Doğan accused of breaching Law in sale to Axel Springer

The Sabah and Yeni Şafak dailies reported on Monday that a Finance Ministry report on irregularities of the group's companies Doğan TV Holding, D Yapım Reklamcilik, Doğan Prodüksiyon and Alp Görsel AŞ was presented to the RTÜK, revealing Doğan Yayın's violation of the RTÜK Law.

According to the 29th clause of the law, a foreign company can own no more than a 25 percent stake in a Turkish private radio or TV station. The Finance Ministry report states that Doğan Yayın sold a 32.48 percent ownership stake to Axel Springer on Dec. 26, 2006, exceeding the 25 percent limit. The same clause also states that a foreign company can only acquire shares in one TV or radio station in Turkey. The audits, however, discovered that Doğan Yayın's sale to Alex Springer included a combination of shares in 28 firms operating under Doğan Yayın Holding, including Eko TV AŞ, DTV Haber Görsel AŞ, Bravo TV AŞ, Tempo TV AŞ, Fun TV AŞ, Galaksi Radyo TV AŞ, Kanalspor TV AŞ, Milenyum TV AŞ, TV 2000 AŞ, Hürriyet Radyo AŞ (Rapsodi AŞ), Foreks AŞ, Radyo Kulübü AŞ, Işıl TV AŞ, Altın Kanal AŞ, Doğa TV AŞ, Popüler TV AŞ, Stil TV AŞ, Dinamik TV A.Ş (Selenit AŞ), Elit TV AŞ, Trend TV AŞ, Ekinoks TV AŞ, Dönence TV AŞ, Fleks TV AŞ, Meridyen TV AŞ, Planet TV AŞ, Deniz TV AŞ, Doğan TV Digital and Kutup TV AŞ.

Doğan Yayın is also accused of not informing the RTÜK about the transfer of its shares, the dailies reported. According to the same clause of the RTÜK Law, any joint stock company that is granted broadcasting rights is obliged to inform the RTÜK within a month about share transfers and the partners and partnership structure that will emerge after the transfer is completed. The law also requires companies to obtain the necessary permission from the RTÜK before a transfer is completed.

During its meeting on Oct. 13, the RTÜK evaluated the Finance Ministry report on the irregularities of Doğan Yayın Holding and demanded that Doğan Yayın fix these irregularities within a three-month period, which was scheduled to start when the legal notice was given to the company, the Yeni Şafak daily reported, adding that Doğan Yayın had been notified on the day of the RTÜK meeting that Doğan Yayın should lower the size of the stake sold to the foreign company and decrease the number of companies whose shares were acquired to one in accordance with the law by Jan. 13, 2010 or else the RTÜK will consider canceling the broadcasting rights given to Doğan Yayın companies.

However, in a written statement released on Monday through the Public Disclosure Platform (KAP), Doğan Yayın announced that at present the legal notice has not been received by the group's companies, as some of the dailies have claimed, adding that another statement will be released if further developments arise.

Meanwhile, the İstanbul Stock Exchange (İMKB) announced early on Monday that it had suspended trade in Doğan Yayın Holding shares. In a written statement released via KAP, the İMKB reported that the temporary suspension would continue until an extra disclosure the İMKB presidency had requested from Doğan Yayın related to the group's material disclosure dated Oct. 15 was presented to the İMKB. Following the release of the requested statement by Doğan Yayın, within an hour the İMKB announced that the suspension had been ended in another statement published about one-and-a-half hours later.

A record fine of TL 3.76 billion ($2.53 billion) was levied on Doğan Yayın by the Finance Ministry in early September for evading taxes in a time period covering 2005, 2006 and 2007. Turkey's tax office asked Doğan Yayın on Sept. 24 to raise TL 4.8 billion ($3.24 billion) within 15 days as a guarantee for the fine. The guarantee is to cover the fine itself plus interest on the fine. The guarantee raised by Doğan on Oct. 9, the final day of the period granted to Doğan, has not been approved by the tax authority. The Finance Ministry has put a lien on the companies of the holding, and the relevant tax office has sent a notice to those companies. Doğan Yayın announced last week that the bank accounts of some of its companies had been placed under injunction. Doğan Yayın was separately fined $500 million in February for the alleged improprieties connected to the sale of shares to Axel Springer.