Ten years ago, as Hungary was roiling with democratic protests, the country had two television channels, both controlled by the state. But in October 1989, for the first time, news crews accustomed to filming the droning monologues of Communist officials took their cameras into the streets. The box that had once been the voice of party-line platitudes was suddenly filled with real life, offering a window onto the revolution. For the democratic reformers, with no experience of an authentic mass media, the country's post-Communist media landscape was a blank slate. Top on their agenda was carving out a new space for private, competitive TV.

While during the Communist era, the monotony of state-run TV engendered great skepticism and infrequent viewing, by last year Hungarians were spending close to nearly four hours a day in front of a television set. Today Hungary offers two private and two public broadcast channels, innumerable foreign stations available with a satellite dish, and a half-dozen national cable stations, three of which are controlled by Time Warner: HBO, featuring primarily American films (dubbed into Hungarian); Spektrum, which shows documentaries; and Z-TV, a music channel.

The free market did not work in mysterious ways. As Hungarians emerged from state domination, they got an eye-opening exposure to the well-honed techniques of aggressive lobbying by Western media interests looking to stake a claim in a market expected to grow exponentially in the coming decades. During that tumultuous time, when Hungarians were attempting to learn the rules of an uncharted new economic terrain, Time Warner's HBO set out to establish itself as the most significant US presence in the cultural landscape of the new Hungary. Dispensing with democratic niceties, the company wrote its own media law. And now, having transformed Hungary's cable television business in its own image, the company is moving into neighboring Poland with a similar sleight-of-hand.

The history of Hungarian cable TV begins in the eighties, when the Communist government established a constellation of small, local cable outlets, which operated as party mouthpieces parallel to the national channels. In the days of the revolution--when dissidents occupied the streets and then would sit, stunned, to watch themselves on one of the state's two national channels--the flickering gray light of Hungary's nascent cable network, as if in a time warp, was still showing exhortations to socialist fraternity delivered by party officials.

After the revolution, HBO was the first to see the potential in those cable outlets as privatization began. In return for 51 percent control of each station, HBO--operating through its then-subsidiary Kabelkom--offered its programming for free and promised to modernize the delivery systems. "HBO went to these companies run by old comrades and made them an offer they couldn't refuse," recalls Miklos Haraszti, former media spokesman for the Free Democrats, a leading opposition party at the time. Within five years, those cable stations had become the basis of HBO's national distribution system, establishing the company as Hungary's premier cable provider. Today, one-third of Hungarian homes are wired for cable, and HBO has some 200,000 subscribers in a nation of 10 million people.

Hungary's first post-Communist media law, however, threatened to derail HBO's carefully laid hardware. As a result, the company forced Hungary into an early test of allegiance, forcing it to choose between its new European and American allies. At first, it appeared that the European media mold would prevail: In mid-1995, the Hungarian Parliament's Media Committee was set to pass a statute bearing the imprint of European Union guidelines requiring that private channels air at least 20 percent Hungarian-made programs and a total of at least 51 percent European productions. Initially, those rules included cable as well.

Not for long. As Parliament's Media Committee debated the new law, lobbyists from Time Warner, MTV, CNN and other US cable interests, along with the high-profile Jack Valenti, president and CEO of the Motion Picture Association of America, launched an aggressive campaign to repeal the quotas and provide an exemption for "specialized channels"--i.e., cable. The US Commerce Department, according to several MP's involved in the negotiations at the time, made clear its support for the companies' position. "Get rid of those quotas!" was the message, recalls Peter Molnar, a former Free Democrat MP then serving on the Media Committee.

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