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TV channel vows to stay in Hungary despite ad tax

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By PABLO GORONDI
Associated Press

BUDAPEST, Hungary (AP) - The head of Hungary's largest broadcaster said Tuesday the company wants to remain in the country despite being seen as the main target of a new tax on advertising revenues.

RTL Klub CEO Dirk Gerkens said bowing to government pressure and leaving Hungary would be a "bad precedent" even though he said he cannot imagine a similar law being passed elsewhere in the 28-nation European Union.

The tax approved in June hits Hungarian media companies' annual advertising revenues in several steps and has been severely criticized by media experts. Only RTL Klub, the ratings leader, has ad revenues affected by the highest tax rate of 40 percent and it says it will pay 15 million euros ($20.4 million) in tax this year. That amount is equivalent to its 2013 pre-tax profits and about half of the total revenue the government expects from the new tax this year.

Gerkens said the company was working with three law firms to evaluate its legal options.

"We will do whatever it takes to defend our interests," Gerkens told reporters. "We are the last major independent media company and this is an attempt to expropriate us from the market."

Prime Minister Viktor Orban's government has imposed windfall taxes on a wide range of industries and he said the media enjoyed "very large profits" that needed to be taxed accordingly.

Gerkens, however, said Hungary's advertising market was 50 percent smaller than in 2008.

He said some advertisers had shifted recently from RTL Klub to its main rival, TV2, which was sold last year by its German owners to two station executives widely reported to have links to business interests close to the ruling Fidesz party.

RTL Klub is a subsidiary of RTL Group, a Luxembourg-based media company.

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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