In the second part of our overview of the winners and losers of the pandemic, we continue with two large players that cannot be as happy as the publishing houses we examined in the previous post when looking at their 2020 financial results. Although Central Médiacsoport seems to have increased their turnover, there is an interesting spin in their data. On the other hand, Indamedia, the publisher of Index could foresee their somewhat gloomy results due to the shock they went through in 2020.

Central Médiacsoport – Great Results or Simple Window-dressing?

Despite Covid-19, the 2020 financial year might seem to have been successful for Central Médiacsoport – so much so that the General Assembly of the company decided to pay a dividend of HUF 2.43 billion. Although last year, due to the pandemic, the working hours and hence the salaries of employees were reduced for a few months (causing discontent among some), based on their recently published official financial report for 2020, the Group seems to have coped very well with the crisis – the net sales of Central Médiacsoport increased by almost HUF 2 billion from HUF 11.32 billion in 2019 to HUF 13.2 billion in 2020. The company’s profit after tax also increased from HUF 1.13 billion to HUF 2.41 billion, which could mean that Central managed to double its profit. (source)

However, we have to add to the above figures that the favorable financial results are mostly due to the merger of the formerly independent Central Digitális Média Kft. – which included the group’s online products such as 24.hu, nlc.hu and startlap.hu – into Central Médiacsoport. The turnover of this company in 2019, the last period before the merger, was HUF 4.14 billion, and the company reported a profit after tax of HUF 366 million. (source)

In 2014, Central Médiacsoport decided to set up Central Digitális Média Kft., which included digital products, separately from Central Médiacsoport, which published print magazines (Story, Marie Claire, Best, Nők Lapja, etc.), partly to prepare the strategic partnership between Central Médiacsoport and RTL Hungary, which was planned at the time. However, after the Media Council of the National Media and Infocommunications Authority refused to give its consent to RTL Klub’s acquisition of a 30% stake in Central Digitális Média Kft. in October 2016, there was little advantage in keeping the digital products in a separate company, while the operation of a separate entity significantly complicated corporate processes. (source)

When comparing the results of the financial years, if we take the last financial data of the merged Central Digitális Média as a basis for comparison with the base year, we actually see a decrease rather than an increase in turnover. Central Médiacsoport Zrt., if we compare it only to the 2019 results of Central Médiacsoport, which publishes magazines, was able to grow because the well-functioning digital business, digital products, was merged into the group. (source)

Nowadays, the product portfolio of the company includes the most popular educational, entertainment and/or lifestyle-focused magazine brands and online products, including Nők Lapja, National Geographic, nlc.hu, Nosalty, Házipatika.com and 24.hu. The company publishes 25 print magazines, 25 special issues, and manages 19 online publications that reach over half of the population monthly. (source)

On the Ashes of Index

The loss of Index.hu Zrt. in 2020 was HUF 277 million compared to a profit of HUF 61 million in 2019. Index’s net sales revenue decreased by 7 percent in 2020, with the media company recording HUF 1 billion 156 million in 2020. According to the CEO, Ákos Starcz, the loss of revenue from the spring-summer period of last year is clearly reflected in Index’s financial results.

“The product was hit not only by the advertising market’s drop that was already noticeable in spring 2020, but also by a reputational shock. By the end of 2020 we were able to normalize our situation, as we had to make our partners and advertisers understand that our goal is not to destroy Index, but to develop it. And let us not forget that a 7 percent drop in Index’s revenue also means a drop of almost HUF 100 million. In addition, the mass resignation of people leaving Index and the creation of a new team also resulted in extra HR costs for the company,” said Index’s CEO in an interview with Kreatív. His words are backed up by the fact that at the payroll cost level, an extra HUF 92 million compared to 2019 is reflected in the report.

Index’s readership shows barely any signs of a reputational shock triggered by the mass resignations of the editorial staff and management before summer 2020. In terms of daily visitors, Index was the most widely read most of the days (28 out of 30) in April. Index’s articles reached over 1 million readers every day that month except for a few weekends.

Index’s fate, which had long been in doubt, became clear in November 2020, when Indamedia announced that it had bought the remaining shares in Index from the previous owner, the Hungarian Development Foundation, and appointed Ákos Starcz as CEO. (source)