Turkey Media Baron to Sell After Long Battle With Erdogan

(Bloomberg) -- Aydin Dogan, the 81-year-old billionaire whose control of the largest media group in Turkey put him in constant battle with the government, has begun talks to sell all of those assets to a group loyal to President Recep Tayyip Erdogan.

Dogan’s negotiations with Demiroren Holding AS are based on a market value for the media assets of $890 million, less than a quarter of the group’s enterprise value at its peak in the mid-2000s. That was before Dogan was slapped with multi-billion dollar tax fines and forced to unload some of its flagship outlets.

The assets being discussed include Hurriyet Gazetecilik ve Matbaacilik AS, which publishes the daily newspaper long considered Turkey’s most influential, Hurriyet, Dogan Gazetecilik AS, which owns best-selling tabloid daily Posta and sports daily Fanatik, news broadcaster CNN-Turk and entertainment channel Kanal D, according to a statement to the stock exchange by Dogan Holding. Pay TV platform D-Smart, Dogan News Agency and newspaper distribution company Yaysat are also among the assets to be sold, it said. The enterprise value of the assets including financial debt is $1.1 billion, it said.

The sale will create a “big monopoly” in the media market, said Cagdas Ses news portal, citing Ozgur Ozel, a lawmaker from the main opposition Republican People’s Party CHP. “If the competition board is to make a fair and unbiased decision, it should not allow this sale to happen,” he said. The Ankara-based antitrust body weighs every merger and acquisition deal to guard against the creation of monopolies and cartels.

Dogan Holding will be “a great beneficiary” considering the cash it will get from the transaction, Haydar Acun, head of Marmara Capital Asset Management in Istanbul, said by email. The company “might also be a dividend payer after the transaction.”

Tax Fine

Once Turkey’s dominant media group in both market share and influence, Dogan got a $3.3 billion tax fine in 2009, after which it sold some newspapers, closed others, and adjusted coverage amid frequent run-ins with Erdogan and his Islamist-rooted ruling party. In 2011, it sold two liberal newspapers, Milliyet and Vatan, to DK Gazetecilik & Yayincilik AS, owned by the Demiroren and Karacan groups, for $74 million.

Erdogan says Dogan’s media represents the “old Turkey.” The term refers to the typically secular elite that had dominated Turkish politics, culture and business since the establishment of the republic in 1923 until Erdogan’s rise to power starting in 2003.

Shares of Dogan Holding, which also has assets in real estate, manufacturing and energy, soared almost 20 percent to 1.04 liras by 2:47 p.m. in Istanbul on Thursday, after closing 19 percent higher on Wednesday. The stocks of Hurriyet, Dogan Gazetecilik and magazine publisher Dogan Dergi also soared almost 20 percent.

Aydin Dogan, who owns the twin Trump Towers in central Istanbul, in a family venture separate from Dogan Holding, became even more deeply enmeshed in politics when Donald J. Trump, during his campaign for president, announced a proposal to ban Muslims from entering the U.S. Erdogan called for the future president’s name to be removed from the buildings, prompting Dogan to seek legal advice on its contractual obligations with the Trump group.

Criticism of the U.S. real estate developer died down after Trump won the election. The multi-purpose mall, office and residential building in Istanbul continues to brandish the Trump brand from the top of its 39 stories, although the name’s been erased from signs at the metro below.

--With assistance from Taylan Bilgic

To contact the reporters on this story: Ercan Ersoy in Istanbul at eersoy@bloomberg.net, Kerim Karakaya in Istanbul at kkarakaya2@bloomberg.net, Tugce Ozsoy in Istanbul at tozsoy1@bloomberg.net.

To contact the editors responsible for this story: Stefania Bianchi at sbianchi10@bloomberg.net, Benjamin Harvey, Vernon Wessels, Robert Brand.

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