BUDAPEST: The European Commission said on Friday it may consider legal action against Hungary after it refused to renew the licence of a radio station whose talk show guests have often criticised government policies.

Klubradio, which has broadcast for 19 years, was forced off the air last month after it lost an appeal against the removal of its licence. It has been broadcasting on the internet since mid-February.

On Thursday Hungary's media authority rejected Klubradio's application for a licence in a frequency tender in which it had been the sole contender left, saying it did not meet requirements.

The EU executive is closely watching the case, Commission spokesman Christian Wiegand said.

"We are carefully analysing the compliance of these decisions with EU law, including their impact on media freedom and pluralism in Hungary, an area where the Commission has great concerns," he told Reuters. "The Commission will not hesitate to take legal action, as necessary."

The EU has long been concerned over what it sees as an erosion of democratic standards under Hungary's Prime Minister Viktor Orban. His nationalist government rejects such criticism.

Asked about the Klubradio case, a government spokesman said: "Press freedom in Hungary is, in fact, safe and sound."

"Those who claim that Klubradio was 'shut down' by the Hungarian government aren't telling... the truth," he said.

The media authority ruled that the station's unstable finances made it unfit for using a frequency and that its programme plans contained mistakes.

Klubradio said in a statement its operations and finances were transparent and met all moral and legal standards.

"Klubradio will appeal the media authority's ruling in all possible relevant Hungarian and international courts," it said.

Under Orban, state-owned broadcasters have largely become government mouthpieces, while several other media outlets have been shut or taken over by government-friendly owners.