It was supposed to be an obedient servant to Hungary's Communist rulers, a weekly political and economics newsmagazine toeing the party line. But somehow, the young journalists who launched Heti Vilaggazdasag (Weekly World Economics, or HVG) in 1979 and modeled its look and style on Britain's The Economist never got the message. Right away HVG set an independent tone. "Our chief editor's full-time job was to defend the editorial staff from the party leadership," says Peter Szauer, then a deputy editor of the magazine and now CEO of HVG Publishing House.
These days, HVG is still bucking trends in the Hungarian media and jealously guarding its freedom, even as it entertains foreign suitors. Owned by management and staff, HVG is one of the few Hungarian news publications that's considered politically independent.
And a decade after Europe's big publishing houses began buying up everything from daily newspapers to lifestyle glossies, it's also the most sought-after publication still in domestic hands. Among the media heavyweights that might be interested in buying HVG if it comes up for sale is the Gruner + Jahr unit of German publishing giant Bertelsmann (see BW, 4/8/02, "Invasion of the Magazine Snatchers").
LUCRATIVE READERSHIP. Little wonder. While an explosion of new print publications and the increased availability of TV are driving down readership levels for Hungary's dailies and other news weeklies, HVG has a stable circulation of 120,000, two-thirds by subscription, and a readership of 500,000. That's 5% of the country's population -- and not just any 5%. HVG readers are decidedly urban, educated, and professional -- Hungary's emerging middle class. "It's the only place to advertise," says Bea Surjesz, managing director of Grafton Recruitment in Budapest, whose company has run ads, mostly in English, in HVG every week for five years.
In 2001, that kind of appeal translated into profits of $3 million on revenues of $17.5 million. That's still small by Western European standards, but with Hungary's economic future looking bright -- EU membership may be only two years away -- there's plenty of room for growth.
HVG is a prime example of just how entrepreneurial Hungarians have become over the last decade -- a trend that's driving the growth of small and midsize businesses. It has been aggressively expanding its business, trying to take advantage of its name and expertise. The company publishes a raft of business newsletters, runs a graphic-design house that serves several other publishers, operates Hungary's leading online job site, and even owns a travel company. HVG is also about to completely revamp its online version. Revenues from sources other than magazine ads account for nearly 20% of total turnover.
STEPPING CAUTIOUSLY. With an eye on pushing that figure higher, Szauer says he's searching for a "strategic partner" among multinational publishers. The right company could help broaden HVG's offerings and squeeze more profits from existing businesses. New avenues might include publishing Hungarian versions of a partner's foreign titles and getting help in tapping the value of its subscription list. HVG is only just beginning to exploit database marketing.
Szauer concedes that finding a working partner is also a cautious first step toward taking on a foreign investor or even selling out completely. But, he quickly adds, he has already refused several good offers (though he won't say from whom).
What's holding Szauer back? Patience, he says. Staff members got a collective 10% stake in the magazine when it was first transformed into a shareholding company in 1989. The employees then spent several years gradually buying out the original majority partner, the state-run Hungarian Chamber of Commerce, with their share of annual profits. No reason to rush into a sale now, especially since HVG's value can be expected to keep growing.
GUTSY CALL. There's an emotional reason, too. Szauer recalls the old battles with Communist Party chiefs back in the 1980s, when the staff fought hard to inform its readers honestly. He compares those pressures to the restraints of a modern business.
"For a multinational investor, the only important thing is making money," Szauer says. Would a new owner, he wonders, have let him tear up the cover that had already gone to press on the night of September 11? It was a costly decision, but one that made HVG the only Hungarian weekly with the terror attacks featured on its cover that week.
Given time and the right offer, HVG's staff will eventually cash in on the magazine and business they've worked so hard to build. But -- they hope -- only to a buyer who'll continue the journalistic traditions they've worked so hard to establish. By Christopher Condon in Budapest