* Journalists liken latest media takeover to "war"
* String of outlets closed down as PM's allies expand
* State advertising revenue withdrawn from disloyal outlets
* U.S. govt dropped grant to support regional media
By Marton Dunai
BUDAPEST, Sept 24 (Reuters) - The new owners of the largest independent news outlet in Hungary say they will not meddle in its editorial policies. Reporters at Index.hu are far from sure, and recent history shows why.
Dozens of newspapers, radio and television stations critical of Prime Minister Viktor Orban have changed hands in the past four years. Some subsequently closed down, while others quickly and dramatically changed their tune.
On the day news channel Hir TV was taken over last month, one of its new owners, Zsolt Nyerges, told the newsroom he would not interfere with its work.
That evening's programmes, including a hard-hitting political talk show, were cancelled. In its place, a recent Orban speech played on a loop.
Last week, the European Union's parliament voted to punish Hungary for flouting EU rules on democracy, corruption and civil rights, including media freedom, although the actual punishment, suspending its voting rights, is unlikely.
An EU parliamentary report said media had been concentrated in the hands of pro-Orban oligarchs, state-funded advertising went largely to outlets loyal to the government and other journalists were often banned from parliament.
Hungary's government has denied undermining press freedom and says it has no desire to control the media. It is taking the EU Parliament to court, accusing it of breaching voting rules.
Asked about Index's independence, one of its new ultimate owners, Gabor Ziegler, said on Wednesday it was guaranteed.
"We have no right to interfere with daily editing or the paper's contents," he said in an interview with napi.hu, one of a number of smaller sites clustered around Index that Ziegler and his partner also acquired.
"We need an independent, widely read and decidedly high-quality Index.hu to achieve our business goals."
Index.hu's editorial line has not changed since the takeover on Monday, but staff are on the alert. A new dial on its home page has a needle pointing towards "independent": next to it is "in danger" and further along, "not independent".
"When it changes we'll talk. As loudly as possible", the strapline says. A statement signed by dozens of staff likened the situation to a war.
Chief editor Attila Toth-Szenesi told Reuters his fellow journalists were tense. "We would like to work peacefully," he said. "It is not good for anyone for us to be the news."
"DOOMSDAY SCENARIO"
Ziegler and media investor Jozsef Oltyan gained ultimate control over Index by buying media group cemp-X Online Zrt, which sells its advertising space, as well as the company owning the foundation set up to guarantee Index's editorial freedom.
Oltyan is a member of a party in coalition with Orban's ruling Fidesz, while Ziegler has been a staff member on Index's business side for nearly two decades.
Editor Toth-Szenesi said he was concerned that the ownership change could bring Index.hu under the influence of Fidesz and its ideological agenda called the "National System of Cooperation" (NER).
NER was launched in 2010 to counter liberal values and champion nationalist policies, and under its auspices some of Orban's friends and family have won an increasing share of publicly funded business.
"What seems to be the doomsday scenario may be reality," Toth-Szenesi said. "It may in fact be the NER approaching Index right now."
Ziegler denied that.
"I would like to reject that in the strongest possible terms," he wrote in an emailed response to Reuters. "We decided freely to buy (the companies that own Index and sister publications); there is nobody behind us."
He added that nobody had the option to buy the companies in the future, and they wanted to hold on to them for the long term.
Oltyan did not respond to requests for comment.
Since Orban was reelected for a third straight term in a landslide election in April, the pace of news outlets changing hands has accelerated.
Political loyalty has paid off for dozens of titles that have toed the government line. Those that back Orban get more state advertising spending, media researchers say.
About 10 percent of state online ad spending goes to Index, for example, while its closest rival, pro-government Origo, gets about 80 percent, a proportion that shot up after its takeover by a pro-government group in 2015, media analysis group Mertek said.
Asked about state ad revenue, Ziegler told Napi.hu: "If the change of ownership means we have an easier time, we will take advantage of opportunities more easily."
Revenue from state ads at TV2, Hungary's second largest commercial channel, more than tripled in 2016 after Orban ally Andy Vajna took it over, research company Kantar media said, while state income stayed flat at levels far below TV2's at market leader RTL.
"Many commercial advertisers publish ads in pro-government media that is watched or read by hardly anyone," media analyst Attila Batorfy said. "We can call that lobbying money."
"Things like reach or visitor numbers make no difference, replaced by an adjustment to government. This is harmful on every level."
As the media landscape narrows, more Hungarians have turned to Index. Average daily visitor numbers so far this month are up 20 percent from the same period in 2017, to 630,000, according to figures from web-monitoring service DKT.
Orban is scathing about the website, which carries investigations into alleged government corruption and editorials criticising his anti-immigration, anti-European Union rhetoric alongside straightforward news.
At a public event in May, Orban met a question from one of its reporters with: "I won't answer to fake news factories".
DEJA VU
Hir TV continues to follow the government's cue.
"The EU wants to strip Hungary of the right to defend our borders," said the main story on its website after the European Parliament's censure vote.
For Gabor Varga, an investigative journalist at the station who quit on the spot last month, it was déjà vu. He had previously worked at Nepszabadsag, the country's top daily, until another Orban ally bought the newspaper then shut it in 2016.
Varga is looking for another job in journalism but with more than a dozen newsrooms recently disbanded, his options are limited.
"Lots of my fellow journalists have become political activists of sorts, and I will not follow them," he said. "I believe in objective, balanced journalism. That doesn't work in Hungary."
Four prominent media outlets were caught up in a public feud between Orban and his former ally Lajos Simicska, a media mogul whose portfolio included Hir TV and the conservative magazine Heti Valasz, which had given an outlet to conservative voices sometimes at odds with Orban's anti-immigration views.
After Simicska broke with Orban in a public spat in 2015, private advertisers followed a state ad moratorium and withdrew from Heti Valasz. A one-billion forint ($3.6 million) profit in 2014 became a 900-million forint loss in 2017.
In July, Simicska sold the ailing magazine to Nyerges at the same time as Hir TV. Despite interest from investors in buying Heti Valasz, Nyerges shut it down within weeks.
Last October, David Kostelancik, then the top U.S. diplomat in Hungary, said the country's independent journalists "face pressure and intimidation" from the government, noting that the government directed substantial advertising contracts to friendly media outlets.
The Hungarian Foreign Ministry summoned Kostelancik to the ministry and said the comments were "uninvited interference in Hungarian internal politics."
The next month, Washington announced a programme "to increase citizens' access to objective information" by awarding a grant of up to $700,000 to a provincial news organisation.
Ferenc Nimmerfroh, fired from editing a local daily in Pecs, southern Hungary, soon after premier Orban's close friend bought it in early 2017, was hopeful his application to launch a website with a string of regional newsrooms would win.
As Hungary's relations with the United States warmed after the election of President Donald Trump, Nimmerfroh said he began to fear the programme was doomed. In July the U.S. State Department dropped it before the grant was awarded.
The State Department and the U.S. Embassy in Budapest did not reply to emailed questions about the reversal. Ambassador David Cornstein told the New York Times in August that the U.S. had reconsidered its overall view of the subject. (Editing by Andrew R.C. Marshall and Philippa Fletcher)
