around half of MTV’s operating costs to its fellow state television channel Duna TV.
“MTV’s operating profit was Ft 700 million above target for the first three quarters, while its balance-sheet profit was Ft 1 billion above target,” said chief financial officer Attila Nagy, adding that Monday’s decision has “created a business crisis” at the television channel.
“As MTV has not seen the feasibility study supporting the cancellation of the subsidy, it cannot do anything other than appoint a liquidation manager,” acting deputy chairman Balázs Medveczky said.
Huh? An large operating profit but no money?
I second JD’s question. This isn’t just a surplus, this is 1B HUF above target. What was the target?
On top of all this, how can a company operate based on taking money from next year’s budget into this year?
Does the CFO sound like he is in control?
Or is “business crisis” coded for “bonus crisis”?
@JD and Rolrox: They mean ‘profit’ after all the handouts, so not real money or real profits. The story here is that of the 9.4 billion in government support that they expected to receive 2.4 has been given to DunaTV instead and the other 7 stay in central government coffers.
The reason being that MTV earlier canceled a breakfast show that Fidesz had refused to appear on. The show was canceled without warning. In its place another breakfast show friendly to Fidesz was created, they took part but MSZP now refuse to take part. Some people think the cut is a punishment to MTV for being spineless toadies trying to get in Fidesz’s good books ahead of the inevitable.
MTV have supposedly cut staffing costs by 0.5 billion and other running costs by 2.3 billion.
Anyway, there are plenty of details around, but this story I think has little to do with finance.
Not sure where Hungary Around the Clock got the figure of half the operating costs (üzemeltetési díj/költség) going to DunaTV from. Their personnel costs are 9 billion and rental commitments 4 billion. http://gazdasagiradio.hu/cikk/36204/
Just found this http://index.hu/kultur/media/mtv0312/ which clearly states that 4 billion is the monthly operating costs of the new MTV studios, so this is the likely source of the statement “around half of MTV’s operating costs to its fellow state television channel Duna TV”, though without personnel costs this is slightly misleading I think!!
@Vandorlo. Interesting numbers… And I get how they are spending next year’s money today (I guess it’s like raising bonds for some future taxpayers to pay; nothing new there). Still kind of despicable to those who are to follow.
Was the MTV .5B cost cut a yearly or monthly debt?
@Rolrox: Actually the Gazdasági Rádió article only mentions that it is a 0.5 billion reduction ‘compared to last spring’, so I would be pretty sure this is a total (annual) cost reduction.
There is a much more informative article on Index that gives total figures for subsidies with a breakdown of what they are supposed to be for: http://index.hu/kultur/media/2009/11/23/minden_tamogatast_elvettek_az_mtv-tol/
This shows that MTV had an operating budget of 32.5 billion forints coming from lots of different sources, but only 3.5 billion of that was receipts from advertising. Given this they will be expected to squander only around 22-3 billion forints this year.
The index article did suggest that they could raise 2 billion by selling off their rights to cover the swimming and football games.
The weird thing for me is that we have far too many channels being paid for from the public purse and some of them you can only watch if you also then subscribe to a commercial cable TV service. How on earth can that be justified? One public TV channel is plenty. There are far too many people sitting around tables talking bollocks for hours on end. Either that or western programs dubbed by ‘actors’ who are clearly the spoilt children of the Buda elite (I have never heard such appalling voice acting in my life). Lets stop subsiding Buda brats and their parents.
@Vandorlo: That’s a hefty amount, though paying for content and then dubbing is expensive. It never occurred to me that there was an elite living off voice-overs – only that doing such reduces the opportunities for the population to learn other languages.
I liked the last point from the chairman about how since he didn’t see the logic in the reduction, his only option was to liquidate the company. Coupled with the CFO who, while operating at profit depends upon next year’s revenues to operate this year – and will be unable to pay wages or rent (as I guess all the other money was already spent and no bank will grant them loans?), I wonder about the talent at the helm of this great undertaking.
Plenty of other companies have been hit a lot harder and managed to figure out solutions.
Was it a translation error, or does the gov’t actually now undertake feasibility studies to get rid of things? Aren’t feasibility studies done before doing or changing things permanently?
@Rolrox: To be honest I haven’t come across the quote talking about feasibility studies (“megvalósíthatósági tanulmányok”) or liquidation (“felszámolás” or “likvidálás”). Though, in the case of the latter, I think they have translated “csőd” as ‘liquidation’, though ‘insolvency’ or ‘bankruptcy’ were also possible – but obviously less shocking. The closest is in parts of something posted on MTVs website: http://www.mtvzrt.hu/?id=313420
In this, parts of which are quoted in most of the articles, they talk about wanting to see the ‘detailed economic analysis’ on which the decision was based (“Várom a közgazdaságilag megalapozott elemzést…”). And ‘MTV is preparing for the appointment of a bankruptcy trustee’ (“csődbiztos kinevezésére készülnek az MTV-ben.”) The difference here is one between ‘csődgondnok’ or ‘csődbiztos’ and that of ‘felszámolóbiztos’. That is ‘trustee in bankruptcy’ and that of ‘receiver’, respectively. Again, I think talk of liquidation, rather than bankruptcy was on the dramatic side.
There are probably plenty of quotes out there from melodramatic MTV management that may match the original statements, however.
“The weird thing for me is that we have far too many channels being paid for from the public purse and some of them you can only watch if you also then subscribe to a commercial cable TV service. How on earth can that be justified? One public TV channel is plenty. There are far too many people sitting around tables talking bollocks for hours on end”
Well done, Vandórló! The above statement you posted recently hits the nail fairly and squarely on the head.
Sponging bastards, dodgy accounting, nepotistic intrigue, questionable statistics etc. ad infintum. Same old story in good old, downtown, Magyarorszag.