Dogan Yayin fined $2.53 billion; applies to negotiate with tax authorities

Posted by Emma Heald on September 9, 2009 at 3:09 PM

Dogan Yayin Holding AS, Turkey's biggest media group, has been ordered to pay 3.75 billion liras ($2.53 billion) in back-taxes and fines, Bloomberg and other outlets reported yesterday. Owner Aydin Dogan has been engaged in a "war of words" with Prime Minister Recep Tayyip Erdogan and this is the second penalty given to the group this year.

In a filing with the Istanbul Stock Exchange yesterday, Dogan said that the government is asking for taxes that the company's units should have paid between 2005 and 2007 stemming from share transactions between group companies. Dogan Yayin has protested that it is not required to pay tax on the transactions because no sale took place and no cash changed hands, and will ask the government to re-evaluate the tax demand, according to Bloomberg. Reuters reported today that the Turkish tax authority is open to negotiating with Dogan Yayin, and that the publisher had already applied to negotiate a settlement of the fine. The company's share value had slumped considerably since the announcement of the fine but has since started to rise.

Dogan Yayin owns two out of the three top-selling newspapers in Turkey, Milliyet and Hurriyet, and two of the four most-watched television stations. Its main rival Calik Holding AS owns a newspaper, Sabah, whose chief executive is Erdogan's son-in-law, Berat Albayrak.

Erdogan first accused the media group of bias against his government a year ago, and after the initial $500 million fine in February, Dogan Yayin in turn accused the government of intimidation and muzzling the press. Aydin Dogan said in interviews earlier this year that the prime minister was trying to stifle criticism of the government coming from within his media conglomerate. Erdogan denied this in March, insisting that the process that the Dogan Group was going through was nothing to do with him.

The new huge fine is likely to prompt further protest from Dogan Yayin about the government's personal interest, and concern from press freedom groups. CNN quoted David Dadge of the International Press Institute, a media watchdog, who said that "one of our main concerns would be that the tax investigation and the actual penalty belong more in the political sphere then in the financial sphere." Jose Manuel Barroso, president of the European Commission, said in March that the feud threatened "pluralism and freedom of the press."

Source: Bloomberg, Reuters, CNN